"Revenue Management of Consumer Options for Sporting Events"
Working Paper Series: No. 2011–1,
December
2010
Publication type: Working paper
Research Archive Topic: Operations, Risk Management
Abstract
Some event managers and ticket resellers offer call options under which a customer can pay a small amount now for the guaranteed option to attend a future sporting event by paying an additional amount later. We consider the case of tournament options in which the identity of the two teams playing in a tournament final such as the Super Bowl or the World Cup final are unknown at the time that options are sold. We develop an approach by which an event manager can determine the revenue maximizing prices and amounts of advance tickets and options to sell for a tournament final. We show that, under certain conditions, offering options will increase expected revenue for the event and can increase social welfare. We present a numerical application of our approach to the 2012 Super Bowl.
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