How Minnesota Used Yield Management to Generate $1 Million in Incremental Revenue in Year 1 of Implementation
May 31, 2016
When asked to help the University of Minnesota’s athletic department understand the complexities of football ticket pricing through our Yield Management process, The Aspire Group started by identifying the Gopher fan.
It was through an in-depth review of Minnesota’s fan base that Aspire and Minnesota were able to develop the persona of a Gopher’s fan. Who is the ticket buyer? Why are they buying season tickets?
This is what we learned about Gopher fans:
- They are devoted to the “U” and the history of Minnesota
- They desired to see the program at the top of the Big Ten
- Their affinity to the Gophers and seat location were primary motivators to purchase tickets
There was tremendous value in conducting fan-focused workshops to uncover the core consumer for Minnesota football and know what fans value. Through this process, the Gophers discovered that TCF Bank Stadium’s “ocean-front” property was undervalued compared to other seats in the venue.
This revealed a potential revenue opportunity in their “ocean-front” property that had never been realized.
The recommendation from Aspire’s Yield Management analysis for the Gophers was to re-scale the stadium to include a new ticketed category to further define the four sections between the 20-yard lines on each side of the venue. Aspire also encouraged Minnesota to increase their 50-yard line seats annually by 15% from 2014 to 2016, and then scale the rest of the house accordingly.
The core task during a Yield Management workshop is to challenge our partner’s assumptions on price,” said Michael Farris, Director of Strategic Consulting & Research for Aspire. “The goal is to provide the price map that is going to get a client not only the greatest yield but the greatest retention rate and the highest satisfaction from fans.
Minnesota’s Yield Management strategy brought in $1 million in incremental revenue for the school in the first year of implementation.
With the anticipated price increase, it was important to help the fan understand why they are buying their season ticket. From the workshops, we knew Minnesota fans who were buying season tickets were buying first for the experience, second for the location, and then, third for the price.
“We communicate the memorable experience to the fan rather than focusing on price,” said T.J. Ill, Director of Sales & Service for Aspire’s Fan Relationship Management Center (FRMC) at the University of Minnesota. “Value resonates. Price can set people off. We know the fan’s emotional connection to Minnesota football is why they enjoy coming out to the games. “
Ill and Aspire had data to support the ‘ask’ for more money, but there were some other core revelations.
- Minnesota ranked in the middle or lower third in ticket price compared to rivals in the Big Ten.
- The Gophers’ prices, compared to the professional sports properties in town (Wild, Timberwolves, Vikings), were a bargain.
- There was a risk of the athletic department having to request money from other academic arms of the university to help pay the cost of attendance for athletes.
“As the face of the state of Minnesota in NCAA athletics, it is not right operating in the red,” Ill said. “We are not going to raise donations for the facility plan fans do not like. We are raising donations for the students. We told fans ‘These students need scholarships. We need to close the gap to be fiscally responsible, and this is our three-year plan to get there’.”
There was something else core to the strategy. Aspire CEO and Founder Bernie Mullin came to Minneapolis and met with media one-on-one to explain the rationale behind the incremental increase in per seat donation over the next three years.
Using Aspire as a third-party was a tactical decision that prevented a hyperactive media from publicly scolding Minnesota over the increases,” said Ill. “Bernie told the media ‘This is what makes sense in the industry and how the additional funds will be utilized,’” Ill said. “It was not the University saying ‘this is what’s going to happen’.
A strategy was in place of what to do if fans pushed back against the price increases. It never came. The Gophers have renewed an average of 86% of season ticket holders for football the past three seasons.
Research, analysis, and transparency kept the Gophers golden with the season-ticket holders.