How Not to Price Your Tickets - A Look at New Yankee Stadium
This week brought the news that the Yankees - yes those Yankees - were lowering ticket prices on their most expensive premium seats due to sagging demand and embarrassing empty seats.
The problem, of course, was the outrageously expensive cost of sitting in the premium seats, compared to the relatively modest cost of sitting elsewhere. Sure, there will be a few people who will pay top dollar to sit in the best seats in the house, but how many people are willing to pay $2,500 when you can get in the park for just 14 bucks?
Steinbrenner has admitted that he's overpriced the tickets, but just how badly did the Yankees botch their ticket prices? For this I compared the Yankees prices from their ticketing website to the median ticket price for all other stadiums built in this same neo-classic era for a variety of approximate seat locations. I then compared this to the prices you could get for the same seats on StubHub, the ticket re-seller which has thousands of tickets sold by fans for each game. Since markets tend to get closer to their true value as the event nears, I took two upcoming games - this Sunday's game against the LA Angels (for which the weather is supposed to be terrible) and for Tuesday's game against the Red Sox (the weather still won't be great, but it's the Red Sox) for comparison. The following chart shows the difference between the prices in a variety of sections.
As you can see, the true value of the tickets according to StubHub are closer to the MLB median ticket prices than the exorbitant face value of the seats in a lot of cases. Anyone planning to go to the games this week ought to think twice before buying tickets at the box office because clearly deals can be had. It's also readily apparent that the Yankees did indeed overprice their high-priced tickets compared to their nosebleeds and bleachers.
For the Angels game, the only tickets going for more than face value were the bleacher seats. Meanwhile, the $100-plus seats were going for about a third or a quarter of their face value. For Tuesday's Red Sox game, the tickets were going for about double the price of the LA game across the board. This means that while bleacher seats are going for double their face value, the fancy seats are still going for well under face, meaning that a lot of them are presumably unsold, leading to a lot of pictures such as this one.
So what did the Yankees do wrong? The average team was selling their excellent (but not “premium” seats) for about $70, while their decent seats (poor lower level seats or good upper level seats) were going for about half of that. The cheap seats in the outfield or down the lines in the upper deck were going for about a quarter of that amount. But the Yankees didn’t follow that pricing structure at all. Instead, they priced the good seats at $375, about four times more than the decent seats, and about eight times more than the nosebleeds and bleachers. This leads to a huge chasm in pricing sections and the empty seats in the good sections that we keep hearing so much about. As the StubHub data shows (which is similar to most teams’ pricing structure of half-price for decent seats, one quarter of the price for nosebleeds), it’s simply not worth that much extra to get that much closer at a ballgame.
However, the Yankees were just the latest team to push the envelope in what has become an increasing trend. Baseball ticket prices have undergone a revolution in the last 10 to 15 years, with teams figuring that people are willing to pay a lot more based on seat location. It used to be that when you walked up to the ticket counter, you'd ask for the best available seat. Usually the really good seats were already sold, or taken by season ticket holders, but if you could get your hands on a good ticket, you'd take it, knowing that you could do so without breaking the bank. It was usually worth the extra few bucks to sit up front.
A look at National League ticket prices based on the 1993 National League Greenbook (ticket price information is that annoying type of data that's ubiquitously available at the time, but surprisingly difficult to find even a short while later) shows a few surprising things. You can see the approximate pricing difference here, though with less detailed seat locations than the previous charts:
First off, the prices in general were a lot lower. Even after adjusting for inflation, the median highest priced ticket among the 12 teams was $20. Those prices today are unfathomable in any ballpark, not just in New York. The median ticket price has tripled over the past 16 years from $14 to $40 (again this assumes the same number of seats in each section, so it's not perfectly accurate - it's probably on the high side).
Second, there were far fewer price levels. A cruise around the MLB ticket websites will reveal a dizzying array of price levels and seating options. You can't really tell from this chart, but in 1993 each team had just three to five price levels, with the typical arrangement being a box seat, terrace seating, reserved seating, and general admission or bleacher seating
Today of course, teams have realized that seat location matters a great deal, and four or five price sections won't do. Their theory is that more price points make for a fairer pricing system, with each patron getting the seat they paid for. In the old days however, there wasn't that much difference in price between the good and bad seats anyhow, which brings me to my next point.
Not only have ticket prices been raised dramatically since 1993, but it's primarily the good seats that have gone up the most. While ticket prices have tripled, the spread of the ticket prices has also increased. No longer can you pay an extra $10 and get the best seat in the house. While the top seats used to be $20, now the best seats in the house have increased tenfold at over $200 a pop. Even among the non-premium seats, this trend is true. Nosebleed seats have doubled from about $7 to $14, but the field boxes, the mezzanine seating and the best outfield seats have increased three or four fold. The standard deviation of the 1993 ticket prices (and again this is very crude because it assumes there are the same number of seats in each section I outlined) was just $4.80, but in 2009 this standard deviation was a whopping $55.80 - a remarkable increase in spread. Even when excluding the "premium" seats the standard deviation was over $20.
Another interesting difference is that in 1993, all teams priced their tickets around the same. The following chart shows the standard deviation between teams for each type of ticket.
As you can see, there was fairly little difference in pricing between teams in 1993 - the ticket prices for each team are the same give or take a couple bucks. Now however, the differences in ticket prices are dramatic, particularly for good seats. The only real consensus is in the back of the upper deck where teams think they should be priced at $12, give or take $4. If you walk into a random ballpark and ask for a decent lower level seat, you'll get a vastly different answer depending on the ballpark - the median price is $52, but the standard deviation of that price is $63! You can get one for as little as $27 in Pittsburgh or as much as $375 at New Yankee Stadium.
A final observation about the 1993 ticket prices is that teams didn't have differing prices based on opponent, time of the year, etc, like they do today. The Chicago Cubs were the only team which practiced any type of this, and they did so by raising their prices by $1 for weekend and night games. Now, almost every team varies their prices based on a myriad of factors, and charges "premium" prices for certain games.
So, where does that leave us as fans? Certainly the tickets are never going back to the way they were when we were kids. Teams have realized that certain games and certain seats demand higher prices and they are charging those higher prices. But this latest Yankees debacle may be the beginning of a reversing trend. The Yankees and Mets both have been burned by their gouging and the Nationals also were burned by this pricing structure last year in their new ballpark. For many games, the attendance would be fairly low, but all of the decently priced seats would unavailable, locking out the average fan and creating quite an odd pattern of seating at the ballpark. The long term effects of this pricing is unknown and teams may be wise to that fact that this could be detrimental. For instance, one of the incentives of getting season tickets used to be that over time you could move up into really good seats - but now, the really good seats are unaffordable to a lot of people - so where's the incentive?
How baseball teams go forward with their pricing is unknown, but taking a look back sure makes you long for 1993 again.