Being priced out of football

[um pahars]

I think clubs with spare capacity would be more willing to reduce prices in order to fill their grounds and draw in more punters who would in turn buy merchandise and refreshments. A recent survey conducted by virgin money (think it was them) suggests the uptake for season tickets for next year is set to decline and this is very good news. For clubs like Man Utd this won't be a problem as there are plenty who'll fill the vacated spaces, but for less glamouress clubs it's not sustainable. Less people doesn't just mean less tickets sold, it also means less merchandise and less food and drink.

 

That argument is simply ridiculous. Nothing in your argument has any reference to cost (you could do all of what you are saying regardless of whether your wage bill is £20m or £30m).

 

Clubs will simply price tickets and offers in the way that they believe will maximise their income. If clubs believed they could increase their income by reducing prices, then they would do it regardless of their cost base.

 

The price elasticity of demand is not affected by suppliers costs.

 

And I very much doubt that any club would reduce their ticket prices if they managed to enforce a wage cap (unless they were forced to).

[Deppo]

Talking to fans I know a lot are now not going to games/have reduced the number of games they attend, because of the costs involved. With fuel prices now at unprecendented levels and clubs charging exorbitant amounts for tickets to pay for obscene player wages the future of the game is not looking rosy.

 

Whilst big clubs like Arsenal, Man Utd, Chelsea have the fanbases to fill the gaps left by fans that stop going, other clubs in the tiers below will struggle to sell their capacities - the rot has already set in particularly in the North.

 

Personally I think dwindling attendances are a good thing as this will force clubs to reign in the greed, and i'm hopeful that they will become noticeably smaller next season as reports suggest they will. Saints will buck the trend whilst we are rising in my opinion, but in the medium term I don't think we will.

 

That's capitalism for ya! We can thank Thatcher for it.

[Surman4no7shirt]

That's great news, I don't like sitting with poor people.

[Surman4no7shirt]

[sandwichsaint]

That argument is simply ridiculous. Nothing in your argument has any reference to cost (you could do all of what you are saying regardless of whether your wage bill is £20m or £30m).

 

Clubs will simply price tickets and offers in the way that they believe will maximise their income. If clubs believed they could increase their income by reducing prices, then they would do it regardless of their cost base.

 

The price elasticity of demand is not affected by suppliers costs.

 

And I very much doubt that any club would reduce their ticket prices if they managed to enforce a wage cap (unless they were forced to).

 

Have you not both got it a little bit wrong?

 

A wage cap would presumably drive the highest earners (the biggest star players) out of the league (assuming it wasn't a universal cap across the whole football world), this would over a period of time leave a less-good product for which simple economics would say there would be less demand. Which would then leave the clubs with a choice of say crowds of 18k paying 40 quid a go, or crowds of 36k paying 20 quid a go .... factor in merchandising and match-day extras and clubs would clearly prefer crowds of 36k to crowds of 18k.

 

I'm sure all club's would 'like' to keep their prices at £40 for a less good product but all demand has some sort of elasticity and although all clubs have their 'die hard' fan base they all have their 'plastics' too ... look right at home to see that this is true.

 

Clearly rising ticket prices have been driven by consumer demand (to see big stars and big glamour) and by clubs maximising their revenue by setting the highest tkt prices they can - to cover their costs and to make themselves more competitive, whether that be winning things or merely staying in the same league .... as a large part of their costs are 'wages' is it not logical to assert that clubs charge high tkt prices to fund players' wages?

[um pahars]

Have you not both got it a little bit wrong?

 

A wage cap would presumably drive the highest earners (the biggest star players) out of the league (assuming it wasn't a universal cap across the whole football world), this would over a period of time leave a less-good product for which simple economics would say there would be less demand. Which would then leave the clubs with a choice of say crowds of 18k paying 40 quid a go, or crowds of 36k paying 20 quid a go .... factor in merchandising and match-day extras and clubs would clearly prefer crowds of 36k to crowds of 18k.

 

I'm sure all club's would 'like' to keep their prices at £40 for a less good product but all demand has some sort of elasticity and although all clubs have their 'die hard' fan base they all have their 'plastics' too ... look right at home to see that this is true.

 

Clearly rising ticket prices have been driven by consumer demand (to see big stars and big glamour) and by clubs maximising their revenue by setting the highest tkt prices they can - to cover their costs and to make themselves more competitive, whether that be winning things or merely staying in the same league .... as a large part of their costs are 'wages' is it not logical to assert that clubs charge high tkt prices to fund players' wages?

 

I would say the difference with your scenario is the acceptance that a wage cap would change the quality of the product on display (with players migrating to Europe), which would in turn might lead to some effect on the price clubs could charge. The elasticity of demand is driven by the product, not by how much it costs the producer (the increased wages have been driven by the huge increases in TV revenues as the money washes itself straight through the clubs and in to the pockets of agents and players).

 

However, for a wage cap to work it would have to be right across the board (or at least across the major markets in Europe) and simply reducing the wages of the existing players and them remaining in the English game would make no difference on the price being charged (why would clubs start to charge less if they believed the price they currently have is the one that maximises revenue?).

Edited 23 May, 2011 by um pahars

[SaintBobby]

I think clubs with spare capacity would be more willing to reduce prices in order to fill their grounds and draw in more punters who would in turn buy merchandise and refreshments. A recent survey conducted by virgin money (think it was them) suggests the uptake for season tickets for next year is set to decline and this is very good news. For clubs like Man Utd this won't be a problem as there are plenty who'll fill the vacated spaces, but for less glamouress clubs it's not sustainable. Less people doesn't just mean less tickets sold, it also means less merchandise and less food and drink.

 

We are probably approaching a (temporary) peak in prices.

 

Attendances have, I think, fallen in the Premiership this year. This may be down to the economic downturn though rather than a long term trend.

 

But I think that your economic arguments are a bit linear and over-simplistic.

 

It's not really the case that player's wages force up ticket prices. A rational chairman will set ticket prices to maximise profits. If Southampton were to suddenly increase players' salaries by 10,000% this Summer, it doesn't follow that they should/could increase the cost of a Saints ticket to about 30 grand to try and offset this. Doing so would mean they'd fail to sell a single ticket. Their revenues would fall. They'd be better off keeping tickets at around £25-£30 and season tickets at around £400.

 

The question is what the market will bear. To some degree, it's actually increased demand for tickets that is driving up players' salaries, not the other way round. If 30,000 people decide they are now willing and able to pay £250 for a ticket to a single match at SMS, expect the wages of Saints players to go up substantially as a result.

 

You're also probably wrong in your implication that the ticket price should be set at a rate that sells out the stadium. Some clubs such as Man Utd set prices below the "market clearing" rate for filling their stadium (I presume this is for PR/community relations reasons). Other clubs (such as Saints) set ticket prices at a rate that they know is unlikely to lead to a capacity crowd.

 

They are not irrational in doing this. That's because they face the problem of being unable to set up a pricing structure which perfectly segments the market. They can do this at the margins (cheaper tickets for kids, OAPs, disabled etc). But they can't discriminate very easily between different categories of standard adult fans.

 

One might presume that there are fans who are both very rich and very devout. They might be willing to pay £100+ for a match ticket. A fairly poor but devout fan (or a rich, casual fan) might be willing to be pay just £20. A very casual and/or impoverished fan might only be willing/able to pay a fiver. But - with one or two small nuances - you have to set a standard price.

 

It might be that, say, a standard ticket price of £12 would mean that SMS would sell exactly 32,536 (or whatever the capacity is) tickets. BUT this means you are effectively "losing" £88 for every "rich and devout" fan who'd be willing to pay £100 and you'd be "losing" £8 for every "typical" fan who'd be willing to pay £20. You're cramming in an additional 10,000 "casuals" at twelve quid a pop, but at considerable opportunity cost elsewhere.

 

In simple terms, you're better to sell 20,000 tickets at £30 (revenue of £600,000) than 32,000 tickets at £12 (revenue of £384,000). (okay, I haven't factored in food/drink/programme/merchandise sales....but you get the drift).

[westofshannonsaint]

as an outsider I think that it should be mentioned that successful teams sell out their ground regardless (within reason) of cost. e.g. towards the end of the season there was very little mention of the "ticket tax" and how much were people offered for a ticket for the Walsall game?

 

However empty seats in a stadium = lost revenue. I would suggest a Ryanair style ticketing policy - book early & make a saving, pay on the day/within 2 weeks of the game & get stung.

[SaintBobby]

as an outsider I think that it should be mentioned that successful teams sell out their ground regardless (within reason) of cost. e.g. towards the end of the season there was very little mention of the "ticket tax" and how much were people offered for a ticket for the Walsall game?

 

However empty seats in a stadium = lost revenue. I would suggest a Ryanair style ticketing policy - book early & make a saving, pay on the day/within 2 weeks of the game & get stung.

 

Actually, the way airline pricing works is that the prices can fall as the departure time approaches....

Edited 23 May, 2011 by SaintBobby

[westofshannonsaint]

Actually, the way airline pricong works is that the prices can fall as the departure time approaches....

 

I've heard that rumour before, never worked for me anytime I have had to book last minute

[toofarnorth]

Just heard on five live that prices at QPR next year will start at £46 for a ticket up to something in the mid £70's. Crazy prices and would certainly not be able to attend as often at those prices. The lower leagues do have their advantages.

[Matthew Le God]

Q.P.R. have an 18k capacity, which means that the supply can't meet the demand. If they had a stadium like St Mary's, I'm sure they wouldn't charge quite as much. Also it is in London, so London prices. Thus they can get away with increasing prices.

[Flyer]

Match day prices are really expensive but STs save about £15 a game so £35 to sit behind the goal isnt too bad if you buy a ST. I think theyre trying to fleece the people that only want to see Man U, Liverpool etc as those will be even more expensive while Wigan, Stoke etc will be cheaper. The £52-£72 is only the average cost.

[hughieslastminutegoal]

I still do. I was p!ssed off my face in the early hours of Saturday and decided to go to the Carlisle game last season. Jumped out of bed, grabbed my Red Stripe shirt and a clean pair of Y-fronts and got myself down to Brighton station for the 04:05 train to London. Return ticket to Carlisle cost me £195. Hotel cost £80. I could only afford it because I had grafted non stop the previous 14 days. But spontaneity is still alive in my heart.

 

That's an equation that would even baffle my alter ego Albert E.

 

Rainy L1 away match in Carlisle = 2x used days + £195 + £80 ?

[Sour Mash]

Q.P.R. have an 18k capacity, which means that the supply can't meet the demand. If they had a stadium like St Mary's, I'm sure they wouldn't charge quite as much. Also it is in London, so London prices. Thus they can get away with increasing prices.

 

Maybe. And I can't be @rsed to check, but did they sell out for many games this season just gone?

[hughieslastminutegoal]

Dune, 3% average inflation? Give over. Inflation is measured differently by different people depending on what they buy.

 

******, and even if 3% then what is wage growth in same period?

 

there are lies, damn lies and statistics. The true concept of inflation is something that rich folk don't want you to know about. It is how they steal any stored 'work' we may have laid down:

 

watch this: (and all the other chapters too). Chris Martenson is by far the best educator on this subject:

 

http://www.chrismartenson.com/crashcourse/chapter-10-inflation

 

Once upon a time you invested to make stuff people wanted to buy. You made a profit and re-invested some of it to make more stuff for people to buy : growth and consumption.

 

Now they have spare cash and dream up financial assets for investors to buy. These assets get used as security to borrow money off more investors to lend to other people creating a new asset. You use the new asset as security to borrow yet more money to lend to more investors, creating yet more assets that can be used to borrow... and keep on going. That's why "private", not public, borrowing is so out of control, and why we have to bail out banks. Every investor wants growth in the value of these assets. Its a pyramid built on foundations in sand, and we wonder why it came crashing down.

 

As long as paper assets increase in value quicker that inflation erodes the value of money, the rich are ok. And if they don't you get the tax payer to foot the bill, and carry on buying your hospitality box at a PL club (just to bring the topic back to football).

[Matthew Le God]

Maybe. And I can't be @rsed to check, but did they sell out for many games this season just gone?

 

Not always. But Premier League games against some of the biggest clubs in the world are more attractive than those against Doncaster and Barnsley.

[um pahars]

Just heard on five live that prices at QPR next year will start at £46 for a ticket up to something in the mid £70's. Crazy prices and would certainly not be able to attend as often at those prices. The lower leagues do have their advantages.

 

So what is the reason behind these crazy prices????

 

Is the big increase (on top of getting £50m in from SKY) due to the huge increase in QPR's wages this season????

 

OR

 

Is it down to pure supply and demand and guaging that people will pay these huge prices to watch the Premiership matches????

[70's Mike]

So what is the reason behind these crazy prices????

 

Is the big increase (on top of getting £50m in from SKY) due to the huge increase in QPR's wages this season????

 

OR

 

Is it down to pure supply and demand and guaging that people will pay these huge prices to watch the Premiership matches????

 

plus one of the smallest stadiums in prem in an area of high population

[krissyboy31]

So what is the reason behind these crazy prices????

 

Is the big increase (on top of getting £50m in from SKY) due to the huge increase in QPR's wages this season????

 

OR

 

Is it down to pure supply and demand and guaging that people will pay these huge prices to watch the Premiership matches????

 

Or greed of certain members of the board. It certainly wasn't a unanimous decision!

 

http://www.skysports.com/story/0,19528,11095_6951777,00.html?utm_source=twitterfeed&utm_medium=twitter

[sandwichsaint]

So what is the reason behind these crazy prices????

 

Is the big increase (on top of getting £50m in from SKY) due to the huge increase in QPR's wages this season????

 

OR

 

Is it down to pure supply and demand and guaging that people will pay these huge prices to watch the Premiership matches????

 

Surely it's down to a bit of both?

 

To 'compete' in the Prem (ie to have 'any' chance of survival) QPR probably need a minimum of 6-8 new players, perhaps up to a dozen new players. All these new players will come with very high add-ons in terms of signing on fees, agents cut, bonuses etc. before you add in any transfer fee. It probably costs somewhere between 1m-3m to get a bog-standard premier lge journeyman through the front door, before you look at paying 'premier league' wages and before you push the boat out on one or two 'name' signings. Factor in the rise in wages for the existing payers and their promotion bonuses and it's obvious QPRs costs have just gone through the roof.

 

Obviously a lot of this is negated by the big Sky money available, but it still makes sense from the club's POV to absolutely max their income (or as you or I would say to completely shaft their loyal supporters!)

 

On the other side they are clearly charging what they think the market will bear. They are offering top-line football (at least they will be from half a dozen of the visiting sides) right in West London and they have a very limited capacity- clearly they've done their hmwk and think they will sell out, or nearly sell out at these prices. The people to feel sorry for are their regular core supporters who've stuck by them home and away through some pretty lean times and are now being screwed sideways if they want to watch them in the Prem league.

 

Realistically is there any alternative? They could freeze their prices, play this year's team, take the Sky money, and go straight back down; would 'fans' really want that?

 

QPR have private backers and Sky money, surely they could make a go of it without fleecing their own and everybody else's fans too?

 

Or perhaps there is a middle way - is it that the cost of employing Premier League footballers dictates that clubs need £40/seat per game just to stand still?

 

I really do fear for my Saints supporting future when we get back in the Prem, on today's prices I don't think I would pay more than £30 for a standard game and maybe £35 for a premium game, equally the same prices would apply for me away from home: I just could not envisage spending £40 to watch Saints play in a bog-standard, mid-table Prem Lge game. Other than that it would be the cups for me home and away, and the odd Birthday/Boxing Day game.