1/28/2011
Price Discrimination and World Cup Tic…
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Price Discrimination and World
Cup Ticket Pricing: A Lesson from
Golf
Ma y .
28 2 0 1 0 - 1 :0 4 pm |
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pos ted by PATRICK RISHE
On Thursday it was announced that there was approximately
160,000 seats unsold across the 64 matches at the 2010
World Cup. None of the 64 games are sold out yet, and this
inventory includes 90,000 just released that were not taken
by various sponsors and affiliates.
FIFA Secretary General Jerome Valcke stated that ticket
pricing was likely the culprit of poor sales in Africa outside of
South Africa, as African fans were asked to pay the same price
as European and American fans. As a result, less than 40,000
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1/28/2011
Price Discrimination and World Cup Tic…
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tickets were sold to Africans outside of South Africa.
See our profile »
Valcke and his colleagues at FIFA should have considered 3rd degree
price discrimination and its applications in golf pricing.
Take Torrey Pines Golf Course in LaJolla, CA as a case study, one of the
more famous public golf courses in America and site of the historic US
Open victory by Tiger Woods over Rocco Mediate in 2008.
If you are a resident of San Diego County, these are your greens fees.
Everyone else pays these non-local greens fees. In some cases it’s $150
cheaper to play Torrey Pines if you are a ’local’. Torrey Pines is not
atypical in this practice as many public golf courses in the U.S employ this
strategy.
This is an example of 3rd degree price discrimination. In the example
above, ‘non-locals’ are less price sensitive because as visitors to the region
they only have limited opportunities to play Torrey, and as such, their
‘willingness to pay’ is higher than for a ‘local’ who has more choice and
flexibility for which courses they play in San Diego County. If you charge
‘locals’ the ‘non-local rate’, the course takes the risk of pricing the ‘locals’
out and thus selling fewer greens fees.
That said, FIFA should have charged lower ticket prices for African
natives. Though they did sell their Group 4 tickets (the cheapest category
of tickets…which also likely means the least desirable from a viewing
perspective) to just South African natives, this obviously was not enough
to draw more African consumers based on the data before us. They
should have earmarked a small percentage of tickets from the other
seating categories (there were 3 others categories) as qualifying for a
‘local discount’.
Though the existing FIFA 2010 World Cup ticket surplus is not tragic in
an absolute sense given that they have sold approximately 95.5% of their
2.9 million ticket inventory, this surplus could have been much smaller
or perhaps non-existent if FIFA had employed a more prudent revenue
maximizing ticket policy.
If the goal of these games was to make it ‘Africa’s World Cup’ and to
promote the event in the host continent, FIFA missed the goal on this
direct kick.
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