Writers of Pro Football Prospectus 2008

09 Jun 2011

Roger Goodell Is Full of Crap

We haven't run a lot of "editorials" about the lockout here at Football Outsiders, and we've tried not to get in anyone's corner. We just want the two sides to figure this out and play some damn football already. But I'm sorry, this one just pisses me off.

PFT reports today about Roger Goodell giving a talk to Tampa Bay Buccaneers ticket-holders about the lockout. Goodell apparently told the Bucs fans that one of the goals of the lockout is to lower ticket prices for fans. "We can't continue to shift the cost, whether it's the rising player cost or the rising cost of operating an NFL franchise, on to our fans," said Goodell.

This is nonsense. Ticket prices are primarily decided by two variables: supply of tickets and demand for tickets. That's basic economics. When you're pricing tickets, you charge what the market will bear. It doesn't matter what your player costs are. Otherwise, all 32 teams would be non-profit operations. If you cut costs, you don't drop your ticket prices. You take profit home. I can't think of any team that wouldn't want more profit, except perhaps Green Bay.

If player costs go up, you don't raise ticket prices past the point where supply and demand meet. That's inefficient, because the rise in prices won't make up for the corresponding drop in ticket sales.

Hey Roger, do you want to lower ticket prices for fans? STOP CHARGING FULL PRICE FOR PRESEASON EXHIBITION GAMES. Heck, you could even shift the charges and raise the cost of regular season tickets to cover the drop in the prices of preseason tickets, and I bet most fans would be fine with that. People are just plain offended at the idea that preseason games cost the same amount of money as regular season games. Last time I checked, the Red Sox don't charge $100 for spring training tickets.

Addendum: I want to make clear that I'm not saying that the owners are wrong about everything regarding the lockout. Perhaps it is true that player costs are getting close to the point where they will outpace revenues, and therefore player costs have to come down. But if that's the case, then that's the argument that Goodell should be making.

Posted by: Aaron Schatz on 09 Jun 2011

66 comments, Last at 15 Jun 2011, 2:45pm by tuluse

Comments

1
by Matt R (not verified) :: Thu, 06/09/2011 - 11:55am

GEEEEEEEEEEEEET EM

37
by Raiderjoe :: Thu, 06/09/2011 - 8:24pm

tall gllass filled with prune juice goign to help Goodell with probelm.

2
by Jumbo Jim (not verified) :: Thu, 06/09/2011 - 11:58am

Thank you.

3
by jklps :: Thu, 06/09/2011 - 12:00pm

I agree, raise regular season, drop preseason games to 10-20 to just get the stadium filled and sell concessions.

While the Redskins stink, I know many people who try to dump those preseason tickets, even for free because a) the games are mere practices and b) in August people have other things to do than care about a not-real football game. Well and driving to Fedex field is the same as driving into hell normally.

Just fill the stadium, sell food, water, beer(it will be hot), and get those players some practice.

4
by Eric (not verified) :: Thu, 06/09/2011 - 12:05pm

Isn't supply of tickets determined by the marginal cost of the tickets? If the costs to owners shrink, then the supply curve should shift out resulting in lower price. Exactly how much price will be lowered will depend on the relative price elasticities, but assuming normal supply (upward sloping) and demand (downward sloping) properties, the price should drop somewhat if costs shrink.

6
by Aaron Schatz :: Thu, 06/09/2011 - 12:11pm

This would be true if

Lower player costs -> build new stadium with more standard seats -> supply goes up

but in actuality the truth is

Lower player costs -> build new stadium with more club seats and fewer standard seats -> supply stays the same with higher average ticket price

9
by Eric (not verified) :: Thu, 06/09/2011 - 12:19pm

I think Goodell's point, however, was that ticket prices reflect the ability of owners to pay for current seats (they are still paying for them, they are not already paid). If owners raised ticket prices because of decreased revenue from the last labor agreement, it stands to reason that they would lower ticket prices if a more favorable agreement were reached. (Remember, football is in a competitive entertainment industry and any excess profits would put them at a competitive disadvantage vis-a-vis other entertainment suppliers.)

54
by zlionsfan :: Sat, 06/11/2011 - 10:46am

Have owners ever lowered ticket prices as a group before? I can't say I remember that happening, and I find it very hard to believe that it would.

I'm not convinced that they're raising ticket prices because of the previous labor agreement anyway. I think it's much more likely that they raise ticket prices because they can and because the market is mostly powerless to stop them. (Tickets for some teams are in high enough demand that opting out at a certain price point might mean you would never get to see them [regularly] again; for most of the others, not buying a ticket just means that someone else will buy it instead. Oakland, Detroit, and Jacksonville might be exceptions.)

In addition to that, the archaic blackout rules provide a significant disincentive to organize any kind of boycott ... while someone might have a point about tickets priced "too high", theoretically it would be possible for them to organize enough fans to prevent a game from selling out, and then what's going to happen? The game won't be televised locally, and the organizer will be directly linked to that. (And in this economic climate, people who can't afford to go to the games in the first place aren't likely to have any sympathy for the person who "caused" the game not to be shown because he/she didn't want to pay as much for tickets.)

32
by Intropy :: Thu, 06/09/2011 - 5:36pm

I expect that in the long term that would not hold true, but even if it did, more club seats would lower the price of club seats, and people who buy club seats are customers just as people who buy regular seats are.

In addition, I don't have the full context but going only from the quotation provided, "We can't continue to shift the cost, whether it's the rising player cost or the rising cost of operating an NFL franchise, on to our fans," a lower cost of producing games means the NFL teams needs to take in less revenue from all sources not just ticket sales. In fact, in the short term, since there is very little marginal cost to selling one more ticket to a game already being played in a stadium already built, are about the last thing whose price I would expect to change. I would expect other prices to change more readily. For example, NFL branded clothing is licensed such that NFL teams see profit, that profit per sale would shrink, lowering their prices. Probably most directly and significantly, the NFL would require less revenue from television viewership, so they would charge distributors less, which means in venues like a broadcast network fewer commercials and in premium services like DirectTV a lower price for their subscription packages.

Gooddell being a spokesman for one side of the debate is clearly biasing his arguments. Lowering costs does increase profit, and that's their real motivation. But it's not nonsense to claim that decreasing costs of production would lead to decreasing prices for consumers. You say it's all about supply and demand, and it is. This is shifting supply.

35
by tuluse :: Thu, 06/09/2011 - 7:01pm

Why would the NFL ever take in less money when it's clear the market is willing to bear what they are charging right now?

Maybe at some future date they might raise prices less, but why would they ever actually lower a price?

40
by Intropy :: Fri, 06/10/2011 - 12:49am

The NFL is a powerful entity with a highly desired product. But the media distributors are also big powerful companies with a highly desired service. Every time the NFL and the distributors sit down to make a deal, we know and they all know that the games are going to get picked up. What is not known is the price. They bargain. And they pick a point that satisfies both sides, somewhere between the point where the NFL breaks even and the point where the distributor breaks even, since that's what bargaining does. Lower costs means the NFL's break even point is lower, and any given price they receive is more satisfactory. That means that the eventually negotiated price is also going to be lower.

44
by tuluse :: Fri, 06/10/2011 - 12:13pm

Ok, so you admit this is some future possibility, not something that will actually happen say next year.

50
by Intropy :: Fri, 06/10/2011 - 5:38pm

Very likely, yes that is how it would shake out. The number of actors in the market is to small for the reaction to be fast. I don't know how far ahead they make those types of deals either. Probably a few years worth are already laid out. The expectation of future savings by the distributors could have some effect on behavior now, but I suppose it would be too small to notice.

64
by Pat (filler) (not verified) :: Tue, 06/14/2011 - 4:10pm

Because the money they take in for tickets is really nothing.

Aaron's not quite right here. The demand for tickets is essentially infinite in a large number of towns. Philly, Green Bay, etc. all have season ticket waiting lists in the thousands, and single-game tickets sell out in seconds.

These prices aren't market-driven. They can't be - the demand at the current price is way, way higher than the supply, so by definition the price is too low. If they were market driven they'd be 50-100% higher, if not way more. They're artificially low, because teams don't make the majority of their money from ticket sales. Even though they gain less revenue from ticket sales, the PR that they gain from having prices that most people could afford (but still can't buy unless they get lucky) increases the total revenue that the teams make.

But he is right that Goodell's full of crap.

65
by Jerry :: Wed, 06/15/2011 - 4:44am

It's not just PR. (1) By not charging top dollar for high-demand games, teams leave a core of fans who also buy tickets to less attractive games. This decreases the available supply of tickets to those lesser games, which help to keep the marginal price up. (2) If people spend every possible dollar on tickets, there's nothing left for concessions, etc.

66
by tuluse :: Wed, 06/15/2011 - 2:45pm

(2) If people spend every possible dollar on tickets, there's nothing left for concessions

It's not even if they spend every possible dollar. You can get people to stretch their budget by nickle and diming them instead of giving them a huge bill upfront. There is some psychology to this as well.

7
by John Paulsen (not verified) :: Thu, 06/09/2011 - 12:18pm

The supply of tickets is fixed. An owner can only sell so many regular season tickets (8 home games times X number of seats in the stadium). Demand for the tickets sets the price where the owner can fill the stadium. This demand is driven by the quality of the team and the makeup of the market (# of fans, relative passion of fans, expendable income, other entertainment options, etc.) The owner will charge as much as he can for each ticket to maximize profit.

His costs shouldn't matter in this revenue equation. His job is to make as much money from ticket sales so that his costs are (hopefully) covered and he can take a profit home at the end of the season. If costs continue to go up, he can attempt to raise ticket prices, but all else being equal, demand will decrease and he will risk unsold seats.

In the end, costs have nothing to do with what kind of revenue he can generate from ticket sales.

16
by Bobman :: Thu, 06/09/2011 - 1:31pm

Thanks. That is my take on ticket supply as well--99% fixed by game count and stadium size. Sure there is some flex in reconfiguring seating (or the Jags big tarp solution).... but it is what it is.

Where things get fuzzy for me is how ticket sales affect the team's bottom line--specifically, how big a part they play. If tickets amount to 10% of revenues, then cutting or raising the price by $5 has a clear but small effect on the overall profitability. Giving the fans a break and engendering some good-will might make long-term sense even if it reduces your annual revenues by $3.5M (70k seats x 10 games x $5). If tickets are 50% of revenues, then that revenue is too critical to mess with--you have to maximize it--that $5 foregone would be too large an overall percentage of your total revenues and since nothing changes on the expense side, to the bottom line as well.

If I were an owner, one of the key market segments I would focus on is the secondary market for tickets. If my average price is $75 and 20% of my tickets resell for $150, then I am leaving money on the table and others are profiting because of that. Keeping my prices "low" seems to be benefiting resellers/speculators, maybe more than actual fans. If I raised them to that $150 level on average, I might not sell out, and would engender a LOT of ill-will. A middle ground would make sense--keep it kind of low for the real fans, reduce the speculator profit, increase my own profit, etc. Maybe owners are already "giving fans a pricing break" by keeping prices at my theoretical $75 and allowing speculators to pocket an additional $10.5M each year per team (70k seats x 10 games x 20% resales x $75 margin), in order to keep what's left of fan good will. Not sure, and they ain't sharing info....

(Caveat: I know of some fans who ARE real fans and buy 4-8 season tickets, and then close to game time sell half of them to subsidize their own seats. Say you buy eight seats for $75 and the week before the game sell half for $115--you've essentially cut your four retained seat price in half. Not sure what to do with these folks--if I lowered prices, they might just buy their four and keep them and others would speculate and profit. If I raised prices, they (being true fans) would probably do what they are doing and make less on the after-market and suffer.)

Damn, this would make an awesome b-school case study. Of course in b-school, I hardly had time for football....

43
by RC (not verified) :: Fri, 06/10/2011 - 9:32am

Supply of tickets absolutely is not fixed. Thats precisely what they're trying to do with 18 games.

Also, teams that sell well add "Standing room" tickets all the time.

46
by tuluse :: Fri, 06/10/2011 - 12:17pm

At some point you reach the firecode of people who can be in a building, so the supply per game is definitely fixed.

60
by Mikey Benny :: Mon, 06/13/2011 - 8:46am

This assumes a competitive environment where competitive pricing eventually drives suppliers to charge the lowest price they can afford to charge while still making a reasonable profit.

Otherwise, companies just charge as much as they can convince customers to pay.

5
by .matt (not verified) :: Thu, 06/09/2011 - 12:07pm

Not only is this totally wrong in analyzing the NFL as if it were a government (get rid of the unions so we can lower taxes!), but where does TV revenue come into this? What does that have to do with the fans at all?

7
by Mike N (not verified) :: Thu, 06/09/2011 - 12:18pm

Eric:

Your analysis is only correct if you assume the supply of tickets is variable, but that's clearly not the case over the short term, since stadiums have a fixed number of seats. Over the long term, you could argue that reduced costs to the owners would lead them to provide more supply (ie build bigger/better stadiums) but over the short run, when the quantity and quality of tickets is fixed, the supply curve is vertical, and therefore a drop in costs will have no effect on equilibrium price, and Aaron's original post is 100% correct.

Even in the long term, when cost structures could in theory lead to changes in supply levels, you have to assume the owners' are operating in a market of healthy competition that would force them to reduce prices at the higher supply level. In those markets where the local NFL team is not faced with heavy competition from other sports' franchises, impact of reduced costs would mostly flow through to the team's earnings, not lower prices.

-Mike

11
by Eric (not verified) :: Thu, 06/09/2011 - 12:32pm

Mike,

Even if the number of seats is fixed, the supply curve for viewing a football game (the actual quantity of interest here) can still be upward sloping. The price of tickets not only reflect the value of the seat, but the marginal cost of providing the entire entertainment product (the football game). In other words, a ticket price reflects the physical costs of seats, as well as the costs of player salaries, coaching, etc. I don't think you can unbundle the price of the ticket from the whole entertainment quantity, as you seem to suggest.

If your analysis was correct and ticket prices only reflect the value of the seat, then in the short term the owners could never raise the price of tickets without creating a ticket surplus. But, clearly the owners did raise prices and there was no ticket surplus.

13
by Anonymous (not verified) (not verified) :: Thu, 06/09/2011 - 12:41pm

There was no ticket surplus (generally) because demand tends to be higher than supply at the cost levels the ticket prices are at. If there is 40% higher demand than supply at cost X, and 10% higher demand than supply at cost Y (Y>X), then there still won't be a surplus even at a higher price.

If the player salaries drop, and the ticket prices don't, the demand is still there, so the salaries are not a major part of the equation at this time.

18
by Bobman :: Thu, 06/09/2011 - 1:42pm

I agree with Anon above--think of gasoline prices. They might fluctuate by $1.00 per year (25%-50%) depending on many variables, and the demand is still steady. That suggests than demand way exceeds supply. Now it the per gallon cost went up to $10 instead of today's $4, demand might cool off. Of course gas is more of a "need" than football tix. But look at the price delta bewteen brewed coffee and fancy espresso drinks at your local coffee retailer--you can make coffee at home for much less, or get it in the office for free, but people go out and buy it not out of need but out of want. Maybe $1 for drip and $3 for the mocha latte--if this was just a caffiene or thirst issue, that would be insane--buy three times as much at $1 and you are better off. But if the price is deemed within a reasonable range by the public and they can get what they want, they'll pay it. $10 lattes vs $1 drips should result in a LOT more drip coffee sales and a lot fewer latte sales. If it didn't, then SBUX would be leaving a lot of money on the table. But at a 3x price delta, people are generally indifferent to the added cost, so long as they get what they want. Football is what we want and generally we'll pay.

So within a pretty wide price band, demand for NFL tix exceeds supply. Even when teams suck. Except Baltimore in the early 80s, but that's a whole other discussion... ;-)

42
by Thok :: Fri, 06/10/2011 - 6:58am

They might fluctuate by $1.00 per year (25%-50%) depending on many variables, and the demand is still steady.

1. The demand of gasoline has consistently been going up for a while (see the improved standards of living in China and India)

2. People seem to drive less in the US when the price of oil goes up. That's not enough to overwhelm the factors in point 1.

3. That said, gasoline is a bit weird because of possible speculation issues (that is, the demand for oil futures is affecting the price of oil as well as the demand for oil itself, even though the demand for oil futures has little to do with energy needs and everything to do with investment needs.)

24
by otros :: Thu, 06/09/2011 - 3:58pm

Both those assumptions (a long term view and healthy competition) are, arguably, correct to make in this case. I'm not claiming to be right, but that this argument can be made.

The labor dispute bottom line a long term problem, how to make the business model work for the owners, while not damaging the players position too much. If you hear the terms Goodell throws around (and they very well could be just PR spin, but lets go with it) health of the game, growing the pie, etc. clearly reflects that this is a long term problem. (And if you believe anyone, players, owners and, especially, fans wants to be in this rodeo again in five years, well, you're much more cynic than I am).

Healthy competition carries a much more weighty burden of proof, with antitrust exception and all that. But, if you consider that pro football is in the same market with the NBA, MLB, NHL, NCAA, etc. you could start to make the argument that this market is a lot more competitive than at first look. Now if you can make the claim that the NFL is competing against Hollywood, music, book, TV, etc. in the "entertainment" market, well the argument is pretty good.

27
by Jimmy :: Thu, 06/09/2011 - 4:36pm

The problem with that is that the NFL's revenues are currently at $9bn and are expected to rise to $18-20bn in the medium term it doesn't really stack up. The growth in revenues projected are for my mind extremely unlikely to be based upon projected rises in ticket prices. The growth is more likely to come from larger media contracts and exploiting new marketing strategies as well as trying to grow support for the game outside the US.

It is almost as though he is trying to scare fans that if the owners cave they won't be able to afford their tickets any more.

10
by big_jgke :: Thu, 06/09/2011 - 12:19pm

Or just make PSL's illegal. That is seriously the biggest scam I've ever seen.

21
by wr (not verified) :: Thu, 06/09/2011 - 3:20pm

The problem is people allowed themselves to be scammed.
If they had refused to pay the PSLs when they first came
out, there wouldn't be any now.

28
by Dean :: Thu, 06/09/2011 - 4:47pm

Yeah. Lets get government involved. That always works.

12
by MilkmanDanimal :: Thu, 06/09/2011 - 12:32pm

Well, let's also consider the audience here; last year Tampa had a really exciting, upcoming team with a lot of success, and didn't sell out a single game. They couldn't even sell out the Steelers game, and Steelers' fans are known to travel very well. It's a market where ticket sales were really tough, so making that particular sales pitch (giant bucket of crap that it is) makes more sense in Tampa than pretty much anywhere else. I have no doubt that that particular speech was designed to appease (A) the Glazers and (B) all the really pissed-off locals fans who couldn't watch games because every single one was blacked out locally.

51
by An Onimous (not verified) :: Sat, 06/11/2011 - 3:04am

Goodell made the same argument on a conference call with the Seattle fans, though, and Seattle doesn't have any trouble filling seats.

Also, amusing captcha note: My original Captcha was "F(n)/F(n+1)". Except it wouldn't let me type it out like that, it apparently wanted me to make a large horizontal bar with the F(n) on top and the F(n+1) on the bottom and somehow fit it into the captcha field.

14
by David Mazzotta :: Thu, 06/09/2011 - 12:52pm

"Perhaps it is true that player costs are getting close to the point where they will outpace revenues, and therefore player costs have to come down. But if that's the case, then that's the argument that Goodell should be making."

He is, he's just personalizing it. I haven't read the whole interview, but passing costs on to the fans isn't just about ticket prices, it includes all the related costs, including the cost your cable provider charges for NFL Network.

When costs go up, you either your ROI drops or you pass the costs along to the customers. You are right that it's erroneous to relate ticket cost to player wages in isolation, but I don't read that into what Goodell is saying (obviously Florio did).

29
by Danish Denver-Fan :: Thu, 06/09/2011 - 4:58pm

That's simply wrong. The owners can't keep passing on costs (be it salaries or any other cost) to their fans - if they keep raising the price, they'll run out of demand. Take it to an extreme: If they raise the ticketprice to $100k noone would buy tickets. Somewhere between $100 and $100k is that sweet-spot where the owners just can't squeeze more money out of the fans, and proceding beyond that spot will result in a dropoff in attendance.

AND there's no reason to believe that the owners aren't looking for that sweetspot already. They would be, even if the players played for free - not doing so, would effectively be like loosing money.

38
by David Mazzotta :: Thu, 06/09/2011 - 9:18pm

You're correct. If you take what I said to absurd levels it doesn't work. No one would pay 100k for a ticket so raising prices doesn't work in the irrational extreme. Conversely, no owner would continue to keep prices low to the point of going bankrupt so reducing ROI doesn't work in the irrational extreme. I really didn't think that needed to be said, but thanks for stepping up to cover me.

"AND there's no reason to believe that the owners aren't looking for that sweetspot already. They would be, even if the players played for free - not doing so, would effectively be like loosing money"

I have no idea how this contradicts anything I said or makes it "simply wrong".

41
by Danish Denver-Fan :: Fri, 06/10/2011 - 4:59am

I was saying that they can't keep on passing on costs past that sweet-spot. And since we're talking about very succesfull businessmen, the owners have probably already found that spot. Theoretically, they can't raise the price by a dime without losing attendance, so no matter how much their costs increase they'll have to take the hit themselves.

45
by tuluse :: Fri, 06/10/2011 - 12:15pm

Ticket prices affect more than just attendance too. It's possible they could raise rates and still sell out but then lose that money (or more) because of lost merchandise sales (due to ill will) or concession sales (due to people having less money in their pockets).

56
by Whatev :: Sun, 06/12/2011 - 6:47am

No, I doubt that. In the first place, business involves a lot of guesswork. There aren't enough actors in the market to make the prices equalize that quickly. Furthermore, there's actually typically an incentive to underprice the tickets, for much the same reason that 3-star restaurants don't just raise the price until the waiting list is gone. Since there are going to be fluctuations in demand, underpricing will cause a relatively small negative demand shock to short itself out as people rush to pick up the unsold part on the assumption that they won't have the chance later.

Doing this is risk-averse in that it reduces variance at the cost of some expected revenue; if the "safe" pricing scheme becomes less profitable it's entirely possible that the owners may change pricing strategy.

15
by djanyreason :: Thu, 06/09/2011 - 1:20pm

Has anyone anywhere in the negotiations suggested de-coupling the salary cap from total revenues? No? Ok, so then how exactly can modifying the share of revenues going to players affect ticket prices?

Ticket prices go up -> total revenue goes up -> more money to players and owners both, based on the revenue split

Similar outcomes for ticket prices going down.

Modifying the split could only matter if we assume owners want a fixed income, no more no less. In that case, the split going down means that they can bring in less from tickets to achieve their target income, because they get a larger share. So, in order for Roger to be taken at face value, what he's saying is that if the owners win, they'll lower ticket prices, hammering the players even more.

52
by An Onimous (not verified) :: Sat, 06/11/2011 - 3:06am

I believe the owners' original proposal actually did propose giving the players a fixed cap independent of total revenue. They kept talking about what a great deal it was for the players because next year's cap was higher than it otherwise would have been, while conveniently failing to mention that the cap grew at a rate substantially slower than revenue has historically grown.

17
by Michael LaRocca (not verified) :: Thu, 06/09/2011 - 1:37pm

Yeah!

19
by Jimmy :: Thu, 06/09/2011 - 2:14pm

I call shenanigans!

20
by Anonymous(not that one) (not verified) :: Thu, 06/09/2011 - 2:17pm

Aren't PSLs and the required contract, which the Bucs sued fans for abandoning, a bigger part of the issue in pricing?

22
by JCapgun :: Thu, 06/09/2011 - 3:42pm

In all fairness, this labor dispute *could* lead to cheaper tickets, at least in the short term. I remember going to a major league baseball game after the strike in the 90's and got a great ticket for a dollar because people stopped going to the games.
Although, I'm sure that's not what Goodell meant.

23
by Septicwad (not verified) :: Thu, 06/09/2011 - 3:47pm

I love football, but enough is enough. I will not knowingly spend a penny to support the NFL this year. The owners and players are forgetting what it costs Joe Sixpack to attend a game. After all, it is a game, not life or death. If they don't play, I guess that means I can take my child to the park or to a matinee. The NFL might want to review what happened to the NHL after that last strike...

36
by jebmak :: Thu, 06/09/2011 - 7:15pm

Yay! I finally think theatre first instead of movie when I read 'matinee'!

25
by es (not verified) :: Thu, 06/09/2011 - 3:59pm

The issue of preseason tickets would be cleaner if season tix holders regarded their preseason tickets as free and their regular season tickets as 10/8 face value

31
by Jerry :: Thu, 06/09/2011 - 5:06pm

It would be even clearer if season ticketholders weren't required to purchase exhibition games.

34
by es (not verified) :: Thu, 06/09/2011 - 6:44pm

They could do that. But the price would stay the same.

58
by dbostedo :: Sun, 06/12/2011 - 4:10pm

That points to something I've never understood. WHY are season ticket holders upset about supposedly paying full price for preseason games? I think it's because many mistakenly believe that they should be paying less for preseason, and therefore less overall.

But they are really paying for a package - not game by game, despite what the number on the tickets may say. So if the preseason games are pointless to them, they've already shown that they're willing to pay more for the regular season.

Per what Aaron wrote, how many of the people upset with preseason ticket prices be equally upset by a rise in the regular season prices? A lot I'd imagine.

So at this point, the whole "full price preseason ticket issue" is purely a PR thing; And if the buyers were well informed enough, it wouldn't even be that.

59
by Jerry :: Sun, 06/12/2011 - 7:13pm

The numbers on the tickets do mean something. If anything's available for single games at the box office (much more likely for exhibition games), it'll be at those same "meaningless" prices. When the Steelers went from one home exhibition to two in the late '80s or early '90s, the price of a season ticket went from 9 single games to 10; there was no attempt to act like the value of that extra game was any different.

If I lived in a market where the local NFL team didn't sell out regularly, having to buy the preseason would be enough to keep me from buying season tickets. Buying them in the solid sellout situation still sits poorly, no matter how you spin it. And if the league were to act on Goodell's comment (in the conference call I listened to) that they don't need four games to evaluate and prepare, even while sticking to a 16-game regular season, that would be an improvement.

61
by dbostedo :: Mon, 06/13/2011 - 1:06pm

"If anything's available for single games at the box office (much more likely for exhibition games), it'll be at those same "meaningless" prices."

True - but I think we're talking about season ticket holder here, not individual game tickets.

"...having to buy the preseason would be enough to keep me from buying season tickets."

But Aaron, amongst others, is suggesting that rather than pay, say $800 for a season ticket where every game (12 - 8 regular, 4 pre) is $66.67, people would be happier paying $800 where the preseason was free and the regular season tickets were $100. I'm just saying I don't understand how that could be true.

It's $800 either way. For season ticket holders, if the preseason is meaningless to you, you've decided that the regular season is worth the full season ticket price. Who cares how it's split out? (And yes, I'm ignoring possible re-sale, assuming that the season ticket holder attends all games.)

The Steelers' example is interesting, because in that case they were using the extra game as a PR move to deflect bad pub for raising prices. But the value of a preseason game is really still whatever people place on it. I do suspect that in a lot of cases, the teams (the Steelers are probably one) could charge quite a bit more and still sellout, but at the risk of enough bad publicity to hurt the team.

62
by Jerry :: Mon, 06/13/2011 - 6:53pm

Trivial correction that doesn't affect your point - two home exhibitions per team, not four.

In the solid sellout situation, ownership has a lot of leverage. They still have to be careful, though, so that (1) they don't price their fans out of the market, and (2) there's enough good feeling from fans that they don't run away when the onfield product worsens. (Just ask the Cleveland Indians.)

I also believe that you really can't decouple season ticket prices from single game prices. I think every team holds back some seats for single game sales, and if they were cheaper than season prices, folks would rush to the single game market, and probably not buy that crappy-looking Thursday night game in December.

The Steelers have raised prices pretty much every other year for decades. No doubt that second home exhibition was another gate, but I don't think it was a backdoor attempt to raise prices. I'm also reminded that when I had a partial Penguin season ticket in 1988-89, they really did throw the two home exhibitions in for free. (Now that demand is much higher, they charge season ticketholders for the preseason.)

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by dbostedo :: Tue, 06/14/2011 - 11:28am

"I also believe that you really can't decouple season ticket prices from single game prices."

That's true - since there are always SOME single game sales, there's always some tie. But I don't think we're still talking about my initial point. My main point/question still stands :

Would anyone really be happier with plan A than plan B?

Plan A : $900
8 regular season games at $100
2 preseason games at $50

Plan B : $900
All 10 games at $90 each

Aaron (and Peter King, and others) seem to think season ticket holders would be happier with Plan A. I don't understand why.

26
by Sophandros :: Thu, 06/09/2011 - 4:11pm

"Perhaps it is true that player costs are getting close to the point where they will outpace revenues, and therefore player costs have to come down."

Player costs are capped at a certain percentage of football revenue AFTER the owners take the first Billion under the deal that the owners opted out of.

It's impossible for player costs to outpace revenues under the deal that the owners opted out of.

-------------
Sports talk radio and sports message boards are the killing fields of intellectual discourse.

30
by justanothersteve :: Thu, 06/09/2011 - 5:00pm

OK. Everybody who thinks owners will lower ticket prices and keep them lower if the players take less money, raise your hands now.

33
by Theo :: Thu, 06/09/2011 - 5:57pm

Maybe the genius of Goodell wants to set off so many fans that demand goes down, and by that way lower the prices.
Man, I love this commish, he's so smart.

39
by Anonymou (not verified) :: Fri, 06/10/2011 - 12:18am

i don't think anything about the economics of the NFL is as simple as supply and demand.

http://nplusonemag.com/eff-you

47
by Hari-Kiri Bengals Fan (not verified) :: Fri, 06/10/2011 - 1:33pm

Of course he's full of crap--I've known this ever since the "new sheriff in town" crap when he first started. He's just a typical corporate puppet. His reign started off with "getting tough" and ended with economic disaster.

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by Jimbo :: Fri, 06/10/2011 - 1:57pm

"We can't continue to shift the cost, whether it's the rising player cost or the rising cost of operating an NFL franchise, on to our fans," - RG

I see nothing wrong with this statement. It's logical and, of course, will be biased toward his end goal.

The cost of running an NFL franchise has increased according to the owners and the question that is triggering the current stoppage is whether the players will have to sacrifice or the owners, themselves. Rightly or wrongly the cost will be passed on to fans with increased ticket prices. It doesn't have to go this way but we all know how businesses run. You increase profit by cutting cost or raising prices. The owners have chosen the latter (rightly or wrongly) so must argue by prefacing with the latter as if it's fact. I don't agree with him but unfortunately he sets the table for these arguments. Clearly fans should not pay more when the owners and players can cut more, but we know how it is.

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by An Onimous (not verified) :: Sat, 06/11/2011 - 3:14am

If increasing profit was really just a function of raising prices, then why on earth wouldn't everyone be constantly raising their prices? If McDonald's makes a billion dollars selling their hamburgers for a dollar each, why don't they just raise their prices to $2 and then make TWO billion dollars? Hell, why not just sell their hamburgers for $50 each and make $50 billion dollars? Does McDonald's not like money or something?

The previous ticket prices were not set through some feeling of altruism. They were set where they were because the owners believed that price maximized their total profit. If they thought they could have charged more and made more money, they would have. That's what businesses do- they try to maximize profits. I don't know of any businesses that intentionally leave money on the table, that say "hey, I could make so much more money, but shucks, I'm too busy eating cake to bother!"

49
by morganja :: Fri, 06/10/2011 - 3:54pm

Most of the analysis here cannot be applied to a cartel controlled market. How things work in competition is not how things work in a cartel environment. That is why we have anti-trust laws.

The only way to reduce the price of tickets is to introduce competition in professional football. If the NFL had to compete with other leagues, prices would quickly drop to MC in the long term.

55
by njligernj :: Sat, 06/11/2011 - 7:42pm

I believe last year the Bucs were something like 40 million under the league minimum payroll (or what the minimum would have been if it wasn't uncapped). The Glazers have spent less, significantly less, on their payroll in the last five years than any other NFL team. Eventually it came home to roost -- it's unfortunate it came at a time when the team was actually good so anyone not familiar with how the Glazers became cheapskates after buying Manchester United just thinks it's a poor reflection on the fanbase. In reality it was the Glazers cutting costs and never passing the "savings" onto the fans -- despite spending less (I think over 10 million less than the 31st lowest spending team but I can't recall the numbers exactly) the ticket prices were in the top half of the league.

It's ironic he gave this speech in the city which perhaps best reflects how there is clearly no correlation between player payroll and ticket prices.

Here is an quote (from 2009) I found from a quick search "The Tampa Bay Buccaneers average ticket price of $90.13 really stands out. It is the second highest average ticket price."

I believe they did lower prices for 2011 but basically the prices were very high for a long time while the Glazers spent less on payroll than any other team. So it really is something for Goodell to be saying that in Tampa -- where the owners have the lowest payroll over the last five years and (at one time) asked the fans (in a medium sized market) to pay the second highest prices in the entire league. It's utter BS.

It's not about being pro-owner or pro-player it's about logic. In the upcoming NBA dispute you could say I'm "pro-owner" because they opened the books, they're losing millions, so it makes sense to ask for lower salaries. In the NFL the owners just want slightly more of the billions -- I can't support locking out the players and losing a season for that. So I guess I'm pro-player ... but I really just want football. Regardless, statements like this from Goodell are absurd.

There is a conspiracy theory by the way that the Steelers game (someone mentioned that earlier) would have sold out. They sold out all the tickets they put on sale and many, many people reported that you couldn't buy tickets anywhere. Then at some point just before the game (when it was too late to realistically sell them) they released a bunch more tickets and said the game wasn't sold out. Not sure I believe it but if anyone is capable of that it's the Glazers.

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by cisforcookie (not verified) :: Sun, 06/12/2011 - 2:03pm

the NFL can't afford to ever lower prices. It'd be a signal that their commodity isn't the hottest thing in town, and they'll buy the tickets themselves through 3rd parties before they admit that. Also, the NFL has no competition whatsoever in american sports.