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Rich Man’s Game: Rising ticket prices in taxpayer funded facilities

In case you didn’t notice, prostate pilule attending pro sporting events has become a pretty elitist activity.  Right up there with lipoplasty and lunch on the veranda.\n\nApparently, purchase medicine this trend will continue unabated.\n\nThe Blackhawks announced last week that they will be raising season-ticket prices again, this time by 16 percent in 2014.  A team spokesperson assured Crain’s that the team is conscious about “pricing out” fans.  But since the average cost for a family of four to attend a Blackhawks game is already $396 in 2013, I guess Hawks management means not to price out fans they haven’t already priced out.\n\nAttending a game with the family didn’t always cost Chicagoans an arm and a leg.  In 1911, tickets for a White Sox game at Comiskey Park ranged from 25¢ to $1 (about $6 to $24 in 2013 currency).  Cracker Jack or a root beer cost a nickel and a hot dog a dime.  Early twentieth-century author James T. Farrell attended forty to fifty White Sox games a season as a boy living on the South Side with his Irish immigrant grandparents at this time.\n\nWhat happened?  Well, the rise of television, the automobile, and expressways provided the foundation for change.  While teams used to be much more dependent on folks from the local neighborhoods to patronize the stadium or ballpark, beginning in the early 1960s televised games helped to build and maintain a broader fan base, among people who owned cars and had access to the stadium via the interstate.  This meant that the radius around the park from which teams were drawing fans increased and so did the pool of wealthier patrons.\n\nBut ticket prices didn’t jump until decades later.  At least until the early 1980s, attending sporting events in Chicago remained a relatively affordable activity, involving folks from different places and social backgrounds.  But then the business of sports changed.\n\nSports team owners have always benefitted from market manipulation.  For years owners colluded legally (through anti-trust exemption) to depress player salaries.  But Curt Flood sued Major League Baseball in 1970 and soon team owners faced higher labor costs because of player free agency.  Owners were forced to contrive new ways to guarantee profits.\n\nOne of the ways owners did this was to standardize their demand for large cash handouts from host cities to cover the costs of their sports facilities, coupled with various forms of tax relief (and tax evasion).  Another way to grow profits was to modernize business practices in pro sports and incorporate systematized, marketing-driven models from corporations enjoying ever-greater profits in a new consumer economy.\n\nIdeally, sports teams want patrons who will not only buy a seat, but will pay for parking, a hot dog and nachos, a few beers or sodas, and a retro cap at the souvenir shop.  And they want folks who will shell out for season ticket packages prior to the season to guarantee a certain amount of revenue regardless of the performance of the team.  And they want corporations and executives willing to spend thousands on luxury suites and restaurant/club passes.\n\nIn 2011, folks who earned an income in the in the highest 20 percent of Americans spent twice as much on entertainment ($5,207 on average) than the typical American consumer ($2,572 on average).  A 2003 census study found that the discrepancy in spending on “fees and admissions” (which includes sports tickets) was even starker between the richest and the rest.  The top 20 percent in income earners in this country accounted for more than half of entertainment admissions spending.  With the growth of income inequality over the past decade, I expect this percentage is now even greater:\n\n\n\nSports front offices have come to realize that by pricing out a poorer segment of sports fans and marketing to richer ones, they can make more money with the same or even a lesser number of fans who can and will spend more on tickets and at the stadium.  As a bonus, the corporations and businesspeople who make up this class are far less susceptible to loss of income during economic recessions, so they’ll keep coming back during lean years.\n\nBy looking at costs of attending a sporting event in Chicago compared to average incomes and costs of other goods over time, we get a general sense of a trend, one where sports teams have been pricing out a larger segment of less-desirable (i.e. lower-income) consumers.\n\nThis first graph shows average ticket prices in Chicago (numbers mined out of Rodney Fort’s indispensable collection of sports economics data) compared to U.S. per capita income (divided by 1000).  Data on the Cubs and White Sox goes back to 1975 and the graph picks up other teams as average ticket price data becomes available from the sources. (click to enlarge)\n

 

\nWe see a big dip in Blackhawks ticket prices between 2004 and 2007, years during which the NHL suffered from a prolonged strike and the Blackhawks suffered from a terrible team.  Now that the team is better and hugely popular, the Blackhawks are making up for lost time, raising prices for tickets and amenities to new highs (something that is also apparent in the second graph discussed below).\n\nOtherwise, it’s pretty clear that ticket prices for pro sporting events in Chicago have well outpaced growth in per capita income over the past four decades.  In the most extreme example, average income increased 150 percent from 1985 to 2011, while the price of the average Bears ticket rose 600 percent during that time.\n\nWhen teams price out lower income Chicagoans, it’s an act of discrimination   U.S. per capita income is an average for all Americans, but women, African Americans, and Hispanics earn average incomes below the national average, so these are the groups being priced out disproportionately.\n\nThe second graph shows Chicago teams’ Fan Cost Index as compared to Consumer Price Index for the years 1991 through 2011.  (click to enlarge)\n

\nThe Fan Cost Index (FCI) was developed by Team Marketing Report as a way of measuring the overall cost of attending a sporting event.  FCI includes for each team during each given year the cost of four average tickets, two beers, fours soft drinks, four hot dogs, two programs, and two caps.  The Consumer Price Index (CPI) is the cost of a collection of goods and services (as defined by the Bureau of Labor Statistics) tracked over time intended to help measure inflation.\n\nThe Blackhawks are again an outlier here because they’ve had their problems over the last decade (again, now rushing to raise prices).  The average FCI of Chicago’s other four major sports teams was $130 in 1991, and in 2011 the average grew to $387; that’s an increase of nearly 200 percent.  Meanwhile, CPI has increased only 40 percent over that time.\n\nIn short, the cost of attending sporting events has risen higher and faster than the cost of other stuff over the past twenty years.\n\nAnd what has been the result of teams pricing tickets so high that most people can’t afford them?  Business has never been better!  Team revenues and franchise values have grown by the hundreds of millions since Forbes has been accessing these things over the past decade or so.\n\nMore than the quality of the team from year to year, the key to financial success for the franchise has become maintaining the quality of the sport, the league, and the team as a product.  While the former can be judged in wins and losses, the latter is a matter of perception, requiring that teams distance themselves from the repugnance of low- and middle-income lifestyles.\n\nWhat does this look like in practice?  Well, it’s not always pretty.  In her recent lawsuit against Jerry Reinsdorf and Jim Thompson, former ISFA CEO Perri Irmer claims to have spearheaded efforts to bring to the ballpark kids from underprivileged backgrounds living in the surrounding community.  The complaint reads:\n

Reinsdorf did not support Perri Irmer’s efforts to bring more community members into the ballpark through her targeted selection of minority youth and community…Reinsdorf viewed these efforts as being contrary to the White Sox brand, which he viewed as appealing primarily to persons from the suburbs or other areas of the city who were perceived as having little contact with minority communities.

\nIn other words, sorry kids, letting you in the park might be a nice thing to do but, you see, the market determines what is right and wrong, and rubbing elbows with people like you would cheapen the experience for our most desirable patrons.  You understand, right?  Now take a deep breath.  That’s freedom filling your lungs.  Isn’t it great?  Go ahead, run along back to your blighted neighborhood.\n\nIn actuality, only part of this model involves “free market” economic principles, because our professional franchises are propped up financially by our government.  While our representatives can’t seem to find the money for schools or pensions, legislative bodies dig deep for our sports teams, investing hundreds of millions in the White Sox and Bears stadiums and providing tax relief to the Bulls and Blackhawks to the tune of $5 million per year or more.\n\nThe exception is the Cubs.  But Tom Ricketts is working to change that—even after being told to talk to the hand when he asked for renovation subsidies the first time—with his new diabolical plan for “hidden subsidies.\”\n\nSo here’s the deal—and it’s a raw, chaffing, blistered one: all taxpayers subsidize Chicago sports teams, but only the wealthiest ones get to enjoy the facilities we pay for!\n\nUnless Chicagoans rise up and start demanding a more equitable return on these large public investments, high fan costs at the stadium will continue to be the norm.  Sure, teams will, from time to time, lower some ticket prices by a nominal amount.  But the long view is this: these breaks are not enough to make the overall costs of attending sporting events with any regularity feasible for most Chicagoans.\n\nBut to fans who are feeling left behind and worthless, don’t despair, the team needs you too!  Television and media money are becoming a larger piece of the revenue pie for professional sports teams, and the team requires that people like you stay at home and watch the game!\n\nIt’s like I always say: The rich get richer, and the poor get to watch beer commercials.

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