Fixing a Whole, II

Regarding #13 on my list of baseball woes, Ticket prices. I received the following email from Scott A. McConnell:

I really enjoy your blog, however I think you are completely wrong when you
complain about ticket prices. This is a misconception generated by the
media who like to complain about things like this in the off season.

When compared to other sports, ticket prices in baseball aren't that
expensive. The average MLB ticket in 2001 was just under $19 (Team
Marketing Report). This is the lowest of any major sport by more than a
factor of two (according to Team Market Report, the average tickets in 2001
for the major sports were as follows: NBA ~$51, NFL~$49, NHL ~ $48) and
significantly lower than comparable live entertainment (the CHEAPEST ticket
for the Chicago production of the "The Lion King" is $26).

There are a couple of things driving this misconception. First, the oft
quoted "Fan Cost Index" produced by Team Marketing Report assumes that
everyone buys average priced tickets and then compounds the problem by
including a lot of things that most fans (especially ones who attend
regularly, are frugal or both) don't buy. The index figures the prices for
two average priced adult tickets and two children's tickets, along with
four soft drinks, two beers, four hot dogs, two programs, parking and two
caps. In 2001, this added up to an average price of $144.98 to attend a
MLB game, but by foregoing the programs and the caps you lower the price of
the outing to about $90. I figure that a family of four can attend a Cubs
game on a weekend for less than $100 without scrimping and if you really
want to be cheap (park on the street for free east of Halsted and walk a
mile, buy peanuts outside the park, etc.) you can do it for <$70 (upper deck seats are $15). That's the cost in Chicago for the team with (according to a recent article in the Tribune) the fourth most expensive tickets in the majors. In Cincinnati, Kansas City and St. Louis, it's certain to be less (my guess is less than $50 excluding food). When you consider that 4 tickets to Harry Potter will cost you at least $30 it's tough to make the case that baseball tickets are too expensive.

The other cause of this misconception is the way teams and the media report ticket prices increases. While it's true that the average price of MLB tickets has more than doubled since 1990, there are a lot of things going on here that make this increase appear significantly worse than it is. MLB ticket prices (adjusted for inflation) were, in aggregate, remarkably stable from 1950 through 1990. According to Baseball and Billions, by Andrew Zimbalist, the average ticket price of $1.60 in 1950 was $8.74 in 1990 dollars, while the average in 1990 was $7.95.

So the price of the average ticket has more than doubled in the last twelve years. To really understand the impact, we need to adjust for inflation. According to the Labor Dept. the consumer price index increased 30.4% from 1991 to 2001 (I couldn't find the rise since 1990, so I'll use the 1991 number - the effect will be to make the increase look slightly more than it really is, but for my purposes that's not a problem - but note that my numbers are wrong because of it). Adjusting for this, the price of average MLB ticket (in 2001 dollars) in 1950 was about $11.40, in 1990 it was $10.33 and in 2001 they were $19.

So, adjusting for inflation, ticket prices ALMOST doubled....tickets must be too expensive, right? Not so fast. Now in order to be fair, I have to admit that what follows is only conjecture, I don't have the hard data necessary to prove what I'm about to claim, but this hypothesis make sense and with some time and the access to the right data, I'm sure it could be proven.

The factors driving these increases are likely driven by a change in the seating mix caused by the introduction of new stadiums. Using the average, or mean, ticket price as a measure of what tickets cost in this case is extremely misleading. When an old, multipurpose park is replaced by a new retro parks, two important changes typically occur. First, a new class of "super-premium" seats are added. These seats - primarily in luxury boxes and behind home plate - have prices substantially higher than the most expensive seats in the old stadiums. Additionally, the retro parks typically have anywhere from 10,000-20,000 seats less than the multipurpose facilities they replace. The reason for this is that these stadiums had a bunch of seats in their upper reaches that, while ok for football are miserable for baseball (i.e. the upper deck of Cleveland Stadium, the third level in Pittsburgh, the top seats in the Astrodome, etc.) and that were seldom used outside of Opening Day and the playoffs. Despite the complete lack of demand for these seats (after all they were empty 90% of the time) these seats and their low prices (the top 6 rows at Riverfront cost only $4.50, even last year) pulled down the stadiums average, even though they were never used. These two factors both significantly raise the average ticket price, however, since the low priced seats were empty and since the average fan wasn't sitting behind home plate in the old stadium, the increase have little or no effect on what the average fan.

My guess is that if you calculated the median ticket price from 1950 through 2002, one would find very little change that can't be explained by inflation. Note, this shouldn't be read as me saying that teams didn't raise ticket prices when they opened new stadiums - they did, it's just that in most cases those teams real ticket prices hadn't been keeping up for inflation or is offset by other teams whose real ticket prices were declining. Individual teams will have huge increases when they have a good product to sell, open a new stadium, or have a unique stadium like the Red Sox and the Cubs...but I'd bet dollars to donut holes that the aggregate price of the median MLB ticket (when adjusted for inflation) is remarkably stable over the long run.

Even if I'm wrong and the cost of attending a game is too high - what do you propose to do about it? There is obviously sufficient demand to support the current prices (except maybe in Montreal) - if it wasn't prices would come down. In fact, an argument can be made that several teams (notably the Cubs and Red Sox) set their prices are too low. Trying to get a ticket for a Cubs game on a weekend in the summer is next to impossible without resorting to a scalper. Bleacher tickets usually go for $60 - $100 a ticket, depending on the opponent. That's why the Cubs are moving to multi-tiered pricing (something the Giants have already instituted).

Towit I responded:

Thanks for the email and for keeping me honest. You are correct. Ticket prices themselves have not risen significantly for the past 50 years, and I was being imprecise in saying so. I am familiar with the Zimbalist research and it is very compelling. What I meant (and this is based on the three stadia in my vicinity Vets, Shea, and Yankee) was that the entire baseball experience soup, or rather parking, to nuts was too expensive.

I am comparing the costs to an average minor-league game. There are many minor-league teams in my area. A ticket is slightly less expensive, but the various accoutrements that typically attend a game (parking, program, hot dog, soda, etc.) are much more expensive (and its less of a schlep). I realize that this is not entirely fair since you are paying for an inferior brand of baseball. But my four-year-old doesn't know that. The minors would put Bill Veeck to shame. It's much better entertainment for kids.

You are right that major-league baseball prices are in line with the other sports and entertainment options. I suppose I should qualify my statements to read something like, "Relative costs and entertainment quality when compared to a minor-league game." Or maybe include a reference to perceived issues with the new pricing models (i.e., multi-tiered pricing Scott refers to) that are being developed this offseason (the Mets' for example) and the higher prices after a new stadium is basically given to a team. What is your reaction to those proposals?