Researcher finds NFL’s variable ticket pricing is beneficial in areas with high income diversity

OCTOBER 31, 2023 — Combining his interest in data analytics and economics, Hayri Alper Arslan, assistant professor of economics at the Carlos Alvarez College of Business at UTSA, used this knowledge to study variable ticket pricing in the National Football League (NFL).

The results of his work with his colleagues were published in the study, “Scoring a Touchdown with Variable Pricing: Evidence from a Quasi-Experiment in the NFL Ticket Markets,” in one of the top-rated academic journals, Management Science.

Driven by data, Arslan is an empirical researcher. Whether collecting his own data or studying another researcher’s data, Arslan is always searching for a question that can be answered within a dataset.

“We hope that with the help of this study, policymakers will promote variable pricing for other organizations to address the fairness issue in markets.”

Hayri Alper Arslan.

Arslan’s quest led him to study the NFL. From the founding of the NFL in 1920 until 2013, the professional football league did not allow participating teams to charge different prices across games. Though each franchise had both high- and low-demand games based on consumer data, the pricing remained constant. This caused sales in the secondary market to increase and become more profitable.

“In a way, we want to figure out how people react to all these changes. This helps us come up with better ways to make everyone happy – like finding a fair and efficient way to give out goods. In the end, it makes society better, and it also helps companies make more money. The changes that happened in the NFL are a great opportunity for us to study this,” stated Arslan.

Because of this market imbalance, the NFL created a new system, variable pricing, in which teams would be able to adjust ticket prices based on the popularity and demand of each game; the higher the popularity of the matchup, the higher the price of each ticket.

Unexpectedly, not all NFL franchises chose to shift their pricing strategies, allowing an unintentional experiment to unfold with their sales revenues.

“We were able to empirically compare different sets of teams and evaluate which strategy would prove to be better by evaluating the ticket sales and the changing demand for each game between the two catalysts,” explained Arslan, who joined UTSA in 2020.

After analyzing primary and secondary resale ticket market data from 2012 to 2015 during the NFL’s regular season games, Arslan and his research team came to a conclusion. The implementation of variable pricing in the NFL increased primary market ticket sales by about 1.6% per game.

“You must consider that each team is marketing and selling tickets from different viewpoints such as different opponents of different skills, rivalries and the team’s performance ranking itself. These factors along with the fan’s financial standings and conflicts all play major roles in the market,” stated Arslan.

Though Arslan was able to confirm that variable pricing overall is beneficial to the NFL ticket market, the research also showed where variable pricing proved to be the most effective. Analysis showed that variable pricing was more effective in team hometowns with lower income and higher income diversity. It was also found that teams with a greater variation in pricing across games also attained higher ticket sales. These findings further proved Alper and the team’s criticisms that prior to 2014, the traditional pricing of NFL tickets favored customers with higher incomes.

“Our research showed that it is essential to take demographics into account when making pricing decisions. We hope that with the help of this study, policymakers will promote variable pricing for other organizations to address the fairness issue in markets,” he said.

One of Arslan’s current projects includes working with a Texas company to delegate ticket pricing for their events. They have a special kind of ticket that allows the person holding the ticket to exchange it for a different event by paying an added fee. He is evaluating how these special tickets affect how much money the company makes, how many tickets they sell, and when they will sell. He hopes to help the company determine the best prices to set for their tickets and evaluate how the buyers react to these changes.

“I really like researching a lot of different areas, especially projects that involve empirical research. I find each of these topics interesting because they challenge me to figure out how people and companies behave when they’re buying and selling things, and how people make decisions,” he said.

Arslan received his undergraduate and master’s degrees in his home country of Turkey. He holds a Ph.D. in economics from Vanderbilt University.

— Rebekah Alegria