- The Washington Times - Thursday, January 29, 2009

For sports teams, the recent economic recession could force a delicate balancing act.

With many fans unable or unwilling to attend games because of changes in their financial situations, a number of teams have announced that they will keep ticket prices flat or even lower them in an effort to fill seats. But if the country’s economic problems linger, it will be interesting to see whether teams can continue to sell tickets without devaluing their brand.

When the economy is strong, teams generally set prices by supply and demand. If a fan is willing to pay $100 for a ticket, then that fan has determined the game experience was “worth” $100. But what if fans can’t afford $100 or $50 or even $20? Is the game experience then “worth” significantly less? After all, it’s still the same pro athletes playing the same pro game.

Teams could sell every ticket for a dollar and ensure a sellout every night, but that wouldn’t help the bottom line, and more importantly it would send the wrong message about the value of attending a game. If a ticket is sold for $20 now, it will be much harder to convince a fan to buy it at $100 three years from now.

When team executives are grilled about the high price of tickets, one oft-heard response is that the team is “charging a premium price for a premium experience.” The most successful teams are those that persuade fans this is true by fielding winning teams or, in the absence of winning, boasting an attractive stadium or a high level of customer service.

For a sports team, it is far more preferable to charge more for a ticket and strive to offer a top-notch product in line with that price than simply to reduce prices in order to fill seats.

The Nationals said last week that they would lower ticket prices on single-games seats in 14 sections for the 2009 season. But they are a somewhat unique case because as a relocated franchise playing in a new stadium in 2008, it was difficult to know precisely where to set prices. Team officials learned the hard way last season that many of the seats at Nationals Park were a bit overpriced, and they weren’t helped by the fact the team did not perform well on the field.

And it is worth noting that the Nationals did not lower prices on the most expensive seats, the Presidents and Diamond seats behind home plate. While those seats, some of which are priced at more than $300 a game, were rarely full during games last season, team president Stan Kasten has insisted repeatedly the team was happy with the revenue from them. What’s more, because they are advertised as “premium seats” with access to the ballpark’s posh club areas and food buffets, the team is loath to reduce their perceived value.

And this is the case with concessions, too.

One of the biggest complaints from sports fans is the cost of food and drinks at the stadium. But when the Dallas Cowboys and New York Yankees announced a partnership to launch their own catering firm, Legends Hospitality Management, the issue of pricing hardly came up.

“Fans are increasingly voicing their opinion that they want and deserve more from a stadium experience - they want a winning team, but they also want a venue that truly complements the game and elevates the experience,” Cowboys owner Jerry Jones said in announcing the new company in October.

Jones’ words essentially can be translated to say, “We’re going to charge whatever we want, but we’ll work to make sure the quality is in line with the price.” But if the economy continues to struggle, that’s an approach that will become harder and harder to justify.


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