If Pittsburgh Were in Game 7 of the World Series Would You Pay $400 Million to Be There?

Last week, MLB announced their Postseason Ticket Reservation program. This program allows fans to buy the option to later buy a postseason ticket at face value should their team reach the playoffs. You choose the team and game, and then pay $10 for the Division Series, $15 for the Championship Series or $20 for the World Series. If the team you chose gets to that series you have the right to buy a ticket for the chosen game at face value. If not, you get nothing (i.e. your money is not refunded). For the DS you can choose Game One, Two or Three, which are the first, second and third home game for your chosen team, not necessarily the first, second and third game of the series.

So if you choose Game One, you have the right to buy a ticket for the first game of the series (if you have the home team for the series) or the third (if you have the away team for the series). If you choose Game Two you go to Game Two if your team is home and game four if your team is away and the series lasts that long. If you choose Game Three the option is worthless unless your team makes the playoffs, and is home, and the series goes to five games. You get the picture. It works similarly for the CS and WS.

Ok, so should you take part in this program? First, answer these questions: would you like to see a playoff game? Is it worth it to pay above the face value of the ticket to ensure you can go? If so, by how much? That is how much more than face value would you be willing to pay for a given game, assuming that game were to take place. Let’s call that amount, x. Now assuming the probability of the game taking place is p, the the value of the option is:

Value = (1-p)*0 + p*x

Say you are thinking of buying the option to see Game One of the Rangers’ potential ALDS. If they make the playoffs at all this game will happen, and using BPro’s playoff odds they are 82.9% to make the playoffs. So you should buy the option if:

0.829x > 10

x > $12.06

Would you pay the face value of the ticket plus $12.06 to see the Rangers play Games One or Three in Arlington of a ALDS? If so, and you have faith in BPro’s playoff odds, you should buy this $10 option now. Seventeen percent of the time it will be worthless, but 83% of the time you will have something you value at over $12.06.

We can go through and find the break-even points, the xs, for all of these options. It gets a little more tricky because we have to know the probability that a given team is home or away, advances to the next round, and that a series lasts a certain number of games. Here I did that using BPro’s division and wild card probabilities and a host of simplifying assumptions: all teams have a 50% chance of advancing to the next round; each team has a 50% chance of being home in the Division and Championship Series unless they are a wild card team, in which case it is 0%, or are playing a wild card team, in which case it is 100%; all teams are 50% to be home at the World Series; and the probability of a series lasting a given number of games is based on the breakdowns for all series since 1994.

From these assumptions I calculated that break-even value for each team-series-game combo.

First off, these numbers are only as good as the assumptions behind them. So if you think that the Yankees will be favorites in the ALDS if they get there (which they most likely would be) the break-even values on the Yankees ALCS and World Series option goes down while those for the Twins and Rangers, the Yankees’ likely opponents, should probably be a bit higher. For the Yankees the point is moot as they are the one team that is not part of the program. Also, sorry Baltimore fans, but BPro gives you a zero percent chance of getting to the post-season so your options are worthless.

You have to really value drama if you want to purchase the terminal games for any series. These games are much less likely to happen so their break-even value is much higher than the preceding games. Also because the price of the option increases with each round and the probability of reaching that round decreases the break-even value dramatically increases with each round.

Anyway, for teams like Boston, Tampa Bay, Texas, Atlanta, Cincinnati, St. Louis and San Diego these look like very reasonable numbers, and so their options are probably worth it for fans of these teams.