Effectively Wild: A FanGraphs Baseball Podcast - Effectively Wild Episode 907: Root for the Home Team (To Lose By 5 or More Runs)

Episode Date: June 17, 2016

Ben and Sam talk to Warren Friss, the founder of GameHedge, a new ticket vendor that promises to issue 50 percent refunds when the home team loses by five or more runs.

And all the morons And all the stooges with their puns They're the ones who make the rules It's not a game, it's just a route There's desperation There's desperation in the air It leaves a stain on all your clothes And no detergent gets it out

And we're all just slipping through the cracks Good morning and welcome to episode 907 of Effectively Wild, the daily podcast from Baseball Prospectus, presented by our Patreon supporters and the Play Index at BaseballReference.com. I'm Ben Lindberg of FiveThirtyEight, joined by Sam Miller of Baseball Prospectus. Hello, Sam. Hey, howdy. Those of you who've been with us for a while might remember an email from a listener named Mark Miller that we answered in episode 208, and Mark wrote, Wouldn't it be great if we didn't have to pay for games that our team loses?

It's hard enough to sit through a game in which our team is two hit and nobody reaches third, but to pay for it, three exclamation points, that's just wrong. Mark suggested that teams could double their ticket prices and offer refunds if they lost, and Sam and I came up with a number of objections to that idea, but we got so many listener responses Maybe more than we've ever gotten on any Other one topic that we did a follow-up episode Two days later to talk about

Alternatives such as free tickets to Future games or credit at the team store Or offers for season ticket holders Only and so if Sam And I had any business sense we would have worked Out the kinks and figured out how to turn this Into a business instead we Did have worked out the kinks and figured out how to turn this into a business. Instead, we did 700 more episodes of a baseball podcast. However, a New Yorker named Warren Friss had the same idea and did something about it,

founding a company called Game Hedge that is officially launching today and promising to give fans who purchase tickets through their website a 50% refund if the home team loses by five or more runs. So Warren is joining us now to tell us how this works. Warren, welcome to Effectively Wild. Thank you. Thanks for having me. So was there a specific game that you sat through miserably and decided that this would be a good business, or was it just a cumulative effect? Well, it really was a cumulative effect, although there were some specific instances that I

can certainly think of that made the most impact. Yeah, obviously, I'm a huge sports fan and I've been to many, many games. I used to work at the Topps Company, a baseball card company, so I went to a lot of events, lots of games. And a lot of times, you see a great game, have a fantastic experience. It's a beautiful night. Your team wins. There were many games where I just walked out and I said, you know what? That was awful. The team just didn't show up. Why am I paying and not getting anything back when I'm walking out? There's one Mets-Yankee

game that I went to a couple of years ago. The Mets lost badly. I'm a big Mets fan. That was disappointing. There were definitely some others. I started thinking, as some of your listeners and you guys did too, if you went to a five-star hotel or restaurant and something went wrong, they would do something for you. They would give you a free night at the hotel or a free dessert or money off a check.

At a baseball game or football game, you walk out after having a bad experience and they say, thanks for coming, hope to see you tomorrow. It just didn't feel right so we decided to do something about it. I wish you'd had this idea when you still worked at Topps, because I can't tell you how many times I bought a pack of cards as a kid. And the best card I got was Pat Sheridan, and I felt like I deserved 50% off on that too. Wait, let me write that down. So I guess it's fair to say that the Mets inspired this idea,

which is appropriate for Mets fans who suffered through the Mets being bad for many years. Yeah, I would definitely say the Mets played a role for sure. Okay, so explain how it works exactly. What's the process here for consumers? Sure. So you buy tickets on gamehedge.com and we have tickets for every major league baseball team available. We're going to be doing football and basketball and hockey down the road, but right now it's all baseball. We have every team. You come to our site, GameHedge.com.

You purchase tickets just like you would on any other ticket marketplace. We have tons of tickets available. Our prices are consistent with all the other marketplaces. But when you get our tickets, they automatically come with the good game guarantee. So the way it works is you buy your tickets from us, go to the game. If your home team, it's got to be the

home team, loses by five runs or more, we send you an email that says, you know, sorry, it didn't work out the way you wanted it to, but click on this link. You come back to our site and go to your account, and we automatically refund 50% of the ticket price. It goes right back on your credit card. So it's not like you're getting tickets, half-priced tickets, right?

No, you're actually getting cash right back on your credit card. So it's a very simple process. You're basically the third seller of these tickets. So the team is not giving the refund. The person who originally bought the tickets from the team is not giving the refund. You, the broker, essentially, are giving the refund, right? Correct. Correct. Okay. So the seller doesn't lose anything. The seller is not involved in the refund at all. We're adding the guarantee to the tickets that we're selling. That's correct. So do you then have to buy tickets the way that any other person would buy tickets on the

secondary market? Are you partnering with specific ticket vendors or are you going through many sources to acquire these tickets? Yeah, we've partnered with a ticket exchange where we have access to all their tickets and they get tickets from various brokers. So basically, when you come to our site, we're showing you an inventory of tickets that are listed from brokers and are available on this other site, this back-end exchange,

and we're making those tickets available. So as soon as you buy the ticket from us, we're instantaneously buying it from this exchange and giving it to you. It's pretty much the way all the other ticket marketplaces operate. So when we talked about this from a team perspective, one of the problems, obviously, is that teams need their money. They need to make a certain amount of money to have a sustainable business. So if you were to give refunds on losses, then you'd have to generate that revenue somewhere else.

And so presumably this would work if a fan was willing to not only pay for the wins, but pay more for the wins, which might make perfect sense. If you consider that we're pricing in the possibility of disappointment into our ticket purchase, a win might actually be worth double what we pay if we consider a loss or a bad loss, especially to be worthless. So, you know, we, you know, we're all relatively logical people on this call. You've got to make up the revenue somewhere. Like, how are you making up the revenue? How are you still having a business if you're giving refunds on these? Right, right. That's a great question. So we've done a lot of statistical analysis,

and we know what the odds are of a team losing by five runs or more. So we basically know what the cost of doing this is. So that's on the one side. We know what the cost of doing this is. So that's on the one side. We know what the cost is. But our view is that when you're paying $60, $70, $80 for a ticket or spending $300 to bring your family to the game, you're paying for the good game already. I mean, you're not paying – you shouldn't have to pay more

if you actually have a good experience because you're paying a lot of money and investing a lot of time and energy and going to the game. So you shouldn't pay more if it's a great game. You're paying for a good game. And we view it as this is a guarantee. It's no different than buying a car and the car dealer could say, you know what, buy this car and we're not guaranteeing it. Hope it works out.

And they're providing a guarantee because they need to and it's the right thing to do and that's factored into the cost of the car. Now, on our side in terms of the profit margin, there's enough profit margin in selling tickets, whether it's the team selling the tickets or people selling the tickets on StubHub or us, there's enough profit margin to give something back to the fans

when the game doesn't turn out the way it should. So yes, it's costing us something to do that, but we can still clearly easily make money doing this, even though we're giving something back to the fans when they don't get the experience that they hope to get. So we looked up the percentage of games that would meet these criteria, the home team losing by five or more runs. And so, as I'm sure you know, it's fluctuated since 2000. We went season by season, and it's gone from 11.6% of games at the low end

to 14.5% of games at the high end. And this year it's actually, unfortunately for you, I suppose, bounced back up a bit to uh 13.9 percent which is the highest it's been since 2008 maybe because scoring is up i don't know but between one out of eight and one out of seven games generally satisfies these conditions so how much math did you have to do to determine that this was where you wanted to place the cutoff well we yeah yeah, we did quite a bit of math. Obviously, we did that math on the odds of five runs or more. We did the math on four runs or more, three runs or more, six.

We did all the different analysis on different options. And one of the reasons, the main reason we picked five runs or more was we did another statistical analysis of how often does a team come back from three runs behind or four runs behind or five runs behind. And from a fan's perspective, we felt that at five runs, it's pretty unlikely at that point based on history that a team's coming back. And that's the point at which the game's in essence over. Not always. I mean, we all

know we've seen some great things and some of it depends on whether you're five runs down in the second inning or five runs down in the eighth inning, certainly. But a lot of the decision to go with five runs or more was based upon both the odds and what it would cost us, but also the fan experience. And

we felt that at that point, five runs are down. That's really the point at which the game, for the most part, is over. Even a grand slam doesn't bring you back at that point. So yeah, we've done a lot of statistics on looking at a lot of different ways. And we came up with feeling that five runs are more of the right thing for the fans and something that we can deal with financially and still make a good profit. It's such an interesting sort of psychological question that we tried to sort of figure out the first time we talked about this because the whole point of this is to have a better fan experience.

You want the fan who has just seen a loser of a game to go home not feeling like they got doubly suckered. But on the other hand, you don't want to create this weird incentive where the fan is now rooting against his team. So especially if it's a one-run game and the fan is ambivalent about how they're rooting, that would seem to create a worse fan experience. want to be you know fully invested in one outcome and to have a like for once in your life to have a sort of certain clarity in what you want to happen and what it so once you get down to five runs though then maybe it's not as big a deal because as you say the fan intuits that you know this game's basically done uh there's probably it would take you know something close to a miracle to come back.

So it's maybe not quite so morally ambiguous in his head. Did that, did you think at all about, well, I guess I should say, did you think at all about what the fan experience is like having this, these two competing incentives going on? And was that a factor at all in where you set the, you set the refund run rate? Absolutely. I mean, that was a huge factor. And it's interesting also because you ask 10 different fans and everybody has a different view.

I mean, there are fans that go to a game that aren't huge fans of the team and they don't really care who wins. So they might as well root for the home team to lose by five runs or more. But this is aimed at the real fan, as you're saying. It is interesting. I actually went to Mets-Pirates game a few nights ago, and I think this is a good example. By the way, in considering the fan emotion

and the process of coming up with this, I would watch games, Met games, and sort of picture, okay, if I'm at the game and it's 3-1, how am I feeling now? What do I want to happen? But I was at the game the other night, the Mets-Pirates, and the Mets lost 4-0. I think they got three hits. And it was a pretty

boring game, I've got to say. It was 2-0 in the sixth inning. And at that point, I'm clearly rooting for the Mets to come back. You know, I'd rather see them win and have a great experience and get half my money back. But then it was 4-0 in the ninth inning. And, you know, at that point, I'm sort of in the middle because the Mets could come back. But you know what?

They're probably not coming back. So, you know, I would have been fine with the Pirates scoring another run in the top of the ninth and, you know, making it 5-0 instead of 4-0, and I would have been happy. But earlier in the game when it was 2-0, or even if it was 4-0 in the seventh, I probably would have still been rooting for the Mets to come back because personally for me, that would be better. But everybody's different. You know, other people might have said, you know what, you know, it's 2-0, I don't really care, you know, Mets win. So it's different. Other people might have said, you know what, it's 2-0, I don't really care, let's win. So it's hard to gauge because everybody has a different experience. But for the real fan, I think when you get the four runs down late in the

game, people would probably rather have their money back because they don't think the team is coming back. But if it's 4-0 early in the game, I think they're still going to be rooting for their team's coming back. But if it's 4-0 early in the game, I think they're still going to be, you know, rooting for their team to come back. Right, and maybe it depends on where you are in the standings, what your outlook for the season is, if the game actually matters and means something. Maybe you give up and start rooting for the GameHedge refund

a little later than you do if you are a Braves fan, and it doesn't really matter anyway, which leads me to ask, are you worried about people using the site selectively, essentially? You know, if they're going to a game at Wrigley and Jake Arrieta's starting, well, I won't get my tickets through GameHedge today. But if I'm going to a game at Turner Field and Aaron Blair is starting, oh, I'm definitely going to GameHedge because now the odds are not, you know, 12% or 13%. They're, I don't know what, 20% or 30%. So would that be a problem for you?

Can I interrupt? I want to pop on this too, because I have a sort of sub question of that is I was just wondering whether you're at all worried about, or whether you expect once this gets bigger for it to actually move the price such that a Braves ticket ends up costing more and a Cubs ticket ends up costing less because the user is pricing in the likelihood of a refund. That's interesting. That's possible. You really don't know how the pricing is going to work. But in terms of people sort of gaming the system by buying more tickets where they think

their team is more likely to lose. We have figured that into our analysis, so we expect that to happen to a small degree. But the thing with GameHedge is our prices are the same as everywhere else. So there really isn't a good reason not to buy tickets from GameHedge. Even if your team is favored and Arietta don't, and Arrieta's pitching, there's still always a chance he's going to lose. And if you're not paying anything more for our tickets, there's very little reason not to buy them on GameHedge,

whether the odds are with you or against you, because it does happen. I mean, Arrieta does lose every once in a while. So we're not really worried about that, because we think fans will just buy tickets from Game Hedge, you know, in any event because, again, we're priced the same and all you're getting is a potential benefit. There's no negative, you know, no extra price or anything

that you're paying from Game Hedge. But, you know, it will be interesting to see how the statistics pan out. And, you know, I think we'll learn a lot. I think, you know, the teams could possibly learn a lot, you know, I think we'll learn a lot. I think, you know, the teams could possibly learn a lot, you know, from what we see in terms of ticket prices and, you know, which games people are buying, you know, more tickets for and things like that. So I think we're going to have a lot of interesting data that we'll be able to look at as well. Yeah, that's interesting because,

of course, a lot of teams have gone to variable pricing depending on the matchup and how appealing they think it will be. So maybe this could help inform that. smaller profit margin for the time being and hoping that this idea will be so appealing that you will get a lot of business and maybe you won't make as much per sale as some other sites would, but you'll get a bigger user base, you'll last longer, you'll make it up in the long term? Yeah, absolutely. You know, we think we are willing to accept this, you know, a smaller profit margin to, you know, put this product out there. We feel like that is the best product for the fan. Based on that, we're going to have a tremendous amount of sales and a very loyal fan base that will keep coming back to buy tickets from GameHedge.

We're willing to take a small profit to build that business. Part of our business model also is more longer term, just to have a great fan experience in other ways. We plan to have information on each stadium in terms of where's the best place to sit if you have kids or where are the best places to eat. Where should I park if I'm sitting in section 107? So our long-term goal is really to build a great fan experience

and by doing that, we do think we're going to have a great base of loyal fans buying more tickets. So that's our long-term vision and strategy. And you are planning to expand this to the other major sports when their seasons come back around. Have you determined all of the victory or loss margins yet, or are you still working on that? We're still working on it, but it's going to be for football, it's going to be somewhere

around 14 or 15 points, probably similar in basketball. And we might offer something a little different in hockey, although we're still working on it, because obviously the scoring is much different and much lower scoring. We may offer some type of goose egg guarantee, where if your team gets shut out at home, you get half your money back or maybe it's 2-0 or 3-0 or more. We're still working on hockey. But the other sports are going to be roughly a 14, 15 point is going to be the differential. Those seem more challenging because all of those sports really have kind of endgame,

the way the endgame plays out. A close game can become a scoreboard blowout, even though it was a close game, just because the last play or the way that the team changes their strategy in a desperation mode might lead to the score getting run up. But you might have a lot of situations where, you know, it was a really great game until 40 seconds left, and then, you know, somebody broke free and got a touchdown, and all of a sudden a one-possession game becomes a two-possession game.

Anyway, that's your problem, not mine. I was curious what rate of refund requests you are getting in these actual blowout games. How many people are availing themselves of this option? And do you think that there are any fans that would not avail themselves of this option? Or do you have any reason to think that there's anything interesting about the fans that don't come back to get their refunds? Or are they just forgetting? Yeah, so I mean, it's pretty new, obviously. So we don't have a tremendous deal, a great

deal of experience on the numbers. But so far, we've seen about 80% of the people that could claim a refund come back for the refund, but they have 90 days to do it. So the others, you know, still may do the refund. We've only started our soft launch May 1st. We've only been, you know, soft launch month for six weeks. But it will be interesting to see what happens. I mean, people don't always claim their rebates

and things like that. So I'm sure there will be a certain percentage of people that just don't do it for whatever reason. And I think part of that's going to depend on how much is involved. If somebody buys a $20 ticket and they're getting $10 back, they may get lazy and not do it. If they bought a $300 ticket, I think we'll see a much greater percentage of those people coming back for $150.

But in any event, it won't be 100% for sure. But it'll be interesting to see what the numbers are. And so the actual mechanics of the ticket buying, I assume that people have to build in a little more time to actually get their tickets because you are purchasing the tickets from someone else and then providing them. So is there a certain amount of time before a game that someone has to buy a ticket on GameHedge

as opposed to some other source? Yes, one hour. You have to buy your tickets one hour before the game. I mean, most of our tickets are electronic e-delivery. So you could literally, you know, if you're going to a Met game, get on the number seven train, buy your ticket from us while you're on the train. And, you know, it's really instantaneous. You place your order, you get an email back saying congratulations, here are your tickets.

And it's very, very fast and easy. So, yeah, as long as you buy them an hour before game time, you're entitled to the good guarantee. And you're also guaranteed to get your ticket in time for the game. And are there any other teams? I know the Yankees have sort of had their StubHub war and required paper ticketing and that kind of thing. Is there anyone else that that's an issue with right now, or is pretty much everyone else okay with the system that you're currently using? Yeah, I mean, the Yankees really are currently the only team

that seems to have some issue with the whole secondary marketplace. Obviously, it's not just us. It's the concept of other people making money on their tickets. But other than the Yankees, we haven't seen or heard of any other team that has had any issues with the secondary marketplace. I think everybody sort of realizes this. In the long term, this is good for them. More TV for people to buy tickets.

More people have access to tickets. So now we haven't heard anything other than the Yankees. Okay. All right. Well, I wish we had thought of it first. We got part of the way there with our email from a listener and our discussions about it. And then we dropped it. And you came along and you actually did something about it.

So people can go to gamehedge.com to get the tickets and to find out more. Is there anywhere else that people should be looking for information? Just go to gamehedge.com. That's where you'll find everything there. And that's the place to go for your tickets. All right. And if you are listening and you use GameHedge to go to a game, let us know how it works out. Let us know how the refund happens and how you felt during the game. Were you rooting at a certain point for your team to blow it so you could get your discount? Were you watching with win expectancy tables in hand to decide when to

switch allegiance? I'm curious about how this works in practice. So Warren, thank you for joining us and good luck. Thank you so much. I appreciate it. All right. So you can support the podcast on Patreon by going to patreon.com slash effectively wild. Five listeners who have done so are Greg, Francesca Ossie, Darren Pater, Graham Lesh, and Ryan Giles. Thank you. You can also buy our book, The Only Rule Is It Has To Work, our wild experiment building a new kind of baseball team. Father's Day is this weekend. If you have a dad who likes baseball and books, this would be a good pick. You can find out more about it at theonlyruleisithastowork.com. Thank you. on Amazon and Goodreads. You can join our Facebook group at facebook.com slash groups slash effectively wild, and you can rate and review and subscribe to our podcast on iTunes. Get the discounted price of $30 on a one-year subscription to the Play Index by going to baseballreference.com and using the coupon code BP.

If you are in the New York area and you want to meet me, as well as spend time at some fun events, you have two opportunities this weekend. Tomorrow, Saturday, I will be at the Fangraphs Meetup at Rattle and Hum West. That's on 39th Street between 8th and 9th Avenues. It starts at 7 o'clock, and dozens of baseball writers will be there from Fangraphs and other sites, so I will be dropping by. And on Sunday, I will be at the Staten Island Yankees Sabermetrics Day at the Richmond County Bank Ballpark. Staten Island Yankees are playing the Aberdeen Ironbirds.

That's an Orioles affiliate. And I'll be on a panel with some other writers. That is sold out, but there is a picnic, a stat geek picnic, that you can still buy tickets for. And we'll be hanging around for the game, too. So you can just get a ticket to the game and come find us. Happy to sign your book if you bring me one. You can go to siyanks.com slash sabermetrics to find out more about that event.

And if you were at either of those events, please say hello. You can send us emails, questions, and comments at podcast at baseballperspectives.com or by messaging us through Patreon. That is it for this week. We'll be back with another show on Monday.