Why Don't Sports Arena Markets Clear?

Moneybox
A blog about business and economics.
July 17 2013 10:20 AM

Why Don't Sports Arena Markets Clear?

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WASHINGTON - AUGUST 1: U.S. President Barack Obama, his daughter Sasha and an unidentfied person watch as the Tulsa Shock play against the Washington Mystics on August 1, 2010 in Washington, DC.

Photo by Joshua Roberts-Pool/Getty Images

My wife and I are both basketball fans, so last night we went to our first ever WNBA game to see the Washington Mystics play the San Antonio Silver Stars. It was pretty fun! Obviously the players are not as tall, strong, or fast as NBA players but in terms of sub-NBA basketball I sort of preferred it to the slipshod and slow-paced games played by unpaid male teenagers that get so much hype every March. Besides which, thanks to the miracle of supply and demand you can get really good WNBA seats for cheap. Definitely worth your time if you're into basketball.

But the worst thing about the game, in my opinion, is that there were so few fans in the stands. Even with the entire upper deck empty (which is fine and makes a lot more sense than creating a purpose-built smaller arena for the less-popular sport) it looked like a majority of seats were vacant. That led, obviously, to a subdued quantity of crowd noise which detracted from the fun of attending a live sports event.

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And obviously to the economics-inclined fan it raises the question of why the market for WNBA tickets doesn't clear. Now it's easy to tell a story where the demand just isn't that price-responsive and so the revenue-maximizing price doesn't generate sellouts. But this is what price discrimination is for? Where's the senior discount? Where's the kids discount? And heck, just give tickets away for free. I'd be trying to find every girls sports organization in town and give them blocks of free tickets. You'd make some money at the concession stand, you'd make the game experience more enjoyable for the other paying customers since there'd be more people cheering, and it'd be an investment in building a future fanbase by getting kids into the arena when they're young. The closest they seem to have to a price discrimination strategy is moderate discounting of large groups buying over 15 tickets.

I've often wondered more or less the same thing about Wizards games where they routinely don't come close to selling out in recent years and thought proprietors of low-quality NBA pricing could learn a lot from airlines who try very hard to avoid flying half-empty airplanes. But the men's team always comes close enough that it doesn't actively detract from the fan experience, so I figured maybe they know what they're doing. With the Mystics, though, even though they're clearly aware of the basic concept that you charge less money for a less-popular product they really don't seem to have grasped the idea that the marginal cost of filling a seat is about $0. You've gotta do something to get people in there, cheering and buying chicken fingers.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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