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MSG Sports Prez Explains Ticket Pricing Philosophy

Tuesday, 15 Mar 2011 | 1:52 PM ET

Last Friday, Madison Square Garden announced that New York Knicks season ticket prices would be increased by an average of 49 percent.

There was the usual immediate outrage from the public, many of whom are not season ticket holders. And while team executives spend a long time explaining why they raise ticket prices, they rarely explain how they arrive at their number. Intrigued with MSG's announcement, I called MSG Sports president Scott O'Neil to ask him how exactly his team figured out prices for the Knicks.

"It's not like we pull it out of thin air," O'Neil said. "We also don't back into it, so as to say, 'We want to make X, the price is then Y."

O'Neil says the system is sophisticated predicated on a variety of factors to come up with 20 different price points for season tickets next year.

O'Neil is quick to point out that the Knicks sold out season tickets before the season even started. And although he is happy with the new demand created by the Carmelo Anthony trade, he freely admits that his team devised the prices before the Anthony even landed on the team.

Much of the new prices are linked to the $977 million renovation, being called a transformation, of Madison Square Garden. It's not just the building of course, it's also the changing landscape of the fan experience that comes along with it.

Demand is better now than in the last decade, but O'Neil said he believes it isn't so smart to watch every movement of the secondary market.

"There are teams littered on the side of highway who have mapped their ticket prices against secondary prices," O'Neil said. "Our season ticket buyer is different from those that buy on the secondary market.

Is it a barometer for demand? Of course. But it's just one data point."

O'Neil said he feels like the pricing makes sense. When fans ask what the best value seat is, Knicks ticket reps reply the front row followed by the next most expensive, instead of that $30 seat next to a $50 seat.

Those seats that have seen the biggest rise in price are the best seats, which now have an all-inclusive food package.

VIP media table and courtside seats now cost $158,400 and $138,600 per seat per season, or $3,600 and $3,150 per seat per game. The media table seats are going up $600, while the courtside seats are up from $1,900.

O'Neil's confident that unlike other New York teams like the Yankees and the Jets, which had to backtrack on pricing after seats in their new stadium didn't sell as predicted, his prices are right from the onset.

"All things being equal, it's better to be the first team in a new facility to come out with prices than what we are, the fifth," O'Neil.

"But as the fifth we had the advantage of learning a lot from what the other teams did. We learned what you should and shouldn't do when you are relocating fans."

On the high end, there are 900 total seats the include new club access, with the lowest price in the club area being a seat worth $29,700 a season, or $675 per game.

"I think we learned that New York is in a unique position as far as the economy goes," O'Neil said. "We took the hit but we bounced back thanks to the finance, media, entertainment and banking industries that responded."

O'Neil takes offense to those who say that the Knicks don't care who is sitting in their seats, just how they get the money.

"We have people that are passionate sitting at every level whether it is some guy in a suit or a guy who puts out fires for a living,"

O'Neil said. "This is Knicks country and as a result we have the smartest fans at all levels."

Madison Square Garden has 15 ticket reps to handle the season ticket accounts for the Knicks and Rangers, whose tickets went up an average of 23 percent for next season.

O'Neil has already heard from the one guy whose account he doesn't mind having to service himself.

"It was Spike Lee," O'Neil said. "He just wanted to know if, in the transformation, we were moving his seat. I, of course, told him we wouldn't."

Questions? Comments? SportsBiz@cnbc.com

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