Case Study:

Using Revenue Management to Set Orlando Magic Ticket Prices

Case review:
- How widely spread Revenue Management into other industry, particular
ticketing system
- Factors as considerations in determining price range of tickets
- How Orlando Magic developed ticketing price system.
- How Orlando Magic uses projected demand to set prices
1. Overview
The case solution first identifies the central issue to the Orlando Magic The Free Agency
Decisiony case study, and the relevant stakeholders affected by this issue.
The tools used in identifying the solution consist of the SWOT Analysis, Porter Five Forces
Analysis, PESTEL Analysis, VRIO analysis, Value Chain Analysis, BCG Matrix analysis,
Ansoff Matrix analysis, and the Marketing Mix analysis.
The solution consists of recommended strategies to overcome this central issue. It is a good
idea to also propose alternative case study solutions, because if the main solution is not found
feasible, then the alternative solutions could be implemented.
Lastly, a good case study solution also includes an implementation plan for the
recommendation strategies. This shows how through a step-by-step procedure as to how the
central issue can be resolved.
The actual analysis would involve a detailed examination of the case, the application of the
various analytical tools, and the development of specific strategies based on the findings.
2. Discussion 1
After researching revenue (yield) management in airlines, describe how the Magic
system differs from that of American or other air carriers.
Revenue management is the practice of optimizing the revenue from a limited capacity by
adjusting the price and availability of the product based on the demand and willingness-to-
pay of the customers.
The Magic system is a dynamic pricing system that adjusts the ticket prices for each game
based on various factors, such as the opponent, the day of the week, the time of the season,
the team’s performance, and the market demand. The Magic system aims to provide more
value and flexibility to the fans, as well as to increase the attendance and revenue for the
team.
The Magic system differs from the revenue management systems of American or other air
carriers in several ways. Some of the main differences are:
1. Demand Factors:
Airlines: Primarily consider factors like seasonality, holidays, weather patterns, and
competitor pricing.
Magic: In addition to the above, incorporate team performance, opponent popularity,
promotional campaigns, and even in-game factors like score and time remaining. Their
system is more dynamic and reactive to real-time events.
2. Seat
Airlines: use multiple fare classes with different prices and booking codes for different seats
on the same flight but then limit the number/type of fares they will make available for a
certain time.
Magic: offer every seat for sale at the same time when a game becomes available.
3. Pricing Flexibility:
Airlines: Prices are often set weeks or even months in advance, with limited adjustments
closer to the flight date.
Magic: Employ dynamic pricing, allowing prices to fluctuate daily, even hourly, based on
real-time demand and ticket availability. This allows them to optimize revenue and fill seats
more efficiently.
4. Data Analysis and Technology:
Airlines: Use sophisticated yield management software that primarily analyzes historical
booking trends and market forecasts.
Magic: Leverage their fan database and engagement software to personalize ticket offers and
predict individual fan behavior. This allows for more targeted and effective pricing strategies.
5. Overall Difference:
Airlines: Aim for predictability and long-term revenue optimization across a large network of
flights.
Magic: Prioritize maximizing revenue for each individual game, with a focus on fan
engagement and personalized offers.
In conclusion, Orlando Magic's revenue management system takes a more dynamic, data-
driven, and fan-centric approach compared to airlines. They prioritize optimizing revenue for
each game while offering personalized experiences to their fans, which distinguishes them
from the broader airline industry.
2. Discussion 2
The Magic used its original pricing systems of several years ago and set the price for a
Terrace V, Zone 103 seat at $68 per game. There were 230 such seats not purchased as part of
season ticket packages and thus available to the public. If the team switched to the 7-price
dynamic system (illustrated in Table 13.11), how would the profit-contribution for the 45-
game season change? (Note that the 45-game season includes 4 preseason games.)
3. Discussion 3
What are some concerns the team needs to consider when using dynamic pricing with
frequent changes in price?
- Dynamic pricing means looking at unsold tickets for every single game, every day, to see if
the current ticket price for a particular seat needs to be lowered (because of slow demand) or
raised (because of higher-than-expected demand).
- Some concerns the team needs to consider when using dynamic pricing with frequent
changes in price are:
1. Weather
2. News and activities of the team
3. Expected demand

2. News and activities of the team

- Pricing can be impacted by something as whether the team coming to play in the arena is on
a winning streak or has just traded for a new superstar player.
- For example, a few years ago, a basketball star was traded in midseason to the Denver
Nuggets; this resulted in an immediate runup in unsold ticket prices for the teams the Nuggets
were facing on the road. Had the Nuggets been visiting the Orlando Magic 2 weeks after the
trade and the Magic not raised prices, they would have been “leaving money on the table”.

3. Expected demand
For example:
 The Magic use listed prices on Stub Hub and other online ticket exchange services to
track market demand.
 Perez and Dorso use every tool available to collect information on demand, including
counting unique page views at the Ticketmaster Website.