Demand and pricing

Abstract

What determines the demand for tickets to a single sporting event? Given that demand, how are ticket prices determined? What determines the gradient in prices as the quality of the seats rises? How does the opportunity to sell ancillary goods at a sporting event — such as food, drinks, parking and souvenirs — affect the prices of tickets? Is an unrestricted market for resale tickets (called scalping in the USA and ticket touting in the UK) beneficial or harmful? How is a season ticket similar to a call option on the stock market? Why would a fan prefer a season ticket to buying tickets to individual games? Why would a team owner prefer selling season tickets to selling individual game tickets? What determines the demand for and pricing of season tickets? Starting with the assumption that the owner’s objective is to maximize profits, the main goal of this chapter is to answer these questions with simple microeconomics tools. Whether owners indeed try to maximize profits was discussed in Chapter 2.