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Yankees Do the Right Thing the Wrong Way on Ticket Prices PDF Print E-mail
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Jordan Kobritz Article Archive
Written by Jordan Kobritz   
Friday, 01 May 2009 23:03

Yankees Empty Seats

The Yankees lowered prices to help fill their most
expensive seats, but they could have gone about
it in a better way.

After weeks of denying the obvious, the Yankees caved to pressure from fans, the media and even the commissioner. Or perhaps it was a decision based on common sense, even if the Yankees’ historical arrogance suggests otherwise.

Eating crow is never easy, especially for the mighty. But that’s exactly what the Yankees did when they announced a scaled back price structure for the most expensive seats in the new Yankee Stadium.

The acres of empty seats during the first home stand of the season became a public relations nightmare for the Yankees. Worse, it suggested a lack of demand for tickets which could adversely affect future sales. The Yankees were clearly embarrassed. After adamantly denying a price reduction was in order, the Yankees came to their senses, sort of, and lowered the prices of several hundred of the highest priced seats in the new stadium. But the move sparked a new debate centering on whether the Yankees went far enough and what effect the price reduction will have on current ticket holders.

If a $2,650 seat is reduced to $1,250, does that make it affordable? And will the market react positively? The resale market is a good indication of the true value of an item – where a willing seller and a willing buyer agree on a price. By that standard, a number of tickets are still overpriced by a multiple of three. On the day the Yankees announced their price reduction, a number of those $1,250 seats (reduced price) were selling on StubHub.com for $400.

In an effort to appease current ticket holders, the Yankees concocted a complicated plan that would make Minor League Baseball marketers proud. The plan provides some high-end ticket holders with additional seats – 1, 2, 3 or 4, depending on the price and location – for select games at no additional cost. Surely this wasn’t what the team’s marketing department had in mind when the original price structure was being debated.       

Seats at a sporting event are a perishable item, akin to produce in a supermarket. If they aren’t sold for today’s event, the revenue is lost forever. But it should be noted that not all of the empty seats in the stadium were unsold. Some were sold on a season basis and even when they are vacant for a game, the ticket revenue is in the bank.

Of course, an empty seat means the loss of concession revenue, not an insignificant consideration for the Yankees. The SportsBusiness Journal reported that on Opening Day, concession revenue – food and merchandise – at Yankee Stadium averaged more than $60 per person. Those figures are unlikely to hold up over the course of an entire season, but the lost concession revenue is nonetheless real.

The reason sold tickets are going unused varies, but some ticket holders admitted to The New York Times that they don’t want to be seen sitting in the high rent district of the stadium under the current economic conditions. It doesn’t look good if you’re taking TARP money with one hand and eating and drinking in the lap of luxury with the other.

At the reduced prices, the Yankees stand to “lose” several million dollars in ticket revenue during the remainder of the season. But that assumption is based on selling all the reduced price tickets at the original figures, something that wasn’t going to happen.

The rollback in ticket prices is an admission by the Yankees that they were overreaching with their original pricing strategy. By design, the new Yankee Stadium contains approximately 4,500 fewer seats than its predecessor, even though the Yankees didn’t have much of a challenge selling seats in the old stadium. Reducing quantity, thereby increasing demand and prices – average ticket prices were up 76.3% over last year according to Team Marketing Report – is a proven marketing technique. And in time, it may be successful for the Yankees. The real test will come when the Yankees start playing better and the economy rebounds.

Prior to the price reduction, The New York Times reported that the Yankees intended to raise ticket prices by 4% next year. And the Yankees insisted that the reduced prices would apply for this year only. With chutzpah like that, there’s no need to shed any tears for the Yankees.


 

Jordan Kobritz is a staff member of the Business of Sports Network. He is a former attorney, CPA, and Minor League Baseball team owner. He is an Assistant Professor of Sport Management at Eastern New Mexico University and teaches the Business of Sports at the University of Wyoming. Jordan can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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