Revenue / 04.30.18
Flu-Like Symptoms: Why Ticket Prices Won't Go Down
Original article published on Baseball Prospectus (04/30/18) by Rob Mains
The trend of certain Major League Baseball (MLB) teams offering free or reduced-price tickets would theoretically help expand their fan base, but this trend remains limited, drawing attention to the notion that ticket prices are high in order to cover players' salaries. However, Rob Mains disputes such assertions, noting baseball teams face no rivalry because starting a new league that plays in MLB cities is economically impractical. Moreover, this monopoly is unregulated, so teams can set whatever ticket prices they want. Player salaries are a fixed cost, and therefore they make no contribution to pricing decisions. Furthermore, Mains examined a 20-year overview, determining that of the 15 teams that reduced payroll by at least 33 percent for whom he found average ticket price data, the average ticket price rose by 2.9 percent. "The median declined just 1.2 percent, a far, far cry from the 33 percent-plus payroll reductions," Mains writes. Another factor he studied was of ticket sellers obtaining higher than face value in the secondary market, a sign that the face value is underpriced. Mains also cites teams' use of dynamic pricing to match supply and demand and acquire money that might otherwise go to resellers as another reason for high ticket costs.
Read the full story on the Baseball Prospectus website.
Tags: Sports , Reselling , News , Stadium , Secondary Ticketing