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Baseball ticket prices

The Baltimore Orioles announced ticket prices for the 2010 season. Games against the Yankees and Red Sox will have higher prices than those against other teams, by about 10%. Tickets bought at the door will sell for $1 or $5 more than the same seats purchased in advance. With these prices changes, average ticket prices for Orioles games are still below the league average.

Asked about the price increases, here is the response as reported in a Baltimore Sun article by Kevin Cowherd:

"In 2000, our average ticket price was $19.50," Greg Bader, the team's director of communications, said Wednesday. "To think it went up only $3.50 in all that time, I think that's pretty remarkable."

Price discrimination - price differences unrelated to cost differences - tells us that the firm will charge a higher price for the good whose demand is least elastic. In other words, charge a high price to those buyers who are least likely or able to reduce their purchases of the product; charge a lower price to the people most able and willing to respond to the price change.

It is important to think about where cost differences might exist but go unrecognized. Early purchasers of airline tickets get lower prices than last minute purchasers. The airline bears risks of flying with empty seats, and the higher last minute prices capture the opportunity costs of selling the seats earlier, for example. Of course, virtually no one has to suddenly and unexpectedly rush to a ball game, so holding seats open for these last minute purchasers cannot justify the higher prices for game day purchases.

The team's spin on the new game-day ticket pricing is that it rewards fans who buy tickets in advance.

It isn't clear to me how it is a reward to advance ticket buyers to know that day of game ticket buyers paid a higher ticket price. It is even less clear to me that a "reward" to the buyers least likely to alter their purchasing behavior is a profit-maximizing business move. In other words, it seems to me the Orioles have their pricing with respect to day of game tickets versus advance tickets exactly backwards.

Cowherd points this out as well:

In fact, instead of raising ticket prices for same-day sales, maybe the Orioles should do what some theaters do.

For instance, if you're in Manhattan and want to take in a Broadway show that day, you can go to one of those TKTS booths and buy tickets discounted up to 50 percent.

And here in town, the Baltimore Symphony Orchestra and Center Stage offer discounts on same-day ticket purchases.

Their philosophy is simple: They want to fill seats.

The higher prices for tickets to Yankees and Red Sox games, on the other hand, makes perfect sense. First, games against those teams are far bigger draws than games against any other teams the Orioles play. Part of that is, of course, that Yankee and Red Sox fans travel to Baltimore for games because the tickets are cheap and getting here from NY and Boston is simple. Second, Orioles fans who made advanced purchases are thought to be very willing to sell even premium seats to the visiting Yankee and Red Sox fans. By charging more for the tickets, the Orioles are able to capture some of the surplus generated on the re-sale.

In the end, Kevin Cowherd chastises the Orioles for the ticket prices in these rough economic times and because of the sorry results of the last twelve years. Here is documentation of the history he references, the Orioles' attendance and winning percentage since 1997, the last time they won over half their games:

Year Attendance Winning %
1997 3,612,764 0.605
1998 3,684,650 0.488
1999 3,432,099 0.481
2000 3,295,128 0.457
2001 3,094,841 0.391
2002 2,655,559 0.414
2003 2,454,523 0.439
2004 2,744,018 0.481
2005 2,624,740 0.457
2006 2,153,250 0.432
2007 2,164,822 0.426
2008 1,950,075 0.422
2009 1,907,163 0.395

Count me as doubtful that higher ticket prices are the thing to fix what ails this club.