The Kansas City Chiefs recently announced that all single-game, group and partial plan tickets will be subject to variable pricing in 2014. Details on the club's variable pricing structure can be found at www.kcchiefs.com/variablepricing. Season tickets are not subject to variable pricing. Chiefs president Mark Donovan sat down with me to explain variable pricing and how it will affect fans.
1) What is variable pricing?
"Variable pricing is the process of setting prices for tickets, based on market demand for the games. Instead of one set price for the season of games, the price varies by game. A team determines what they think the value of each different game is, based on a number of different factors. It could be impacted by time of the year, opponent, whether it's a night game, versus a day game or rivalry games."
2) Why did the Chiefs make the change to variable pricing from fixed pricing for each game?
"There are a number of factors that played into it; one was looking at the trend in sports. If you look at baseball, hockey, basketball, college sports, the sports industry is changing and going much more to variable and dynamic pricing of sporting events. The second factor we looked at was the secondary market. The secondary market is real and growing, more and more tickets to events, whether it's to a concert or a sporting event, are available on the secondary market. The secondary market is a truly dynamic market; the prices change by the minute, based on the seller and the buyer and the demand. So, when you look at all that data, you see that demand determines price and value and certain events are much more highly valued than others and therefore, you can charge a different price for them. As the secondary market has grown and more teams have accepted variable ticketing, fans are more familiar and comfortable with the process.
3) How does variable pricing impact the total cost of season tickets?
"That's one of the big changes we looked at, when we put together our theory on variable pricing. We talked about how to use variable pricing and deliver value to our season ticket members. Our staff has developed a number of different programs that enhance the value of their relationship with the team. The Chiefs Kingdom Pass, the personalized jerseys celebrating the 50th season in Kansas City, the ticketless technology, the discounts on merchandise and concessions have all factored in to delivering value to our season ticket members. When we looked at variable pricing, our focus was again on creating a benefit for the season ticket member. What we did, the very first meeting, we said the season ticket member will pay the lowest price for any ticket, no matter the game and the more we got into it and looked at the season-long variance, we said that the most-beneficial way, in our opinion, to enhance the season ticket member's value with the organization is to give them one flat price. So, for the highest-demand game, and you could argue that could be the Monday Night game with the Patriots, it could be the Sunday Night game with Denver, it could be the Seahawks game, it could be the season-opener, the season ticket member will always pay the same price. A single-game buyer or a group buyer will pay the variable price. So, that's the biggest difference between the two groups, the season ticket member, first and foremost, will get the most valuable price."
4) What are the season ticket member benefits and can you talk more about the Chiefs Kingdom Pass program that was launched last year?
"The Chiefs Kingdom Pass is part of our whole strategy behind delivering value to our season ticket members. The Chiefs Kingdom Pass delivers valuable benefits to every season ticket member. We will have a season ticket member actually hand NFL Commissioner Roger Goodell the jersey of our first draft pick this year in New York City, all for being a part of the Chiefs Kingdom and being a season ticket member. We had this last year and we'll have it again this year, what we call our First Look event, where season ticket members will get to come to one of our practices and actually see a practice happen at our facility and then get a chance to spend a few minutes with coach Reid and John Dorsey, after the event. Season ticket members, now, through the Kingdom Pass program, can collect loyalty points, which they can convert for valuable experiences, like pregame sideline passes; we had a season ticket member actually use points last year for a chance to have an autographed jersey from Eric Fisher, the week Eric was drafted. So, it's creating unique experiences that you really can't buy and delivering them to season ticket members."
5) How much are season ticket members saving?
"The savings for a season ticket member vary, based on location, more than anything else. It also varies, based on the demand for a game. The savings, because the season ticket member is paying the same price for every game, will be more for the high-demand games. If you do the math, the average price for an average season ticket member is going to save enough that they mathematically get two games for free. In some cases, based on location and pricing, a season ticket member could get up to four games for free. When I say that, I'm saying that in comparison to if they paid the variable price for a season's worth of tickets, the difference between those two numbers would be the cost of attending two or more games; so, it's significant in our mind."
6) Can season ticket members still sell games on ticket exchange?
"Yes. Nothing has changed with ticket exchange. We think it's the safe, secure way to sell tickets to the market and it's completely contained within the Chiefs and Ticketmaster."
7) Where do the Chiefs rank in relation to the NFL on average ticket price?
"Not all of the teams have rolled out their pricing yet, so you can't do that comparison for 2014. In 2013, the average cost of tickets that we sold, we were about 29th in the league in terms of pricing and I don't expect that to change significantly. For Chiefs fans, in 2014, over 60% of our tickets are flat from last year. So, I would expect that we're going to stay in the bottom third of the league, in terms of average pricing."
8) What other NFL teams or professional sports teams are utilizing variable pricing?
"We don't know the final number yet, but from the announcements we have seen from other teams, we believe that a number of teams are going to take advantage of variable ticketing this year. Of those, some of them are going to do it the way we're doing it, with the season ticket being locked and then the variable being for single games and groups and the others will be full-variable. We looked at that option, but in our belief, again, going back to that first objective, delivering value to the season ticket member, our belief was this delivers the most value to the season ticket member and also creates an opportunity for a truly variable way of pricing tickets."
9) If fans want to know more information, including which tickets are best for them and the list of all per-game ticket prices, what should they do?