20141013-NEWS--1-NAT-CCI-CL_--
10/10/2014
12:40 PM
Page 1
$2.00/OCTOBER 13 - 19, 2014
THE DYNAMICS BEHIND AN UNPOPULAR STRATEGY Many fans have resisted, but Indians are sticking to their pricing plan By KEVIN KLEPS kkleps@crain.com
41
Patrick Rishe said his research shows that 24 of the 30 teams in Major League Baseball use dynamic pricing. “It’s pretty clear that’s the way to go in terms of maximizing revenue,” said Rishe, an economics professor at Webster University in St. Louis and founder of Sportsimpacts, a sports consulting firm. The Indians first instituted dynamic pricing — a ticketing strategy in which the cost of a game varies depending on such factors as the opponent, the date, the day of the week and when the seat is purchased — on a limited basis in the second half of the 2012 season. During each of the last two seasons, dynamic pricing has been fully in effect, and it has been as warmly embraced by some Tribe fans as a midweek matchup in April against the Minnesota Twins on a rainy 40-degree night. The Indians are a combined 177-147 the last two seasons, a tenure that includes an unexpected run to the postseason in 2013. In those two years, the team’s attendance has ranked 28th and 29th, respectively, in MLB. In 2014, a campaign that started with the Tribe riding the momentum of a 92-win season the year before, the Indians’ average attendance dropped 6.3%, and their total attendance of 1,437,393 was the worst in baseball. The average crowd per game has plummeted from 22,726 in 2011, the last season with no dynamic pricing, to 18,428 in 2014. There are plenty of well-chronicled components that are contributing to the Indians’ low attendance, but there are teams in similar-sized markets with similarly finicky weather that are drawing 5,000 to 17,000 more fans per game than the Tribe. The Milwaukee Brewers (an average 2014 attendance of 34,535), Cincinnati Reds (30,576), Pittsburgh Pirates (30,155), Minnesota Twins (27,785) and Kansas City Royals (24,154) all pulled in at least 5,700 more fans per home date than the Indians, and only the Pirates and Royals had more victories than the Tribe’s 85. “Listen, we’re certainly not satisfied,” Indians president Mark Shapiro said. “I think we have a solid approach. There’s a variety of reasons. We had three rainouts that happened. No one’s mentioned that. We probably wouldn’t have dropped if we didn’t have those three rainouts.” The Indians had four home games postponed by rain in 2014, and three of the contests resulted in doubleheaders — essentially removing three home dates from the team’s schedule. The three extra dates — originally scheduled for a Monday,
See DYNAMICS, page 33
That’s the message of Case Western University professor who will host global forum By TIMOTHY MAGAW tmagaw@crain.com
Chris Laszlo insists he’s not a tree hugger. Still, the associate professor at Case Western Reserve University’s Weatherhead School of Management is one of the foremost researchers when it comes to corporate sustainability. But for Laszlo, corporate sustainability initiatives — like setting goals to reduce carbon emissions — shouldn’t be rooted in the idea of incrementally doing less harm to the planet. Instead, he said companies should focus on the idea of flourishing — a concept Laszlo and other researchers explore in the new book, “Flourishing: The New Spirit of Business Enterprise.” The ultimate goal, Laszlo said, is that humans and other life will thrive on the earth forever, and businesses can play a major role in making that happen. The idea is that businesses can flourish — take that as meaning “make big bucks” — by focusing their work on some of the biggest problems facing the globe. Consider General Electric’s eco-imagination initiative, which focuses on environmentally friendly products and services. It has brought in more than $100 billion in revenue since launching almost a decade ago. “This has nothing to do with tree hugging or singing Kumbaya,” Laszlo said. “This is about market opportunity. We teach this at Weatherhead, and we tell our students to go out and develop businesses that end up hugely profitable because they’re taking advantage of rising expectations. What they have seen is there is demand in the marketplace for products that solve a customer’s problem and do so with a positive attribute for the community, See PICTURE, page 6
THEY’RE FLOURISHING HERE A few examples of local companies that fit Case Western Reserve University’s definition of a flourishing enterprise, along with a list of speakers at this week’s event. Page 6
7
ALSO INSIDE: NEWSPAPER
74470 83781 0
Tuesday and Wednesday night in April, August and September, respectively — would have padded the Tribe’s total attendance, but probably wouldn’t have provided much of a boost to the club’s average at the gate. For the Tribe, low attendance isn’t a new issue, but it seems to be getting more complex by the season. Shapiro said the Indians have a “three-tiered approach” to addressing the problem. Eliminating dynamic pricing is not part of the equation. “That’s something that’s going to stay,” the Tribe president said. “But I think the value proposition will be a piece of that or offer an
Make big bucks, but be part of big picture
CFO OF THE YEAR Crain’s highlights some of Northeast Ohio’s top fiscal officers ■ Pages 15-30 PLUS: GOLDEN LEDGER AWARD ■ JUDGING PANEL ■ & MORE
Entire contents © 2014 by Crain Communications Inc. Vol. 35, No. 41