The Mythical Ticket/Payroll Connection
By It’s nice to see King Kaufman tackle a particularly stupid element of sports labor-bashing, the idea that increasing ticket prices are due to high salaries:
A Sox fan named Don Watts made the old connection between salaries and high prices to a reporter from the Fitchburg Sentinel and Enterprise who wrote about high prices in general, at the stadium and around it.
“I wish some of the players would think more about the game than about how much money they’re making,” Watts said. “The more money they make, the harder it is for us to go see them.”
That’s a funny thing to say right outside Fenway Park, which has by far the highest ticket prices in baseball, but by far not the baseball team with the highest payroll. That team, of course, is the New York Yankees, with an Opening Day payroll of $194 million, give or take a Bubba Crosby or two. The Red Sox are second at $120 million, according to USA Today’s figures.
The average ticket at Fenway Park, Team Marketing Report’s annual survey says, costs $46.46 this year, $12.16 more than the second-highest average ticket, at Wrigley Field. Yankee Stadium ducats go for an average of $28.27, fourth highest in baseball, just behind those at the St. Louis Cardinals’ new Busch Stadium.
So the Red Sox’s payroll is about 62 percent of the Yankees’ payroll, but their tickets cost 64 percent more on average.
As the excellent baseball business analyst Maury Brown points out in the Hardball Times, of the 10 teams that lowered payroll from 2005 to 2006, only one of them, the Colorado Rockies, also lowered ticket prices. Seven of them raised prices and two held steady.
The Florida Marlins slashed their payroll by 75 percent and raised ticket prices 7 percent.
What is it the players should be thinking about again?
Ticket prices are high for the same reasons salaries are high, which are the same reasons parking near Fenway is high. Scarcity and what the market will bear. There are only so many seats at major league ballparks, and hardly any available ones at the popular parks. There are only so many guys good enough to play in the major leagues, and hardly any good enough to play well. And there are hardly any places to park within a comfortable walk of Fenway.
What’s remarkable about the persistence of this myth is that it’s both utterly illogical and transparently wrong in practice. In theory, it’s obvious that you set ticket prices at the level that roughly maximizes revenues, a point that is the same whether your payroll is nothing or 500 million. (A higher payroll may lead to increased ticket prices because it increases demand, but it’s the demand and not the payroll that’s doing the work.) And in practice, even more instructive than Kaufman’s examples is to look at the NCAA. NCAA players are so ruthlessly exploited as to be a sportswriter’s wet dream–which much make the games dirt cheap to attend, right? But, of course, if you want season tickets to watch, say, University of Florida football from the “Touchdown Terrace” it will cost you $200…plus a $1,200 booster club “contribution.” Or about 230 bucks a (regular season) game. Think of how expensive it would be if those damned greedy players were paid anything!
But other than the fact that it’s both illogical and empirically wrong, there’s nothing wrong with the idea that high ticket prices are because of high salaries. The way in which both so many fans and sportswriters seem to believe that everything they don’t like about sports–whether alleged “competitive balance” problems or high ticket prices–would be solved if only the owners kept more money is quite remarkable.
This isn’t to say that I like the status quo. Sure, I wax nostalgic for the fact that when I moved to Montreal in 1990 you could get bleacher tickets for C$1 and great seats for less than C$30. I suppose I should see a game at Yankee Stadium at some point, but even a ticket in the “tier box”–a pretty terrible seat–will run you $40, and even a mediocre-at-best “Field Box” $60. Or, rather, the latter would–except that they’re completely sold out for the season. And of course, that’s the point. The Yankees have extraordinarily high ticket prices (although, as Kaufman notes, still cheaper than Fenway)–and last Thursday they drew 54,381 fans. For a weekday day game. In April. Against the worst team in baseball. (If anything, their ticket prices are probably irrationally low at this point; I’m sure they could tack on at least 10 bucks across the board on the high end tickets and still sell them out for every game.) And that’s drives ticket prices–not payroll. If the demand wasn’t there, they could pay their players $500 million and they wouldn’t be able to raise ticket prices a cent.