Thursday, July 11, 2013
The Michigan Daily - michigandaily.com
.M' could make millions after dynamic pricing
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Weekly Summer Edition MichiganDaily.com
By GREG GARNO
Managing Sports Editor
Because they stand to make $5
million.
Any more questions why the
Michigan athletic department
shouldn't implement dynamicticket
pricing for football tickets?
Last week, Michigan announced
that all single-game football tickets
would be subject to a new dynamic-
ticket pricing policy - which will
determine the price of the ticket
based on the demand for the ticket.
The policy will only affect single-
game tickets and not season tickets
or student tickets.
"Dynamic pricing is a practice
that hasbecome standard across the
sports and entertainment industry
after gaining acceptance through
airlines and hotels," said Hunter
Lochmann, chief marketing officer
for Michigan Athletics, in a state-
ment to the athletic department.
But just how much of a difference
will the policy have on ticket prices?
Endzone tickets for games
against Notre Dame or Ohio State
are already projected to cost more
than $100 from a standard $65 tick-
et and could go for more. The esti-
mated total revenue for the athletic
department is $5 million, according
to Jesse Lawrence, a contributor to
Forbes and founder of TiqIQ - a
live-event ticket-pricing aggrega-
tor and search engine that provides
flexible buying and selling options.
Nearly 80 percent of ticket
sales go to students and alumni,
according to Lawrence, leaving
21,700 available seats, or 20 percent.
Michigan estimates that intial
dynamic price of tickets could range
from no increase - like Sept. 14
against Akron - or a $130 increase
- like Sept. 7 against Notre Dame.
"They (the consumers) are going
to pay more anyways," Lawrence
said. "It's just a auestion of who's
making the money? Is it the school
or is it the broker?"
The athletic department is set to
release tickets on July 31to the pub-
lie, at which point it could decide to
withhold a percentage of those tick-
ets for a later time. Lawrence said he
estimates that the athletic depart-
ment could make up to another mil-
lion dollars should they hold on to
the tickets while the price goes up.
"If they wanted to be as greedy as
possible, they probably would have
jacked it up higher than that," Law-
rence said. "The market would have
dictated that the demand would be
enough to absorb the prices."
Both Lochmann and the athletic
departmentdid notestimateon new
revenue, since the number of tickets
available is unknown. However,
Lochmann said in an interview
with Crain's Detroit Business that
he expects less than 10,000 single-
game tickets to be available.
"We'd be happy if we netted
over $1 million," Lochmann said to
Crain's.
Dynamic pricing was used origi-
nally by entertainment and hotel
industries before it expanded into
sports, where teams from the NFL
to Major League Soccer make use of
the computer program's input.
Michigan will use QCue, a
computer program that "determines
what drives sales using variables
such as start time, opponents, etc.
to set more accurate prices from the
onset and maximize demand across
the house."
Professional sports teams like
the MLB's New York Mets or the
NBA's Atlanta Hawks, among many,
use QCue to capture opportunities
to raise prices.
Ann Arbor, MI
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The University of California, one
of the first collegiate programs to
implement dynamic pricing, also
uses QCue to suggest ticket prices.
The University of South Florida and
Georgetown Universityuse dynam-
ic ticket pricing as well.
On Monday, Purdue University
announced that it too would use
dynamic pricing for football season.
"One of our guiding principles is
to drive change and innovate and in
this case, it's a win-win," Lochmann
said to The Daily. "Creating extra
value for our season ticket holders
and also creating mre revenue
to support our 900-plus student-
athletes across 31 teams."
The use of dynamic pricing is
expected to help athletic depart-
ments, much like professional
teams, recuperate profits lost to sec-
ondary ticket markets like StubHub
or Ticketmaster. According to the
athletic department, an aggregate
of secondary market average ticket
prices for the same endzone seats
against Notre Dame cost as much as
$133 more as of June 26.
Michigan is the second most
valuable football program accord-
ing to Forbes, worth a $120 million.
Only Texas, worth $133 million, is
valued to be more. Lawrence said
he believes the additional revenue
would be enough to make the Wol-
verines the most valuable program.
"There's so much money to be
made in the whole college football
ecosystem that to think that they
would not maximize revenue is
a bit naive frankly," Lawrence
said. "It is business, even though
it's a collegiate program. They're
obviously dedicated to making as
much profit as possible."
inside
N EWS
Online Expansion
MOOCs seek to broaden
higher education
possibilities.
>> SEE PAGE 2
N EWS
UM Wireless
MWireless will completely
overtake its predecessor
this coming August.
>> SEE PAGE 7
O PI NION
From the Daily:
Higher tipping fee for
disposing trash in landfills
would help the state.
>> SEE PAGE4
ARTS
Hova's Crown
Jay Z's latest LP aspires
to royal status and lands
slightly short.
>> SEE PAGE 11
SPOR T S
Football Tickets
Implementation of
dynamic pricing could
bring in millions.
>> SEE PAGE 12
IND EX
mihgad i2y com asanaiy
NEWS.......................... 2
OPINION ...............................4
CLASSIFIEDS ................... 6
CROSSWORD........................6
ARTS......................................9
SPORTS.................................12
An Ann Arbor construction worker continues development on former Borders Bookstore building Wednesday. The space will
house five restaurants andtwo offices.
Two caf~s to open
in Michigan Union
BUILDING BORDERS
Faculty
prep~ares
for Pro p.
2ifallI
Supreme Court
to rule on cases
involving 'U'
By PETER SHAHIN
Daily Staff Reporter
This fall, the U.S. Supreme
Court will hear a new case
regarding affirmative action
in Michigan, Schuette v.
Coalition to Defend Affirmative
Action. The case, to which the
University is a party, has the
potential to have sweeping
effects for both the standing
of popular referendum and
affirmative action policies
across the nation.
The Michigan Civil Rights
Initiative, a state constitution-
al amendment that outlawed
the use of race, gender, and a
number of other factors in col-
lege admissions, was adopted
with 58 percent of voters for
the measure. However, the
Michigan Civil Rights Corm-
mision, then chaired by now-
re gent Mark Bernstein (D -Ann
Arbor), alleged a campaign of
disinformation and deception
by proponents of the MCRI. In
Augiut 2006, a District Court
judg - ruled that supporters
of th MCRI had "engaged in
systematic voter fraud by tell-
ing voicr, that were signing a
petition ,upporting affirma-
tive acti:!,,' but refused to
remove it from the ballot since
the MCRI's supporters had not
technically violated the Voting
Rights Act of 1965.
After the passage of the ini-
tiative, a group of University
students and faculty filed a suit
See FACULTY, Page 8
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Starbucks and Au
Bon Pain will join
other Union eateries
By AMRUTHA SIVAKUMAR
Daily News Editor
On Monday morning, Univc'r-
sity Unions announced that cafs
Starbucks and Au Bon Pain would
replace Amer's Mediterranean Deli
and the University Club, respective-
ly, at the Michigan Union.
In late April, University Unions
announced the final list of tenants
that would occupy the Michigan
Union's ground floor court, Michi-
gan Union Grill. While Wendy's,
Subway and Panda Express would
continue to serve the Union - with
Wendy's and Subway expanding -
Pizza Hut, Mrs. Fields, Freshens
and Auntie Anne's faced expiring
leases. Ahmo's Gyro and Deli would
also be moving into the MUG.
Changes hit above ground as well.
As the winter semester wound down
to a close, so did Amer's tenancy
in the first floor of the Michigan
Union. The announcement also
marked the close of the University
Club, a sit-down restaurant located
also on the first floor.
The University Club began
operation in 1937, providing
students with healthy alternatives
to fast food lunch options. In a
University press release, Susan Pile,
director of the Michigan Union,
cited a diminishing customer base
and faltering revenues as reasons
for the Club's closing.
Pile said she believed that the
Club no longer met "the needs
of today's students," because
sit-down lunches did not appeal
to the contemporary student
lifestyle. Moreover, she noted that
the University Club model did not
"allow the spaceto be more used
by students," as the Club space was
primarily limited to lunch hours
and other selective events.
"We really feel thatthis is actually
going to allow for a much more
interactive and engaging kind of
space through all hours of the day
than we've had in the past," Pile said.
She added that the cafe would
maintain a performance area so
programming and events - such as
weekly poetry slams and acoustic
performances - could continue to
take place.
The Michigan Union Board
of Representatives, the selection
committee for the prospective
Union tenants, was impressed
by Au Bon Pain's success around
other college campuses and their
provision of detailed nutritional
charts. The Boston chain is
known for its fast-service soups,
sandwiches and breakfast entrees
and its ready-made deli selections.
See UNION, Page 6