This blog contains posts and comments written by students in Dr. Tufte's economics classes at Southern Utah University.
9/30/2010
NFL Ticket Prices on the Rise
According to the article, NFL Ticket Prices on the Rise, even though sales are down average ticket prices have still increased. This seems a little backwards, but prices have actually risen on average 4.5 percent this year. Most the average price increase comes at the expense of the New York football fans, however. In reality, only nine of the NFL's teams have prices above the league average. David Carter, executive director of USC's Sports Business Institute, said "The tough economy is certainly playing a role in pricing decisions made by management, and that some teams soften the blow of a price increase by including price breaks on concessions or parking." Lowering the price for items may help, but not everyone buys from the concession stands or pays for parking to begin with. With the weak demand for tickets, most teams will want to decrease ticket prices to fill the seats.
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7 comments:
Ceteris paribus can't be overlooked here. Yes sales are down and prices have increased in some areas, but all things in some areas are not equal. Ticket prices must go up in some stadiums because of increased costs. For example, in the article it says New York residence are getting hit with a 21-38% increase in ticket costs. Mostly because of the $1.6 billion dollar stadium that was built. The owners must have felt that the demand to see a live game in a new stadium with more amenities would increase and be worth the large increase in the cost of tickets to consumers.
Another major problem that NFL and its team owners are facing is the increased demand to watch games at home with the new T.V. technologies and up-to-date information provided. I think we are going to see some big time innovation and new features to draw more people back to watch games live at the stadiums. This article touches on a few.
http://www.businessinsider.com/nfl-iphone-app-2010-9
In addition, I heard from an ESPN insider that we may see stadiums offer radio sets that allows fans the ability to listen in on play calls between coaches and QBs. Of course there would be some type of delay, but this would, no doubt, create a higher demand to see games live at the stadium. Whatever happens, the NFL and its owners have got some major decisions to make.
Link doesn't post in the comment box like it does in the post new box. To see the link, you can copy it to your address bar or right click and go to it. Sorry.
I believe that the law of demand is currently being met in the NFL. The demand for games have actually increased which leads to an increase in ticket prices. The NFL is still seeing an increase in demand in most of their stadiums. The New York Giants are only down slightly per home game this year in comparison to last year and with the new stadium, as Vladimir mentioned, they should see an increase in ticket prices. New Orleans Saints have seen a huge increase as well, but the demand for tickets have gone up because they won the Super Bowl last year. The New England Patriots have the highest ticket average, but they have built a dynasty over the last 10-15 years and the demand for tickets in New England have continually risen. The average home attendance collectively this year for the NFL is actually higher than the average last year (http://espn.go.com/nfl/attendance/_/year/2010) (This page gives you the figures for average home attendance for the past few years and if you add the average home attendance this year compared to last year, you will find that has actually increased). Tampa Bay has been the only team this year to see a blackout from lack of tickets sold. Places like Jacksonville (who suffered from 3 blackouts last year) have actually increased about 14,000 per home game this year in comparison to last year. Tampa Bay has been forced to discount their tickets because of a weak demand, but most teams demand have increased which leads to an increase in price because people are willing to pay for the tickets. The NFL teams still get the revenue from people watching the games from home, based on their broadcasting revenue. The only thing they would have to worry about is avoiding a blackout. As long as the teams sell enough tickets to avoid having a blackout, then they should still receive a generous amount of revenue from broadcasting. The NFL will need to create some new innovations for both stadium attendance and home viewing, but overall we should continue to see a rise in prices because the demand for NFL games have continued to rise.
The idea to create an I-Phone Ap that would benefit those who are actually at the game is a good idea. Creating this complementary item to the actual ticket can be a factor in spurring growth, however, it does not seem to be enough to be a significant motivator for an individual to go to a game if that is the only extra incentive they have.
I enjoy your post!! I am so intrigued with the success of the NFL as a business organization. Although ticket sales are down (in some markets) and ticket prices are on the rise (in some markets), the NFL's position in the sports market has never been better. The nine teams that have raised ticket prices are most likely those who are able to increase capital due to their position on the market namely: Boston, New York, Dallas, Pittsburg, Baltimore, and Indianapolis to name a few of the powers in the NFL. A large reason why the NFL has been able to increase the demand is the success of their marketing strategies. Fantasy football has taken being a fan to the next level. The article, Bloomberg activates NFL partnership with fantasy football iPad app (http://www.mobilemarketer.com/cms/news/content/7395.html) is one example of how the NFL has been able to bring their product that much closer to their customers.
To me, Jerry Jones is more than just a NFL owner. He is a shrewd businessman.
This is all very interesting. Unfortunately, the bottom line is that economists aren't really sure how ticket prices work.
The reasons are 1) the interaction with concession sales, and 2) the lack of elasticity of prices to team quality.
The thing we don't get about concessions is whether they are a substitute or complement for tickets. How the two will behave depends intimately on this, and it varies across fan types. Research on thing like movie ticket prices, scalping, event promotion, and so on is actually pretty hot in economics right now.
The other thing we don't get is discounting. Why don't worse teams lower their ticket prices more often? We just don't know.
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