I need help with question 2 Adollar during a sports-business slowdown. Soaringplayer salaries and debt payments tied to stadiumconstruction are outstripping revenue for manyteams. Years of ticket-price increases and creepingfan disgruntlement also are cutting into attendance:Major League Baseball suffered a 6% drop at there you willing to pay just about anything towatch your favorite sports team play itsLarchrival? Some pro teams are making surethat you do.The New York Mets recently told fans theywould have to pay up to twice as much next year towatch the crosstown Yankees or home-run kingBarry Bonds as they would to see a sad-sack team.Hockey's Ottawa Senators jacked up prices 20%this season for games againstthe hated Toronto Maple Leafsand Stanley Cup champion “Fans don't want to get theDetroit Red Wings.gate last year.That's where variable pricing comes in. Sports-industry executives say the strategy can actually bea clever way for teams toboost ticket prices under theguise of giving fans a break.Baseball and hockey are thebiggest users of the new pric-ing models because of thesheer number of home gamesThe Pittsburgh Penguins feeling the club is in it forhave tacked on $5 to weekendgame prices, and $5 to week- every last dollar."night skates against three oftheir most high-profile oppo-per team-81 in baseball and41 in hockey-and becauseof labor and financial woes that have left teams innents.Known as “variable pricing," the practice ofcharging different prices for the same seat is fairlycommon in the airline industry and Broadway. Butit's a curveball in the tradition-bound sports business,where ticket pricing for decades was unchanged. Thesame seat for a regular-season game cost the sameamount, regardless of date or opponent."It's always been thatpaying $100 or $200 to find himself sitting next tosomeone who's paying 30 bucks," says Rick Bur-ton, who directs a sports-marketing center at theUniversity of Oregon.But that fear is waning as teams scrap for everyworse shape than in basketball or football.In principle, such pricing is a simple way ofboosting revenue by capitalizing on the sure thingson the schedule. Despite charging extra to see theYankees last summer, baseball's Colorado Rockiesdrew a franchise-record attendance for a three-game series against the star-powered New Yorkteam. The Penguins brought in an extra $1 millionin ticket revenue last season thanks to their week-end-game surcharge, a boost that helped the teambreak even just a few years after emerging frombankruptcy court. "If you can get more revenue infor games thatyoudon't want someoneare better attractions, so be it," says Tom Rooney, president of Team Lemieux, whichoperates the Penguins.The new plans carry some risk and complica-tions. The plans require teams to gauge the qualityopponents months before the season starts, "andthat valuation can change very quickly," says BernieMullin, a senior vice president at the NBA, whichhas steered its teams away from the strategy. Indeed,the Mets included the Philadelphia Phillies in their“value plan"-but the Phillies soon afterwardbecame a better draw by signing slugger Jim Thome.Assuming that fans will turn out for the bestgames despite a price increase could be a mistake. InNovember, the Ottawa Senators had nearly 2,500empty seats for a game against the Montreal Cana-diens, which carried a 10% surcharge; that game isusually a sellout or close to it. The team also fellshort of a sellout a few weeks later against rivalToronto, a matchup that usually draws a capacitywhen marquee opponents come to town. Under theGiants' tiered pricing plan, season-ticket holders paythe lowest prices. Next in line are single-game ticketsto midweek games. And the priciest are single-gametickets for Opening Day games, weekends and holi-days. The price disparity among the packages rangefrom $1 per game for bleacher seats to more than$20 per game for long-term box season tickets.The Giants' main goal: Take advantage of famdemand without drawing distinctions among oppo-nents-or alienating season-ticket holders, whoaccount for more than two-thirds of sales. The planis "reinforced value for our season-ticket holdersofthat they have best pricing in ballpark," says TomMcDonald, the Giants' senior vice president formarketing.Giants President Larry Baer says the plan net-ted an additional $1 million in ticket revenue lastseason, helping the heavily indebted club finishwith a slim profit of around $100,000. While Mr.Baer says his team's plan has worked, he cautionsagainst pushing ticket discrepancies further. "Fansdon't want to get the feeling the club is in it forevery last dollar," he says.crowd.Senators fan Steven Duford says he skippedboth games because of the price increases. "“I do notagree that I have to pay extra to see certain teams,"he says. "I don't pay less for teams that usuallydon't draw."That sort of thinking has led some clubs, includ-ing the San Francisco Giants, to avoid inflating pricesQUESTIONS FOR DISCUSSION1. Why are sports teams considering switching to a variable-pricing strategy for tickets?2. Predicting Consequences Use the table below to predict what would happen if airlines and baseballstadiums priced all seats the same instead of using variable pricing. What would happen to the num-ber of tickets sold? What would happen to the total revenue from ticket sales? Assume stadiums areusing variable pricing and aren't completely sold out or completely empty. What would change ifseats were sold at the lowest prices? Highest prices? Variable prices?More seats soldFewer seats soldMore revenueLess revenueLowest pricesHighest pricesVariable prices

Question

I need help with question 2 Adollar during a sports-business slowdown. Soaringplayer salaries and debt payments tied to stadiumconstruction are outstripping revenue for manyteams. Years of ticket-price increases and creepingfan disgruntlement also are cutting into attendance:Major League Baseball suffered a 6% drop at there you willing to pay just about anything towatch your favorite sports team play itsLarchrival? Some pro teams are making surethat you do.The New York Mets recently told fans theywould have to pay up to twice as much next year towatch the crosstown Yankees or home-run kingBarry Bonds as they would to see a sad-sack team.Hockey's Ottawa Senators jacked up prices 20%this season for games againstthe hated Toronto Maple Leafsand Stanley Cup champion “Fans don't want to get theDetroit Red Wings.gate last year.That's where variable pricing comes in. Sports-industry executives say the strategy can actually bea clever way for teams toboost ticket prices under theguise of giving fans a break.Baseball and hockey are thebiggest users of the new pric-ing models because of thesheer number of home gamesThe Pittsburgh Penguins feeling the club is in it forhave tacked on $5 to weekendgame prices, and $5 to week- every last dollar.&#34;night skates against three oftheir most high-profile oppo-per team-81 in baseball and41 in hockey-and becauseof labor and financial woes that have left teams innents.Known as “variable pricing,&#34; the practice ofcharging different prices for the same seat is fairlycommon in the airline industry and Broadway. Butit's a curveball in the tradition-bound sports business,where ticket pricing for decades was unchanged. Thesame seat for a regular-season game cost the sameamount, regardless of date or opponent.&#34;It's always been thatpaying $100 or $200 to find himself sitting next tosomeone who's paying 30 bucks,&#34; says Rick Bur-ton, who directs a sports-marketing center at theUniversity of Oregon.But that fear is waning as teams scrap for everyworse shape than in basketball or football.In principle, such pricing is a simple way ofboosting revenue by capitalizing on the sure thingson the schedule. Despite charging extra to see theYankees last summer, baseball's Colorado Rockiesdrew a franchise-record attendance for a three-game series against the star-powered New Yorkteam. The Penguins brought in an extra $1 millionin ticket revenue last season thanks to their week-end-game surcharge, a boost that helped the teambreak even just a few years after emerging frombankruptcy court. &#34;If you can get more revenue infor games thatyoudon't want someoneare better attractions, so be it,&#34; says Tom Rooney, president of Team Lemieux, whichoperates the Penguins.The new plans carry some risk and complica-tions. The plans require teams to gauge the qualityopponents months before the season starts, &#34;andthat valuation can change very quickly,&#34; says BernieMullin, a senior vice president at the NBA, whichhas steered its teams away from the strategy. Indeed,the Mets included the Philadelphia Phillies in their“value plan&#34;-but the Phillies soon afterwardbecame a better draw by signing slugger Jim Thome.Assuming that fans will turn out for the bestgames despite a price increase could be a mistake. InNovember, the Ottawa Senators had nearly 2,500empty seats for a game against the Montreal Cana-diens, which carried a 10% surcharge; that game isusually a sellout or close to it. The team also fellshort of a sellout a few weeks later against rivalToronto, a matchup that usually draws a capacitywhen marquee opponents come to town. Under theGiants' tiered pricing plan, season-ticket holders paythe lowest prices. Next in line are single-game ticketsto midweek games. And the priciest are single-gametickets for Opening Day games, weekends and holi-days. The price disparity among the packages rangefrom $1 per game for bleacher seats to more than$20 per game for long-term box season tickets.The Giants' main goal: Take advantage of famdemand without drawing distinctions among oppo-nents-or alienating season-ticket holders, whoaccount for more than two-thirds of sales. The planis &#34;reinforced value for our season-ticket holdersofthat they have best pricing in ballpark,&#34; says TomMcDonald, the Giants' senior vice president formarketing.Giants President Larry Baer says the plan net-ted an additional $1 million in ticket revenue lastseason, helping the heavily indebted club finishwith a slim profit of around $100,000. While Mr.Baer says his team's plan has worked, he cautionsagainst pushing ticket discrepancies further. &#34;Fansdon't want to get the feeling the club is in it forevery last dollar,&#34; he says.crowd.Senators fan Steven Duford says he skippedboth games because of the price increases. &#34;“I do notagree that I have to pay extra to see certain teams,&#34;he says. &#34;I don't pay less for teams that usuallydon't draw.&#34;That sort of thinking has led some clubs, includ-ing the San Francisco Giants, to avoid inflating pricesQUESTIONS FOR DISCUSSION1. Why are sports teams considering switching to a variable-pricing strategy for tickets?2. Predicting Consequences Use the table below to predict what would happen if airlines and baseballstadiums priced all seats the same instead of using variable pricing. What would happen to the num-ber of tickets sold? What would happen to the total revenue from ticket sales? Assume stadiums areusing variable pricing and aren't completely sold out or completely empty. What would change ifseats were sold at the lowest prices? Highest prices? Variable prices?More seats soldFewer seats soldMore revenueLess revenueLowest pricesHighest pricesVariable prices

Accepted Answer

Variable pricing is a strategy where different prices are charged for the same product or service…