The Perils of Dynamic Pricing

The Vancouver #WhitecapsFC (and Major League Soccer) are learning the hard way that while there can be a tremendous upside to leaning into dynamic pricing, there are also great risks. Those risks increase with the aggressiveness that a team (or artist/promoter) choose to utilize for any given event.

Prior to the start of 2024, the Whitecaps announced their season schedule. Single match tickets went on sale later in January, before the season kicked off in March. The highlight of the home schedule was a visit by reigning Leagues Cup champions Inter Miami, featuring the one and only Leo Messi, the most famous, and arguably the best player in the world. His image featured prominently in promotions and his impact on the league (after leaving Paris Saint Germain, and Barcelona before that) was expected to be so meaningful that his MLS contract and associated endorsements reset the norm for how superstar athletes are compensated. Messi will not only receive a generous salary, but his contract includes a stake in the Inter Miami club upon retirement and generous profit sharing from endorsement deals with (MLS broadcast rights holder) Apple TV and Adidas. Given his profile, it is no doubt that teams like the Whitecaps (and other teams) looked to capitalize by raising prices for the Inter Miami match.

I have been a passionate global soccer fan for decades and this passion rose to a new level in 2005 when working in London, colleagues took me to a North London Derby, Arsenal vs. Tottenham Hotspur. While in London, I was fortunate to secure a half share in a season ticket and saw some of the world’s greatest footballers perform. Once we moved to Vancouver years later, I became a Whitecaps season ticket holder for almost a decade. One of the benefits of a season ticket is a guaranteed seat. When ticket scarcity is not an issue (as it was with the Whitecaps as the club performance faltered), a season ticket becomes less enticing. I let my season ticket go.?

When the Inter Miami match was announced, I decided to try and find tickets. I had no luck with a pre-sale, general on sale and a local sponsor link. I finally got through via our local football club which has a partnership. I found tickets for about C$250 ($185 USD). These were in the 4th last row of the upper deck and about 10 times the cost of (better seats) for other matches this season. I could justify it, knowing full well that there was a chance Messi might not show. I was not, however, willing to pay 20-30 times the price other fans paid to have a better view of the Messi-less opponent. It was a hedge, and in the end we had a nice day out and there was a great pre-event party and it was nice to see the stadium full.

The reason I hedged was for the chance to see Messi, the greatest footballer of his era, with my son. I recognized that injury could prevent him from appearing. I thought if he were fit, he would appear on the bench and participate in warmup and perhaps even come on as a substitute. What I was not prepared for was that none of Messi and his former Barcelona FC superstar teammates Sergio Busquets (also a World Cup and Champions League winner, aged 35) and Luis Suarez (37) also not appearing, nor even making the trip.

Two days prior to matchday rumors started swirling around that Messi would not travel. The club then confirmed this via social media and an email to ticket holders.

Where the Whitecaps and the MLS failed

The Whitecaps installed a new (C$2.75M) FieldTurf playing surface in 2022. As of 2023 six of the MLS 29 teams play on turf, despite numerous global stars before Messi (36) refusing to play on anything but grass (David Beckham and Thierry Henry among them), as there is a strong belief that grass is a more forgiving surface. There was always a risk Messi would follow suit and avoid playing on the BC Place turf. What irks fans is that the three stars each played 90 minutes in the preceding match (one week prior) and the two that immediately followed (four and seven days following) all in Miami. Traveling between Miami and Vancouver represents the longest travel distance in the MLS. Flying long distances to play multiple matches in one week increases load issues, and complicates the recovery process for all athletes, let alone those in their mid to late 30’s.?

Scheduling the Vancouver match four days prior to another home match in Miami four days earlier was a mistake that greatly increased the likelihood of a no-show and is one that the MLS needs to own.

The Whitecaps featured Messi heavily in promotional material and took advantage of the surging demand to recognize record revenue and ask fans to pay 10-20 times (or higher) normal ticket prices.

The public outcry against the Whitecaps and Major League Soccer may ultimately be voiced in a courtroom as one Whitecaps fan is taking both parties to court.

What they have done in Reaction Mode

Once the Whitecaps learned Messi would not be in Vancouver, they entered reaction mode. They offered fans discounted food and beverages. While a well-intentioned gesture, all this really did was ensure that thousands of frustrated parents endured long lineups and ended up missing significant minutes of the game. Attendance was over 51,000 on the night, more than double the usual figure and clearly the team were not able to ramp up service levels to accommodate for the added bodies looking to cash in on the compensatory offers. A few hours before kickoff, fans also learned that ticket holders would be offered a free ticket to a future match as part of the compensation attempt.

What they should have done

There are a few things MLS and the Whitecaps could have done:

1. If they truly believed there was a reasonable chance Messi and his star teammates would appear, the club should have sold tickets at normal prices, or with a modest 10-15% surcharge, thereby protecting themselves against present gauging accusations and lost fan loyalty. They still would have had a record crowd, great non ticket revenue and would have saved the hassle (expense) of the compensatory steps they ended up taking.
2. The MLS should clarify its stance on artificial turf. If stars can pull out of matches because of playing surfaces, it should make grass mandatory.
3. The MLS should ensure that schedules are more manageable (for instance, it could have scheduled another west coast opponent within the week) to help ensure that all fans have access to its superstars.

Lessons for teams, artists and event promoters

Dynamic pricing has been around for decades and is a great reflection of the supply-demand equilibrium. It has become an accepted practice of the airline industry. Event promoters and artists need to take advantage of revenue growth opportunities, as it is a tricky, evolving area. One tip for them is to try and put reasonable ceilings on the top end to maintain some type of ticket affordability. They will argue that this will inspire resale and line the pockets of scalpers. There are new mechanisms to protect against this and keep tickets in fans’ hands (Pearl Jam has a no transfer policy on its current sold out tour and other artists only distribute tickets within 24-48 hours of the event to discourage and limit resale). The final lesson is transparency. If there are risks to the event, tell fans about it. We’ve been living with these risks for generations (rain or shine!), just call them out in advance (Player appearances not guaranteed, event time subject to change, etc.).?

The Whitecaps PR and ticketing departments were contacted and chose not to comment on this article.

What do you think of dynamic pricing? Feel free to share your thoughts and experiences in the comments.