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Just like the airlines

2008 July 18
by Skip Sauer

MLB will set a new attendance record if current figures hold up through the second half of the season. Given high gas prices and shaky consumer confidence, this is somewhat puzzling. One factor that might help account for this is an increasing use of discounts and promotions. Here are some snips from an article on demand for sports in Atlanta:

The Braves recently added to a long lineup of discount offers, which range from two-for-the-price-of-one outfield seats to four-game packages that come with $25 gas gift cards.

…The Braves’ Eurton said the team’s most successful discount offer has been a “stay-cation” package that offers tickets for a game and up to four other Atlanta attractions — the Georgia Aquarium, Stone Mountain Park, World of Coca-Cola and Six Flags. Savings are as much as $52.99, or 37 percent, depending on how many attractions are chosen.

…Eurton said the Braves were “ahead of the curve” with value-added packages in the past — such as their two-for-one Tuesday tickets and all-you-can-eat seats — but developed more such offerings this year. Because of the state of the economy, “I think fans are paying more attention to what we have to offer,” he said.

A stadium has something in common with an airplane: filling a seat with a fanny has very low marginal cost, so it makes sense to price discriminate like crazy to get them filled. That’s what the airlines do. The trick for baseball teams is finding creative ways to do it. If the Braves are in any way typical, the increased use of promotions may have something to do with record ticket sales, but not record demand.

On a related note, consider this information on the NFL’s Giants pricing scheme, where seat licences at the new stadium are going for $1,000 to $2,000. From Sandomir at the NY Times:

Even before the Giants released their pricing plan, which has 10 options, fans were resigned that they had to buy licenses, which guarantee the right to buy and control their season tickets — or lose their places in the new building.

John Moss, of Roseland, N.J., learned that he would be paying $5,000 each for his four front-row, end-zone seats at the new stadium. “It’s difficult to afford,” he said, “but I’m better off than the guy at the 40-yard line in the 27th row who’s paying $20,000.”

It would cost $80,000 for four seat licenses and $28,000 a year to buy the tickets in the field level behind the Giants’ bench, which will become an elite Coach’s Club in the new stadium.

There’s no sign of recession in those figures.

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