Jester said:
maybe the most useless thing i've ever read. obviously it is more complicated than the theoretical application of supply and demand, EVERYTHING is, even the breadshop. it is rare to impossible to achieve a perfect balance in the supply/demand relationship outside of a piece of paper w/ a graph on it.
1) obviously they set ticket prices at the beginning of the season.
2) that decision is based on what they feel will maximize their revenue for the upcoming season based on the demand they expect for their tickets.
- this is why ticket prices go up for new stadiums.
- this is why ticket prices go up when a team is good and expectations are high.
- this is why ticket prices tend to remain the same or go down when a team is horrible and no one wants to see them. (& they think they can make more money in total by lowering the ticket price)
3) supply and demand is the most simple aspect of economics and a purchased item like a ticket is a classic example of it. if ticket price is too high for demand for the ticket, fans won't buy it. if ticket price is too low, then lots of people will buy the ticket... but the team won't make as much as they could if they had a perfectly set price.
4) read my posts... i'm ridiculously pro-owner.
I realize you are pro-owner, Jester, which is why I am trying not to debate you but scaredsens instead.
What I find bothersome is when people throw out these platitudes of supply and demand as if they are "received wisdom" that has been passed down justbecause they have heard them debated by either no-brain sportscasters and hockey writers or guys like Saskin (or Fehr in MLB) and think "oh yeah, i remember something about that, yeah that's probably right."
At the risk of turning this thread into one that should be in a board about economics populated by propellorheads with slide rules in their shirt pockets ...
Anyone who knows anything about economics knows at least two things: (a) price elasticity (which is actually what we are talking about in economic terms) varies greatly depending on the commodity; and (b) as a result of that difference in elasticity, price increases will have a dramatically different impact on demand. Contrary to your statement that "Supply and demand is the most simple part of economics", that is pretty far from the truth. It IS arguably one of the most important parts, but it is not simple. You may be surprised to know, but there are actually classes of goods where demand actually goes UP as prices increase.
Of course, in the case of NHL ticket prices, it is complicated by the extreme variances across marketplaces, and the segmentation of the market into corporate ticket purchases and consumer ticket prices. Arguably price elasticity varies between each of those segments. In the corporate sector, for example, it is arguable that price has no relation to demand. If the ticket is perceived as a desired commodity for its purposes (ie sales), price will not enter into it. In fact, it may arguably constitute a "Veblen" form of goods, which is a class of goods for which demand would decrease if it were priced lower (as is the case for many luxury goods). For the consumer ticket market, while price will play a factor, there is a segment of THAT market - the diehard fan - for which money is not that much of an object, outside of extreme pricing scenarios.
The fact is that there are several teams, suich as Toronto and Montreal and others, where supply and demand has no impact on ticket pricing. The only thing that affects ticket pricing in those markets is the desire to avoid fan revolts if they jacked prices up to the point where actual supply/demand forces kicked in (since we are dealing with actual people with emotions invested) and the needs of the team to cover player and other costs.
In other less successful markets, the issue of pricing is still not based on supply and demand, at least in the simplistic manner it is addressed by scaredsensfan. Even in the worst markets, there remains the dedicated fan (you actually only need 15,000 or so) and the corporate customer looking for something with cachet. What keeps them that way is the quality of the team and its constituent players, which we can all agree is related largely to salary.
To summarize:
(a) strong markets can charge their markets whatever they feel like, so long as they are not perceived to be pigs about it, and the decision is driven by their need to maintain a profit margin after escalating costs. In that equation, player costs drives ticket prices.
(b) weak markets can also charge their dedicated fans and corporate customers what they liek, so long as they maintain their cachet as a desired luxury commodity in their marketplace. To do so, they must achieve a certain quality of player and team, which correlates to salaris, which is what drives ticket prices.
Sorry for the lengthy response. I just get a little tired of all the hoary old pat answers that people put out there when they don't actually want to think about stuff.
