Katie Wilson 1

Executive Summary

The Nor’easters are a new minor league baseball team whose first season will begin in about

a year and a half. Larry Buckingham has been tasked with creating a pricing strategy for tickets, as

well as taking care of the other marketing needs of the team. He has many factors he needs to

consider as he creates his pricing strategy, including the following:

• Springfield has a minor league hockey team that is threatening to leave because they

cannot sale enough season tickets.

• Springfield residents have a median income of $31,046, which means they do not

necessarily have a lot of extra money to spend. However, Springfield is starting to

experience some growth with many entrepreneurs, financial organizations, and health

organizations moving to the area.

• From his research, Larry knows more than half of the team’s revenue may have to

come from ads and concession sales. However, to have strong concession sales, he

must have solid ticket sales.

• His manager, Jimmy Mercante, wants to break even in the team’s first year.

This analysis will cover the issues Larry faces as he creates his pricing strategy; the important

results he needs to consider from the survey he sent; what pricing strategy he should implement for

the Nor’easters and why; and what he can do to break even in the first year. This analysis will also

recommend that Larry implement a fair pricing strategy that is not too high it turns people away

from events, but is not too low that the Nor’easters can’t make a profit. It will recommend that

Larry markets to families because this is the market that is most likely to come to games and buy

items at the concession stands. Finally, it will recommend that Larry gets businesses around the area

to purchase several ads because currently there is a small chance that he will have the strong ticket

sales he needs to break even in the first year.

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Analysis of the Nor’easters and Their Pricing Strategy

Larry Buckingham has many challenges facing him as he tries to create a pricing strategy for

the Springfield Nor’easters. To better figure out his pricing strategy, he utilized secondary research

from the League Sports Association; however, this research applied to both major and minor league

teams, so he decided to do his own primary research to better understand the city where the

Nor’easters will play. Larry knew he had to collect the right data because a minor league hockey

team was also threatening to leave Springfield if they did not sale more tickets. Larry knew he

needed this primary survey information to better analyze who would be willing to come to the

games and how much they would be willing to pay. To develop the survey, he talked to his

equivalents at other minor league teams. He focused on how these teams generated revenue so he

would better know what to ask on his survey. Once he had developed the survey, he sent it through

a pretest to see how he could better ask the questions to improve responses.

He bought mailing lists from the Springfield census and from four sports-related

organizations in Springfield. He got a random sample of the names in the database for each. He sent

out 10,000 surveys and received 625 responses. Overall, Larry felt the “respondent characteristics

were fairly representative of the Springfield market” (page 318 1 ). The most significant findings from

the survey were as follows:

• Of the people who will attend a game, 21% (the highest percentage) are willing to

attend one game, and 11% (the next highest percentage) would consider a 5-game

package.

• When it comes to paying for one game, 31% are willing to pay $10, 27% are willing

to pay $12, and 22% are willing to pay $14. This is important because the highest

1
All page references come from “The Springfield Nor’easters: Maximizing Revenues in the Minor Leagues” case study
in “Duke, McGraw-Hill Customized Text with cases.”
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percentage of respondents is willing to pay $10 or more, which means that the

Nor’easters could comfortably charge more for one game.

• Those who would purchase a 5-game ticket package are willing to pay between $10

and $12.

• 48% are willing to pay 10% more for grandstand seats over bleacher seats.

• Finally, the majority of respondents (66%) have children living with them.

When establishing a pricing policy, there are several important factors to consider. The first

is that there is currently another minor league team that is considering leaving Springfield because

they are not selling enough season tickets; in fact, they need to sell 300 or more season tickets for

the team to remain viable in Springfield. This could impact the Nor’easters as well, especially since in

the survey, respondents were more willing to buy single or 5-game tickets over full-season tickets.

While they want to be aggressive with their pricing to make a profit, the Nor’easters also need to

keep in mind that currently Springfield does not have the richest population and many have to be

cautious of the money they spend. However, 60% of the population has families and many of these

families are active in little leagues; this group of people will be more likely to attend a game.

Springfield is also showing signs of growth with several small businesses, entrepreneurs, and health

care and financial industries moving into the area, which could be a good sign for the Nor’easters’

advertising sales.

When creating the pricing strategy, there are two quotes to keep in mind:

“Most of the marketing directors emphasized the need to price seats on par with the

competition—movies, bowling, other sporting events.” (page 316)

“Our prices should be high enough so that anyone who can and will pay a lot to

attend will do so. At the same time, anyone who really wants to come shouldn’t be

put off by what they perceive as too-high prices.” (page 318)

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Based off the above information, Larry should implement the following ticket price options. Larry

should offer both bleacher and grandstand seating options for single and 5-game tickets. He should

do this because 48% of respondents said they were willing to pay 10% more for grandstand over

bleacher seating. For 5-game tickets, the higher percentage of people were willing to pay between

$10-$12; since the Nor’easters still need to make a profit, Larry can make 5-game tickets $12 for

grandstand and $10 for bleachers. Larry should offer 5-game tickets for bleacher seats because they

aren’t as comfortable as grandstand; however, they could offer an option for those who want to save

money but want to attend more than one game. He can make 20-game tickets $10 for grandstand

since the majority was willing to pay between $8-$10. He can make the full-season tickets $6 per

game for grandstand seats. He should charge $6 per game for season tickets because most people

were willing to pay between $4-$8. Based on the lower level of interest in season tickets, it is better

to go significantly lower than the 20-game tickets to draw more people to these tickets, but not go

too low that they can’t be profitable. Finally, for single game tickets, he should charge $14 for

grandstand and $12 for bleacher seats. Most respondents were willing to pay at or above $10, but

since Larry wants to encourage season or multi-game ticket sales, he should charge the maximum

people are willing to pay for a single game ticket. (See the Appendix for the Pricing Chart.)

Larry also received good advice from his counterparts who suggested catering to families

and little leagues. When looking at prices for other minor league teams, it appeared that offering

group rates (that discounted by $2 or more) was an important strategy for minor league teams. To

account for these groups, he should create a birthday group, a little league group, and a regular

group set of tickets. He should charge $18 per person for birthday and little league groups because

food will be provided so parents won’t have to leave to get food for a bunch of kids (though they

can still buy other concession items). These groups could use either the Birthday Party Zone or the

Family Section. For the regular group tickets, he should offer a $2 discount from the $14 tickets.
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This is on par with the 5-game tickets and encourages people to bring 10 or more people to the

game. They would also have access to grandstand seats.

Based on the expenses and revenues calculations provided in the Appendix, Larry can

assume there is a slim possibility that the Nor’easters will break even in the first year. If they sold

only the highest priced tickets and sold out every game, they could break even from ticket sales

alone; however, based on the troubles the minor league hockey team is having, it is very unlikely

they will be able to sellout every game. If they sold 75% of seats at full price every game, they would

still break even; however, if they sell less than 75% of seats every game, they will have to rely heavily

on ad sales and concession sales to break even their first year. To break even, the Nor’easters will

have to use clever and aggressive marketing to get people to the games. This includes pushing

family-friendly events and their group rates. They need to make it the place for families and groups

to go any night of the week. Larry should focus on families because they will probably be the

majority of who comes to the games and the Nor’easters need to utilize this market.

Larry could also enhance the team’s relationships with the local businesses coming into

town. The case mentions that several entrepreneurs, healthcare businesses, and financial businesses

have started coming to the area. If he can get them to buy more ads for an aggressive cost, this

could substantially help the revenues they bring in. He could also consider getting these businesses

to purchase group tickets for their companies. From the case, it didn’t sound like these were

necessarily big businesses, so group ticket rates could be very viable for these businesses.

Considering the troubles of the city, Larry should focus on enhancing ad and concession

sales as much as possible since tickets sales may not be very strong. He should also create events

that get families to the games since they have the best potential for attending games and buying

concession items while they’re there. If he can get this market and get them to buy concession items

while they’re there, he can increase the team’s chances of breaking even.
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Appendix: Pricing Chart

Grandstand (all prices represent costs per game)

Cost per Ticket

Type of $6 $8 $10 $12 $14

Ticket
Single X
Ticket
5-game X
20-game X
half-season
38-game X
season

Bleachers (all prices represent costs per game)

Cost per Ticket

Type of Ticket $10 $12

Single Ticket X
5-game X

Extra Promotions
Promotions Cost Notes
Birthday $18/person Includes food, drinks, and a
Party Zone special visit from the team
mascot and two players
Little $18/person Includes food, autographed
League souvenirs from the team, a
Teams visit from the mascot, and an
introduction of the team on
the field
Group $12/person Valid for groups of 10 or
Tickets more
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Appendix: Expenses and Potential Revenues

Expenses
Fixed Expenses (excludes costs $1,051,879
covered by the major league)
Mailings $3,800
Cost of lists (estimated) $680
Total $1,056,359

Revenues if the Nor'easters sold out

every game
Sold out bleachers at $24,000
full price (per game)
Sold out grandstand $22,400
at full price (per
game)
Total (per game) $46,400
Total for the full $1,763,200
season
To break even 0

If Nor'easters sold 75% of seats

Sold 1,500 bleacher $18,000

seats per game (full
price)

Sold 1,200 $21,000

grandstand seats per
game (full price)
Total per game $39,000
Total for season $1,482,000

To break even 0
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If Nor'easters sold 50% of seats

Sold 1,000 bleacher $12,000

seats per game (full
price)

Sold 800 grandstand $11,200

seats per game (full
price)

Total per game $23,200

Total for the season $881,600

To break even $174,759

(would need the
following from
concessions and
ads)

If they sold 21% of seats (based on

survey data)

Sold 420 bleacher $5,040

seats per game (full
price)
Sold 336 grandstand $4,704
seats per game (full
price)
Total per game $9,744
Total for full season $370,272

To break even $686,087

(would need the
following from
concessions and
ads)