Kings Ransom

[Nalyd Psycho]

Perhaps but the great inflationary pressure on ticket prices beginning in the late 80s would never have been as severe if players salaries grew much slower and more reasonably.

Why is a new entry level car ~15 - 20k? In large part to the costs of production. Do you honestly believe costs have nothing to do with price - especially in this economy?

I bet some empty NHL arenas would love to sell out by charging $5 a ticket - but they couldn't pay the players if they did.

It depends where you are. Yes, there are some places where ticket porices would be a lot lower. But for Toronto, Montreal, New York, Vancouver, Pilly etc... they wouldn't...

 

[overpass]

Perhaps but the great inflationary pressure on ticket prices beginning in the late 80s would never have been as severe if players salaries grew much slower and more reasonably.

Why is a new entry level car ~15 - 20k? In large part to the costs of production. Do you honestly believe costs have nothing to do with price - especially in this economy?

Depending on the product, costs may have nothing to do with price. Most of a hockey team's costs, including payroll costs, are fixed at the beginning of the season. From that point on, the marginal cost of an additional ticket sold is essentially zero, so the whole ticket goes toward profit.

This cost system is very different from the system involved in building an entry level car, where there are significant costs in materials and labour that go directly into the car.

A business where all costs are fixed (and a hockey team is pretty close) doesn't need to consider the cost when setting prices. They set prices only to maximize revenue.

Rising ticket prices in hockey were entirely driven by the rise in disposable income available to spend on entertainment that took place over the last three decades. It's not just hockey tickets that rose in price - every major sport's tickets rose in price, as well as rock concerts and all other forms of entertainment. People were willing to spend more money on sports and entertainment, and this drove the price up.

If hockey teams cut salaries and lowered the price of tickets, tickets would be rationed by lineups instead of price. More people would have the possibility to go to games, so you would have lineups as soon as the tickets came on sale, whether on the phone or online. Teams would be leaving a lot of money on the table to allow this to happen. What possible reason would they have to do so? Growing expected future revenues is one reason, but you can't allow current revenues to drop too far in doing so. It's just bad business.

 

[golfortennis]

Perhaps but the great inflationary pressure on ticket prices beginning in the late 80s would never have been as severe if players salaries grew much slower and more reasonably.

Why is a new entry level car ~15 - 20k? In large part to the costs of production. Do you honestly believe costs have nothing to do with price - especially in this economy?

I bet some empty NHL arenas would love to sell out by charging $5 a ticket - but they couldn't pay the players if they did.

If costs really drive prices like you say, I'm eagerly awaiting your explanation of airline fares, where one person could have paid 5 times more then the person next to them, for the same product? Or why we pay the same $12 for a movie ticket to see one with Tom Hanks who is getting paid $20 million for it, or to see one with someone who is only getting $2 million for the lead?

If $5 a ticket is the highest price they can get for the ticket, then that is what the market will bear. The fact the owner pays players a certain salary is irrelevant. People don't decide to buy tickets by saying to themselves, "well, since the payroll is $54 million I will pay this price, but I wouldn't dare if it was $30 million." they look at the price and decide if seeing a hockey game is worth that sum of money or not. Plain and simple. If too many people decide not, then the owner has priced himself out of his market. They aren't paying the player with the revenue from unsold seats either.

It's Economics 101.

 

[greatgazoo]

In 1988, Gary Carter was MLB's highest paid player at $2.3 milion. Magic Johnson was the NBA's best player and making $2.5 million. Joe Montana was making about the same amount for the 49'ers.

Gretzky on the open market in 1989 would have gotten at least what those great players were earning, if not more, thanks to a renegade owner like Bruce McNall.

Keep in mind that, the Oilers entire payroll in 1988 was about $8 million with Gretzky accounting for 12% of that.

Sure Pocklington could've matched a McNall offer of $2.5 to $3 million per season to Gretzky but he would've had to trade Messier, Anderson, Fuhr and more to make it possible on his end.

That brings on the dilemma. Keep one great player by trading away 3 future hall of famers? Or trade away 1 hall of famer and keep the other 3?

Does Edmonton with Gretzky win another Cup without Messier, Anderson, Fuhr? Maybe, but not as soon as 1990 like they did without him.

 

[golfortennis]

In 1988, Gary Carter was MLB's highest paid player at $2.3 milion. Magic Johnson was the NBA's best player and making $2.5 million. Joe Montana was making about the same amount for the 49'ers.

Gretzky on the open market in 1989 would have gotten at least what those great players were earning, if not more, thanks to a renegade owner like Bruce McNall.

Keep in mind that, the Oilers entire payroll in 1988 was about $8 million with Gretzky accounting for 12% of that.

Sure Pocklington could've matched a McNall offer of $2.5 to $3 million per season to Gretzky but he would've had to trade Messier, Anderson, Fuhr and more to make it possible on his end.

That brings on the dilemma. Keep one great player by trading away 3 future hall of famers? Or trade away 1 hall of famer and keep the other 3?

Does Edmonton with Gretzky win another Cup without Messier, Anderson, Fuhr? Maybe, but not as soon as 1990 like they did without him.

It's all nice and good that Edmonton's payroll was $8 million in 1988, but what were their revenues? $8 million for a payroll doesn't say too much, and I hope you're not implying that that represented some kind of ceiling. All that is is the amount in contracts the Oilers agreed to. Doesn't mean they did or didn't have the resources to go higher.

Assuming tickets were $20 back then, and I believe they have 18,000 seats, that's $14,000,000 just from tickets. Now I don't know the breakdown of how much the Oilers kept or whether they paid rent(Fourier, where are you??), but that was a nice starting point. Add in TV revenues, concessions, etc., although the revenue streams weren't as numerous as they are today, you have a decent base. Deep playoff runs kept the coffers well fed as well. Net Worth(the book) estimates playoff revenues to be worth between $50 and $75 million back then(book was written in 1991), with players on the winning team receiving $25,000. Pocklington was rolling in the money with 5 finals appearances in 6 years.

At some point they reach a point where they can't pay everybody their perceived market value, like you say, but $8 million is not a number to work off. Part of the reason Pocklington sold Gretzky in the first place was to get his hands on cash in order to prop up some of his other businesses. How do we know he didn't make a killing on the Oiles and use that towards the other businesses? Keeping the payroll at $8 million may have meant that he had lots of cash flow for other interests. He very well could have increased that number.