Bad Economic Theory
The latest trend in some media outlets and blogs is to declare Bob Goodenow’s theory, that salaries don’t affect ticket prices, as gospel. I’m reading this one too many places recently. A Larry Brooks column I expect, given his stance towards the league right now. Everywhere else? Shame on you for not digging into things further or providing statistics that mean very little.
First off, throw out any one-year stat. Teams raised ticket prices and lowered salaries one year. So what? No one ever said salaries were the only things affecting prices, just that they do on some level. Also, a one-year “trend” is not a trend.
Secondly, don’t compare markets to one another. I know it’s tempting to say that the Wild have higher prices and lower payroll, but once again, it doesn’t mean salaries don’t affect prices. It does mean that market has a big influence and you can raise prices when people will still buy them, but that just means management knows how to turn a bigger profit. However, saying that the Rangers charge more for tickets than the Panthers should be a given. Gas and milk are also more expensive in New York. Every cost related to running the team is probably higher in New York - tickets will probably be more expensive in New York. If hockey was the thing in Miami you could certainly raise prices down there and let them sell the same, but it’s not and they can’t (unlike Minnesota). What does any of this have to do with salary? Easy - base price.
When raising and lowering prices is mentioned - where do you think the starting point is made from? These teams aren’t picking numbers out of a hat. They’re doing their best to figure out if they sold a certain amount of tickets to each game, what price would it take to cover costs best? Obviously tickets aren’t the only thing teams use to cover costs, but the NHL is certainly a gate-driven sport. Salaries are certainly the largest expense in running a team. These salaries help set base prices for tickets year in and year out. If the market supports them, then they remain level. If you’re selling out every game, bump ‘em up; if not, you’ll see teams running special after special. This is because they try to create demand in a way where they don’t lower prices and then raise them back up once a certain level of demand is met. Instead they pull the specials and no one thinks prices have changed a bit (it’s just better marketing).
Don’t be fooled by one-line statistics and spite, the largest chunk of money within one industry certainly has an affect on how that money is made.
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