Tom Ricketts, AB ’88, MBA ’93, knows what it takes to help lead an organization to achieve a big goal. In his case, the goal happened to be arguably the biggest in baseball history: leading the Chicago Cubs to a World Series victory after a 108-year drought.
As the executive chairman of the Cubs and chairman and cofounder of Incapital, Ricketts sat down for a keynote conversation with Anil Kashyap, Edward Eagle Brown Professor of Economics and Finance, at this year’s Management Conference. The two discussed the economics of ticket pricing, the value of gathering and evaluating player data, and a potential change to the consumption of baseball that could disrupt how the sport is watched.
Studying the Economics of Ticket Pricing
As a graduate of Booth, Ricketts firmly believes in data-driven decision-making. In order to determine optimal ticket pricing for every section at Wrigley Field, the Cubs work with the San Diego-based company Natural Selection, which helps the team use computational intelligence algorithms for predictive analytics and forecasting.
“A lot of teams take ticket pricing lightly,” Ricketts said. Not the Cubs. The organization evaluates about three million data points when modeling optimal ticket pricing at Wrigley. Sometimes the data show sections at Wrigley where ticket prices stand as low as 25 percent below market, Ricketts said. The team will raise prices gradually in order to reach fair market value. “We’re fortunate that we have high ticket demand and a lot of information,” he said.
Looking for Edges in Data—and Yoga
Baseball has undergone a revolution since teams began applying statistical analysis to baseball records and evaluating the performance of individual players. The Cubs have a team of statistics specialists who have a profound amount of data at their fingertips. “It’s a massive challenge to take data, find a way to meaningfully look at it, and then boil it down to something that can be given to a coach and player,” Ricketts said.
In addition to the team’s quantitative approach, Ricketts emphasized the importance of developing the team’s human capital and building a healthy culture. The team invests significant resources into the players’ well-being, including studying the biomechanics of players, encouraging players to take yoga, and making mental skills coaches available. “If we leave a guy behind and all he needed was someone to talk to, that’s on us,” he said.
Adapting to Sports Consumption Disruption
Today, about 60 percent of young adults choose online streaming over watching TV, according to the Pew Research Center—a fact not lost on Ricketts. He sees online streaming as a disruption to the current sports consumption model. “It’s a threat to the baseball model because most of the dollars you make are from local programming,” he said. And baseball fans typically root for local teams.
While the advent of streaming poses a short-term challenge, in the long run, Ricketts has confidence in the enduring appeal of the national pastime. “I personally believe that if others get into being the delivery system for sports content—such as Facebook or Amazon—sports will still have incredible value,” Ricketts said. “You’re not going to be able to replace the passion of the fan base, or the fact that it’s the only real thing on television—it’s live.”
Pick Your Career Wave
Ricketts left Management Conference attendees with two pieces of career advice. “The first half of your career is defined by your accomplishments, and the second half is defined by your relationships,” he said. “Once you get to a certain point in your career, if you don’t know people who can help, trust, and have confidence in you, you’ve capped yourself.”
His second piece of advice channeled Hamilton—not the Founding Father, Alexander, but the legendary surfer, Laird. Careers have ups and downs, Ricketts said, and each “wave” represents a shift in one’s career trajectory—an opportunity to grow and experience something new. “The key is picking your wave,” he said.
—By Brent White
May 11, 2018