Nashville to raise ticket prices as much as 50%

Discussion in 'Fugu's Business of Hockey Forum' started by hockeytown9321, Sep 2, 2006.

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  1. hockeytown9321

    hockeytown9321 Registered User

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  2. Pepper

    Pepper Registered User

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    Doh, when will you people understand that salary cap has zero to do with maximizing revenues??

    Owners will maximize revenues in every possible case, the new CBA hasn't changed that even with revenue sharing.

    The biggest advantage of salary cap is the fact that the payrolls will be within ~15M among the league, no more $25M vs. $80M payrolls.
     
  3. hockeytown9321

    hockeytown9321 Registered User

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    Maybe that's a question you should ask the commissioner:

    "A partnership will ensure 30 healthy and competitive franchises with affordable ticket prices. This is a goal that we will not abandon."
    -Gary Bettman, October 13, 2004
    http://www.nhl.com/fancentral/livechat/transcripts/bettman101304.html
     
  4. Tickets are still affordable. Also, after the great season Nashville had, and the prospect of them getting better, raising ticket prices isn't that big of a deal to the season ticket holders.

    Gary Bettman isn't the GM for every team. If a team wishes to spend to the max, they have to live with the decision. This is a concept you don't seem to understand.
     
  5. hockeytown9321

    hockeytown9321 Registered User

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    Nashville spends to the max?

    You obviously were not privy to the countless discussons during the lockout that high ticket prices were the greedy players' fault and had nothing to do with supply and demand.
     
  6. Pepper

    Pepper Registered User

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    Maybe you should go beyond PR-statements like that? How much did Leafs ticket prices drop with the new CBA? Zero % (somebody correct me if I'm wrong here).

    "affordable" is a very relative term anyway, it could mean anything.

    In the long run zero owners will compromise maximum revenues and thus it's always a question of supply & demand. If there's lots of demand for tickets, the prices will most likely go up.
     
  7. hockeytown9321

    hockeytown9321 Registered User

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    I went beyond those statements 2 years ago. And I was ridiculed here for it.

    That's one of the more arrogant statements I've seen in a while.

    I agree completely. Its too bad that Gary Bettman misled millions of fans in order to win a PR battle.
     
  8. Pepper

    Pepper Registered User

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    You fail to understand the whole issue here.

    In the old CBA you had 15 teams spending $50M+ per season. If a low payroll team wanted to stay competitive (and therefore driving up the demand), they had to spend a lot more than they could/wanted to. In places like Toronto they could drive up the ticket prices to ridiculous numbers because the demand allowed it and thus they stayed profitable even with high payroll. Low revenue teams had to choose between big losses or competitive team (and I'm talking about this in the long-term, not just one or 2 seasons). If they fitted their payroll to their revenues, they were out of playoffs (again, in general with some exceptions).

    With the new CBA teams like Leafs can't drive the demand up by dishing lots of money to UFAs thanks to salary cap. Even in Toronto you can't ask for ridiculously high-priced tickets if your product is total crap.

    Toronto is probably a bad example since it has the highest demand for tickets, maybe a 'semi-profitable' big team like Avs or Dallas would be better example. The demand in those places is not big enough to accept a crap team with ridiculous team prices (that might actually be the case in Toronto now that I think of it).

    Don't accept Bettman's PR-blanket statements at face value, it's just PR mostly.
     
  9. Pepper

    Pepper Registered User

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    Ridiculed for what??

    Hell it isn't. Maybe you should tell me what it means then? "affordable" is a very relative term, 100$ ticket is affordable to business people who can put it on company expense account and never worry about it. 100$ to average 20$/h joe sixpack is not affordable over the season.

    Still bitter eh? I love you pro-PA shills who failed to see the big picture. Bettman was right but the reasons he gave in public are largely PR. Just like PA did it's PR (though they were in such a bad position that it was doomed to fail from the start).
     
  10. Gnashville

    Gnashville HFBoards Hall of Famer

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    Couldn't have said it better myself
     
  11. Irish Blues

    Irish Blues Present once again

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    Bettman would rather have an 18,000 seat arena full at an average cost of $40 a ticket than have only 14,000 seats in that same arena filled at $60 a pop. While it would be nice to have the higher revenue from the latter, being able to say that arenas are at capacity sounds much better in terms of talking about how much fan support the league has. Being able to go to potential advertisers and broadcast partners and say, "Hey - we're playing to full houses, there's people who want to get in and can't" implies that there's strong demand for the game ... something that appeals to business partners.

    That's how it works in the NFL (with the exception of Arizona and maybe one other team), that's how it's starting to work with MLB.

    If Nashville's market can support a 50% increase, people will buy tickets and show up; if they can't, the Predators will be playing in front of an average crowd of 11,000 a game. Obviously the Predators expect to have a *very* good team this season and they think that people will pay a premium to see that team on the ice. We'll know how accurately they judged the Nashville market at the end of the season.
     
  12. Fugu

    Fugu Guest


    I believe that only 11-12 teams ever spent more than this year's cap maximum of $44 MM.

    The very high contracts under the old CBA went mostly to UFAs, who as you know, were 31+ years of age. Most will agree that these players were getting beyond their prime years at that point. Now teams with young talent get to lose it sooner. Ask Muckler.

    The average NHL salary is now approaching the average under the old CBA, at ~$1.8 MM.

    Finally I don't believe a team like the Preds ever spent more than $22 MM under the old system (or something close to that). They now are committed to ~$36-37 MM. If they received $12 MM last year from the NHL in revenue sharing, they have to put all of this money towards player costs and still come up with an additional $5+ MM. It is easy to see why with one of the lower average attendance figures in the league, they have to raise ticket prices.

    Without getting into a debate about the merits of the old vs. new CBA's, it is apparent to all that they are spending significantly more under the new system than the old.

    Hockeytown does correctly point out that the majority of fans bought the league line about what the CBA was about, keeping ticket prices low and affordable, which had become too high due to exorbidant player costs. Sure it is relative, but the average Joe-6-pack did assume that would mean he would not have to face increasing ticket prices especially in the markets that already were struggling.

    On the flipside, the revenue gap between teams in the NHL was too high and this created real problems for many teams. The new CBA is one solution that attempts to deal with the problems that arose. There are those that remain dubious as to this being the best solution. Only time will tell. We've already seen some of the positive and negative effects but the adjustment is still happening. It does buy the NHL time- but a 30-team NHL that can function without a huge TV contract AND without creating a permanent welfare state may never be feasible. The question will be how long that dynamic is desirable and sustainable.
     
  13. Jussi

    Jussi Registered User

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    Hockeytown99378761665!!!! conveniently forgot to mention that the ticket prices are raised in 8 categories "ranging from as little as 3.3 percent to as much as 50 percent".
     
  14. Fugu

    Fugu Guest

    It is nevertheless an increase. How is this relevant?

    The most important piece to take out of this story is that they are using the price increase for the games in highest demand (their variable pricing) to hopefully drive up demand for season tickets. On a per ticket basis, the season ticket prices are less. If the strategy fails, they know they have not built up enough of repeat buyer base which helps them define their market and subsequent strategies a bit better.
     
  15. Pepper

    Pepper Registered User

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    In 03-04 I counted 13 teams that spent more than 44M so I stand corrected on those, that doesn't change my point at all however.

    The main point of the whole new CBA is this:

    Old CBA: payrolls from 25M to 80M. Huge disparency in both finances and competiviness. Low payroll teams had low revenues because their teams were not succesfull enough to attract more fans.

    New CBA: Payrolls from 32M to 44M. Small disparency in finances, very small disparency in competiviness. Low payroll teams can be successful to attract more fans to bring more revenues.

    Everything else is a direct/non-direct result of the above.

    Average ticket prices will keep rising in the future, NO MATTER WHAT LEAGUE we're talking about. Why? Because of inflation, all prices keep rising in general whether it's the price of movie ticket or a can of beer.

    New CBA will allow teams to curb the pressure to increase ticket prices and thus they will become more affordable to fans as the average yearly income per capita keeps rising as well (in microeconomics it's called 'purchasing power').

    The term 'more affordable' does NOT mean the nominal ticket prices dropping, it means ticket prices will not rise as much as they would under the old CBA.

    And also you simply have to understand the differences between different NHL markets. Toronto and Nashville simply don't have the same economics when it comes to hockey business. When Bettman talks about 'more affordable', he's talking about league in general, not individual teams which can and which WILL behave totally differently when it comes to ticket pricing.
     
  16. Falloooooon

    Falloooooon Registered User

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    Anyone who believes a sports team or league that says they are trying to do something to keep ticet prices affordable, or that they are raising ticket prices to stay competitive is a total buffoon. They charge more for tickets when they think that will make them more money.

    If hockey players made 75K per season, but all else was equal, tickets would cost the same as they do now.
     
  17. missK

    missK Registered User

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    That's the price of success! Your team starts playing better, makes the playoffs and the fans get hit with ticket price increases. The tiered ticket prices for single tickets based on opponents was something the Lightning introduced for 2003-2004 right after the Lightning made the playoffs for the first time since 1996.

    My Lightning season ticket went up 45% for 2006-2007. The only reason it didn't change in 2005-2006 after winning the Cup in 2004 was because they held the prices due to the lockout and the Lightning did'nt want to tick the fans off after no hockey for a whole season.
     
  18. Resolute

    Resolute Registered User

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    The foolish argument of others does not lend credibility to your own foolish argument.
     
  19. Seth Lake

    Seth Lake Registered User

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    From a season ticket holder's point of view here in Nashville...

    We found out that our season ticket prices were going to be raised way back before the playoffs started. The Predators sent out a mailing to all season ticket holders with an explanation and a letter from Steve Violetta (I believe) along with some colorful charts and a "sliding" season ticket price chart (it had moving parts).

    The fact that the Predators are looking to maximize their revenues from games where individual ticket sales have been high historically to me is not an issue. I believe that the fans will still come for the Detroit games (always a sellout here in Nashville - and will most likely be 4 of the "premium" dates) and price will not be an issue. I believe that other games that have not drawn as well traditionally (like weekday games) will be reduced to help get more people in the seats and hopefully generate some new fans by getting them into the building on "cheaper" nights.

    The other key fact here that I haven't seen mentioned yet is that the Predators have one of, if not, the cheapest average ticket prices in the NHL. With our on-ice success over the past two seasons and managements efforts this summer to put us in great position to continue to make noise in the league...I don't have a problem with Leopold and Co. saying that they need a little more revenue from ticket sales to help offset their costs.

    I think this will play one of two ways here in Nashville. I think either it will be largely ignored by the media because it was thankfully announced on a Friday so all of the editorials and columns throughout the weekend and on Monday will all be about football or one of our brillant "hockey-friendly" columnists here in Nashville will take the opportunity to write an "Earth-shattering" column on how "wise" this decision is to raise ticket prices.

    I hope it will be largely ignored here, but I kinda fear that I'll see it twisted and turned into something that it is not over the upcoming week.
     
  20. No offense, but people are going to take a Detroit fan's opinion about the salary cap with a grain of salt.

    My team is negatively affected with a salary cap (yet I cared more about the existence of the smaller markets than the ability of the Leafs to continue to outspend most of the league) , and yours manages the cap pretty well for a team that pilfered the Edmontons of the league for a while, so no offense, but stop complaining.

    It's over. Stop holding a grudge, and cheer on your frequently successful team. You Wings fans have a lot to be thankful for.
     
  21. The Old Master

    The Old Master Registered User

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    when the pens raised ticket prices, the type of fan changed.....they went from a young ...adv. joe type fan to ...to your suit and tie guy....who was not a real fan of the game but a band wagon thing to do type....that when the winning stop they quit going......prices are more in line....and the younger fans are back and things are looking up
     
  22. Fugu

    Fugu Guest

    The main point to the new CBA was cost certainty.

    Furthermore, there were plenty of exceptions to your rule- several low payroll (or lower than Toronto) teams were successful, and there are examples of high payroll teams that while drawing lots of fans, had little on ice success. What you are confusing here with regard to payrolls and success is that under the old CBA teams that were consistently successful on the ice (Cups, winning records) had to spend more than those in the cellars. Obviously, the NY Rangers and to a lesser extent Toronto, are good examples of less on ice success yet little loss of revenues.

    If you look at last year’s success stories, they will have to pay more for (a) the same level of talent, or (b) more for even less talent… which seems to be the most likely scenario, old or new CBA.

    Let me introduce you to another concept used in economics and market assessment: market potential. It incorporates things like supply and demand, elasticity in demand, and pricing at a level that the market bears… explanations to follow below.

    I don’t call $16 MM a “small†discrepancy. That would buy me a Luongo and a Chara, or Lecavalier, Richards and Modin or Gomez, Gionta and Brodeur. Sure, it reels in what could’ve been spent under the old CBA by a handful of teams spending >$50 MM, but to say the discrepancy is not significant is erroneous. Furthermore, these players’ prices could not be bid upon until they were 31. It was a classic case of overpaying for depreciating assets.

    If Nashville wins the Cup for the next 3 years, their revenues will no doubt increase (I hope) but they will not be anywhere near Toronto’s revenues. That’s where market potential comes into play. The CBA does offer hope to fans of teams everywhere that “on any given Sunday†they get a ride in the pumpkin coach, however at midnight they still won’t wake up in Toronto revenue-wise!

    I understand inflation. However you contradicted yourself without realizing you did so. “All prices keep rising.†Teams just got a 24% price (player cost) decrease with the new CBA. Furthermore the average salary went from $1.8 to $1.2 MM. And finally, the total that was allowed to be spent was capped. So “prices†as you use the term here decreased. Teams did not reduce their ticket prices to a level commensurate with their cost reduction last year—and I don’t blame them. Purchasing power is a measure used in economics to determine cost-of-living relative to time (and thus a measure of inflation) and to other regions. It measures how much you have to spend on a basic basket of goods. In fact, purchasing power in the US has been steadily decreasing for many years now due to inflation (which in turn is driven by the cost of energy, current account balances and trade balances… which also affect exchange rates, etc.). What has also decreased is the level of disposable income Americans have (I’ll assume Canadians have seen some reduction too). Inflation will drive prices up in any economy where energy costs are increasing and other account imbalances exist, even at higher rates than we have seen thus far, further eroding purchasing power.

    So, yes each year if one is to adjust for inflation, prices would increase by the rate of inflation (2-4 or 5% range). This does not explain the lack of a price reduction nor the price increases being introduced. Why? It is called pricing at what the market will bear. Pricing at cost plus is an outdated system that has several flaws, the two most notable being (a) you leave money on the table because the market may actually be willing to pay more than what it costs, plus your mark-up, or (b) the market is not willing to pay at a level equal to your break-even point at which point you should know you can’t run a profitable business given the existing costs.

    And by the way, US household income is stagnant or declining according to the latest figures, so things are not always in step with inflation either.

    Demand, which will set ticket prices, will be driven by the levels of disposable income in a particular market and its willingness/desire to buy that product. When these factors are too apart in markets (teams) competing for the same resources (players), you get what we have in the NHL right now.




    Again, see pricing at what the market will bear. Ticket prices should always be based on market supply and demand and no CBA can alter the economic reality that Toronto has greater demand for tickets and thus can charge a greater price. There is a theoretical price point where demand drops of significantly even in Toronto, but the truth is that this point is much higher in Toronto than Nashville. What nobody wants to admit is this. Nashville’s market potential is lower and always will be lower. The only thing that can close the gap is revenue redistribution or a large influx of cash from an outside source (e.g., TV contract). The economic reality unfortunately is that Nashville and Toronto do not belong on the same economic playing field. The two options for closing the gap are the only way this ‘reality’ is circumvented.

    What the CBA does try to do is to offer cost certainty. Given that each city has a market potential (relatively fixed), a maximum amount of revenue that it can expect to get from ticket sales, sponsorship, media and related deals, teams were spending too much of this on player costs (as a % of all team revenues and costs). As a group, they now can no longer spend more than 54% of league revenues, up to $2.2 billion, on player costs. Market potential and the revenue/cost ratio affect the most important financial principle here - franchise value. The real need for the NHL to act was to stem the erosion seen in franchise values. The very fact that some franchises are worth 2-3 times as much as others is the best indicator that economically speaking, we are talking about apples and oranges.

    Ticket prices remain a function of something outside the control of the CBA. The NHL can devise a way to deal with the symptoms that result from the economic disparities amongst its 30 markets, but that does not mean we shouldn’t recognize which economics fundamentals are in the driver’s seat.

    Finally which team you happen to be a fan of is no excuse to ignore market realities and fundamentals. Overall I want NHL success. I don't want to see teams fold. Too many of you have allowed these discussions to become about team allegiances and not about honest discourse on what the financial obstacles are that teams are facing in every market. Something that protects teams that have no business being in the NHL is not good for the NHL. Something that does not recognize that the weakest teams relative to the stronger ones need some protection is equally bad if the commitment is to a league that has "X" number of members. Once that number is set, then the entire collective must do what is best for all members.
     
  23. sticknrink

    sticknrink Registered User

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    The article says last seasons avg ticket in Nash was $35.

    Even with the 50% rise, that's still cheap tix.

    ****, I wish I could go to Canuck games for $50. Average prices here are around $200-$250 for decent seats.
     
  24. hockeytown9321

    hockeytown9321 Registered User

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    My argument is, and was, ticket prices are set by the market, they have, and had, nothing to do with player salary.

    I also find it somewhat hypocritical that the owners have no problem with a free market system when its their revenue on the line, but when it comes to actually spending money they become devoted followers of Marx.
     
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