Sports ticket prices are collapsing. Is that good news for fans?

The stadium scene.
Aug. 4 2011 10:06 AM

Plenty of Good Seats Still Available

The collapse of the sports ticket bubble.

Illustration by Robert Neubecker. Click image to expand.

A few months ago, it seemed like Major League Baseball was in the throes of a ticket apocalypse. Through the first two weeks of the season, six teams had set all-time single-game lows at their current homes. The surprising Cleveland Indians led the American League Central in the standings, but remained in the cellar at the turnstiles. The New York Yankees, whose ultrapricey new stadium has been beset by empty seats since it opened in 2009, hosted record-low crowds for four games in a row. It was as if fans, having quietly absorbed more than a decade of price hikes and the advent of $9 beers, had spontaneously decided to go on strike.

Ticket sales have improved since—overall attendance is now roughly flat year over year. Even so, there's a good chance this will mark the fourth straight year that Major League Baseball has seen ticket sales slide after a record year in 2007. You can't blame it on steroids, either. NFL, NBA, and NHL attendance have likewise dipped over the last three years.

The obvious culprit is the sinking economy: Lose $4 trillion in spending power, and at least a few consumers are going to save by watching games at home in hi-def. Yet as the economy lurches back to its feet, there are signs that the sports ticket bubble will continue to deflate. That could have far-reaching effects on ticket prices, competitive balance, and the very existence of the major pro sports leagues that aren't the NFL.

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Sports leagues' ticket woes aren't always visible to the naked eye. According to Team Marketing Report's Fan Cost Index, three of the four major leagues saw average ticket prices rise last year. (The NBA, which cut prices by 2.3 percent, was the exception.) These figures, though, only take into account the face value of tickets. Teams are understandably hesitant to cut prices outright, since it's a tough move to undo should the economy (or the team) suddenly rebound. Instead, we've seen a frenzy of discount offers, attempts to goose the turnstile count without tipping off season-ticket buyers that they're paying more per game than their seats are worth.

Perhaps the first sign of the ticket bubble came in September 2009, when the Baltimore Orioles offered an unprecedented deal: tickets for $1 (plus the ubiquitous "handling fees") for the entire month, except for games against the Yankees and Red Sox. Attendance barely budged. That fall, several NBA teams began quietly offering two-for-one deals to fill suddenly half-empty houses. The previous season the New Jersey Nets, lame ducks at their home arena after announcing a move to Brooklyn, actually gave away tickets to one game for nothing more than Ticketmaster fees.

At the same time, the high end of the ticket market showed signs of softening. Last fall, the New York Giants demanded that fans pony up as much as $20,000 for "personal seat licenses" before being allowed to buy season tickets at the New Meadowlands Stadium. That may have been a workable price point when ground was first broken for the stadium three years prior, but fans balked at the hefty fees in 2010. What was once a lengthy ticket wait list quickly evaporated, leaving the team with thousands of empty seats on its new building's opening day.

It's a remarkable turnabout for an industry that remade its business model over the past two decades around selling expensive tickets to corporations and rich people. It's no coincidence that the biggest surge in ticket prices came not during the 1970s and early 1980s, when free agency drove up player salaries, but during the 1990s, when the rich got dramatically richer thanks to the Reagan tax cuts and the Clinton economic boom. At the same time, a wave of new stadiums and arenas—mostly built with taxpayer dollars—flooded the market with pricey new luxury boxes and club seats to cater to fans' newly bulging wallets.

The result was a dramatic shift in the nature of sports business, and in the type of fans that clubs tried to attract. After an exhaustive search through consumer-price-index surveys, economists John Siegfried and Tim Peterson determined that the only demographic segment that attended more baseball games in the 1990s than the '80s was households earning more than $50,000 a year (which back then was still real money). As the rich poured into new stadiums and arenas, the less-wealthy folks who'd traditionally been the core of the sports market were largely priced out, or at least limited to splurging on tickets once or twice a year.

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