Barron’s on sports economics
July 29th, 2007 by Tank
This week’s Barron’s has an article offering prescriptions for healthier sports leagues. Some points aren’t very practical - I don’t see leagues permitting unfettered movement of franchises any time soon, however economically rational it is - but others are interesting. Most intruiging, and probably inevitable at some point, is the use of load management systems to fill stadiums at the highest price possible. It certainly makes sense conceptually - a seat at a sporting event is perishable in the same way a room in a hotel or seat on a flight are, so using a similar pricing mechanism seems rational.
July 29th, 2007 at 10:40 pm
Well, that already happens… on the secondary market - its called “scalping”. The bleeding hearts will bemoan the fact that the Red Sox will charge double for tickets to Yankees games, in an effort to put money into the franchise (which can theoretically go into paying to get/keep good players) as opposed to letting the extra mone go into the hands of Sully and Fitzy out on Landsdowne Street so they have more money to bring with them to OTB.
Conversely, if/when the Sox suck again (in your dreams, Tank), direct price adjustments or even indirect adjustments (through promotions, and the like) will be a wise move. Get the people into the park for less - but still charge the same for refreshments and souvenirs… something is indeed better than nothing.
In closing, I’m consistently admonished at family gatherings for having the audacity to suggest that the Red Sox should charge *more* for their ticket prices - given that they sell out, and the secondary market is able to charge more for the seats, it seems like an unwise business decision to allow some other than the team realize the incremental revenue from ticket sales. I’m met with “boo-hoo-hoo… what about the poor blue-collar who just wants to take his kid to a ballgame… boo-hoo-hoo”. Well, (a) he’s probably not getting tickets direct from the Sox, so that he’s paying scalper prices, and (b) that same blue collar chump can become an Orioles fan and have much easier access to cheaper tickets to see a far worse team play, and finally (c) which Constitutional Amendment guarantees that every freakin’ fan and his cousin has the right to attend a Boston Red Sox game when they want? The Pawtucket Red Sox are professional baseball, played nearby, in a very kid-friendly atmosphere, replete with free parking, cheaper refreshments/souvenirs, and far cheaper tickets.
Quit whining and pay market prices or don’t go - deal with it… and in the meantime, enjoy the product that current management puts on the field every year (in part) with the revenue it receives from “boo-hoo high ticket prices”. Fans insist they sign Big Papi, and go after ARod, and bring in Dice-K but are then incensed when the team has the audacity to try and maximize revenue streams to allow those moves. Morons.
But I digress…
July 29th, 2007 at 11:39 pm
Well, yeah, it happens in the secondary market, though to my knowledge only the Cubs have actually set up their own internal scalping operation. But it only seems fair that the teams capture the full market value of their tickets, rather than leaving so much on the table for dodgy scalpers. The idea that a ticket to a Yankees - Mets game on a weekend costs the same as a ticket to a Yankees - Royals game on a Tuesday night seems silly, but right now the premium the market places on the Yankees - Mets game can be captured by season ticket holders, scalpers - essentially anyone *except* the Yankees, who actually create the underlying value.
July 29th, 2007 at 11:42 pm
And if/when the Yankees, et al, move to capture the incremental dollars generated by the different opponents, we’ll undoubtedly be met with op-ed pieces bemoaning the fact that Blue Collar Bob and Little Johnny are now even less likely to ever catch a Yanks-Mets game and will be relegated to a lifetime of Yanks-Royals games on the pittance that The Man chooses to leave them in their weekly paychecks.
July 30th, 2007 at 12:16 am
Agreed. And this being New York, the city will likely introduce subsidies to residents of blighted neighborhoods to enable them to attend.