Monday, October 5, 2009

Price in Sports

In the Midwest football is fall, Friday Night High School games and Saturday filled with college games. You can go to a high school football game for a few dollars or shell out about 50 dollars for a Big Ten game. You get to see football at both, I mean my high school has a video screen (way over the top in my opinion). Simply put the demand for tickets isn’t even close, when I was in high school there was 6,000 people at a game, my town only has a population 6,000. Yet that doesn’t compare to the 100,000 people that can fit into the Horseshoe at Ohio State that almost always sells out.

While the schools have set prices for their tickets unless you know somebody with a ticket it is sometimes difficult to get that ticket to the “Big Game.” That is where you go to a scalper or get on eBay to find a ticket. Here is where you get to see how prices are set, two crappy teams hey guess what cheap tickets below the marked price on the other side two good teams with a championship on the line hundreds of dollars for the nose bleed tickets.

In the sports world a lack of coordination between supply and demand can certainly correlate to empty stadiums and potential loss in revenue for a team. For example the Chicago Cubs have some of the most loyal (and obnoxious) fans and manage to sell out Wrigley Field routinely, leaving fans searching for tickets. On the other side of town the White Sox struggle to fill US Cellular Field because a lack of demand for the high price on tickets although the World Series victory has helped sell some more tickets.

Now all we need is for a team named the Economists playing in Adam Smith Stadium. They would never play in front of an empty crowd because the market for tickets would always clear. It does make me wonder if Economists ran a sports team would the price of a beer still be six dollars?

4 comments:

  1. Nate, I really liked this post but it made my brain hurt, because I started thinking about ticket scalpers.

    Do they help the market clear? Do they prevent it from clearing? Are they actively building a marketplace or helping to undermine one.

    I've paid 3 times market value for tickets to a scalper (or was I actually paying market value?) because I wanted to see the St. Louis Blues rock the Red Wings. I've also been walking past Market Square Arena and had a scalper offer me tickets to see the Indianapolis Ice play for one third of the ticket's face value. I bought the tickets; the Ice lost to Ft. Wayne, but I did get to see a lady take a puck to the face. There was blood! OMG I didn't think a person had that much blood in them. But I digress...

    It makes me wonder about ticket scalpers and their role in setting up functioning markets and assisting those markets in clearing. The scalper I bought the Indianapolis Ice tickets seemed to think he was performing a valid and valuable market function. He even gave me his business card. It read: John Ritter - Ticket Services

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  2. I think of ticket scalpers as middlemen. They take on the transaction costs of finding a ticket. They are just a part of the market process.

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  3. "but I did get to see a lady take a puck to the face" I'm sure her utility from that even was much lower than yours.

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  4. I wonder what the price of that "good" would be in the market, although I would hope many people would in fact consider it a "bad" instead.

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