Short one today, but I want some feedback: why doesn’t Boston build a new ballpark for the Red Sox? ????? ??????
First, some economics: let’s say an average Red Sox seat retails for $501. In practice, most of those tickets are scooped up by scalpers, who resell them for 0 and up. ???? ???? ??????? ??? ????? If I’m Theo Epstein, then every penny between the original $50 price and the final $100 price is a penny that I could have captured. This steams my britches.
Should I raise ticket prices across the board? Not necessarily. Baseball tickets are a luxury good, so they tend to have a higher demand elasticity. This means that people are more sensitive to changes in price than with other goods. Cigarettes and gasoline have very inelastic demand, by way of contrast: you can raise the price by 10 or 25 or 50 cents and people won’t buy less of it2. But no one needs loge seats. And a ticket that might have looked perfect at $40 might suddenly seem too expensive at $50. Yes, it’s only another $10, but people are weird.
Further, the Red Sox have been raising ticket prices pretty regularly for years and the problem remains. Scalpers buy up as many tickets as possible, resell them for half again as much, and pocket the difference. It seems pretty clear that the issue with the Red Sox is fundamental: demand outstrips supply.
Fenway Park is the oldest baseball stadium still in operation. It seats 38,805 and is pretty rickety. While other stadiums have fewer available seats (PNC Park in Pittsburgh, for instance), there’s no franchise in baseball with greater demand and fewer seats. Given their tremendous history – to say nothing of their 2004 championship – the Sox can bet on drawing capacity crowds every time.
I would wager that the Red Sox can draw in more fans a season than the struggling Orioles3 (48,800 in Camden Yards) and at least as many as their rivals, the Yankees (56,500 in Yankee Stadium). By this logic, Fenway Park is at least 10,000 seats too small.
So what should happen? Should the Red Sox build a new baseball stadium, raise prices to a level where scalpers won’t be able to make a profitable resale, and start counting their future revenue?
Well, maybe not.
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