Monday, April 2, 2007

Counterpoint: Squeezing the Baseball Market in NY

So Jerry just posted about the two new "stadia" (Ms. Guerra would be proud) that the New York baseball teams are building over the next few years. The point, I think, is that ticket prices will necessarily go up because each stadium will have fewer seats; Jerry blames the Mets in particular, as they are downsizing 12,000 seats, comparted to the yankees' 6,000. While ticket prices will go up (I think both teams have already said this), I disagree with Jerry's reasoning that is particularly critical of the Mets.

It's not enough to say that the Mets are squeezing fans more than the yankees merely because the Mets are cutting out more seats. In fact, based on ticket demand, the opposite is the case. In 2006, the Mets set a club record by drawing an average of 43,327 fans to each home game. By contrast, the yankees drew an average of 51,858 fans to each home game. In order to determine whether each team can cut seats without raising prices, however, you also have to look at capacity. The Mets' attendance figures for 2006 amounted to a 75.5% capacity ratio (13th in MLB despite being 3rd in overall attendance), while the yankees capacity ratio was 90.2% (side note: in 2004, the Boston Red Sox had a capacity ratio of 100.7%; subject of a separate post).

So what's the point? The point is that the yankees are cutting their seat availability below current capacity (51,858 per game > 50,000 seats in new stadium), while the Mets are merely harmonizing their seat capacity with current demand (43,327 fans per game <> would have to raise ticket prices, while the Mets would not.

Now, there are obvious problems with the above reasoning. The Mets actually can sell 57,000 tickets to games against the yankees, the opener, playoffs, etc., and the Mets clearly cannot sell 43,327 tickets to a game against Pittsburgh on a rainy Tuesday night in August, but I think it is fair to point out that the 12,000 seat reduction needs to be viewed against capacity and demand in determining whether it is reasonable.

I think the Mets will raise ticket prices, and I think the Yankees will do the same. The price for fans to pay for a winning club, I guess. In all fairness, though, 57,000 seats is way too big for a baseball stadium, and I think the Mets' proposed reduction is about right.

My point, though, is that the seat reduction in Flushing doesn't require a price increase to maintain income levels. Given the demand to see a winning team in a brand new ballpark, the Mets can reasonably hope to sell out pretty much every home game at the new stadium for the first year or two (look at the Blue Jays, Indians for previous examples). If they sell 45,000 tickets 81 times a year, they will total 3,645,000 tickets in the season, which would be more than they have ever drawn before. In that case, they wouldn't need to raise ticket prices in order to maintain current ticket income (side note: they will still do it, because the demand will exist, and billionaires are generally good businessmen). By contrast, the yankees know that the demand exists, and are consciously reducing supply below demand . . . . that decision is more likely to result in a ticket price increase.

Or, to put it another way:


ChuckJerry said...

Here's where I disagree. The average home game at Shea is not an average night at Shea. When you're at Shea there are either 37,000 or 57,000 people. There are never 43,000 at Shea. The standard deviation for Mets fans at Shea is enormous, while the standard deviation for Yankee attendance is very small.

The new stadium may do it for a couple years, but I don't see the Mets selling out the Pirates game in August ever, and especially after the sheen wears off.

The Mets right now bank on those 15 or so games where they sell out and they're going to cut them out essentially, making it that much more important for fans to come to the other, less exciting games, and I don't know if I see that happening.

The New Yankee Stadium will hold 51,000 fans, which is right on their average give or take a few hundred. They will also have seating availability in the luxury boxes, which may (or may not) move some of the box seat holders from the field level into the boxes, and therefore open up seats for the fans.

Open Bar said...

That pic of Steinbrenner could be placed in every single blog entry, and I'd be a happy man. God bless that red-headed bastard!