his plan for the Ricketts to boost attendance next year at Wrigley.
One part of his plan is to lower ticket prices:
Slashing prices by about 10% would seem appropriate. It might not hurt to lower prices of the bleachers even more than that, and possibly even reduce the cheapest seats (the top part of the upper deck) even more.
While I agree that reducing ticket prices might result in a bit of a boost to attendance next year, the question is whether it would help their revenue stream, which is what the Ricketts care about (and so would you if you had a $450 million credit card bill that needed paying).
Let's say that his assumption of about 25,000 season tickets is true (and I think he's probably pretty close with that guess since I've seen guesses range as high as over 27,000). Those 25,000 seats are sold next year whether the Ricketts lower the prices, keep them the same, or even raise them. When you have over four times as many people waiting for your product as you have product available, it tends to push the price up pretty high and the Cubs have over 100,000 on their waiting list.
Think about it. I might be about done with forking over my cash year in and year out to a loser team that doesn't seem to have any tangible sense of direction or strategy that doesn't involve revenue streams, but there are over 100,000 people looking over my shoulder waiting for the opportunity to buy in. Those tickets are sold. There may be some turnover in who they are sold to, but they are sold and you can put that in the bank next to all the money the Cubs will collect in January from season ticket holders.
So now what do they do to sell those single game tickets? Let's say that demand for tickets declines next year. There are still many games where they are going to sell out, or get at least the 15,000 or so tickets that remain unsold to season ticket buyers. The Cardinals series, the White Sox series, and generally all the interleague series in the middle of summer will sell and they will sell early. So let's suppose that given all of those virtual sellouts, the Cubs can expect to sell about 5,000 single game tickets per game over the course of a season to bring average attendance to 30,000 per game. That would be a precipitous drop of over 20% from the current average of 38,217 they are averaging so far this year (which is down about 3.5% from last year).
Let's also assume that dropping the price of tickets 10% from $52.56 to $47.30 increases single game demand by 20% (which I think is considerably more than it actually would). But lets see what that does to the revenue stream:
So under the new price structure, the Cubs would average 31,000 per game instead of 30,000, but they would bring in about $9 million less in ticket revenue. Those extra 81,000 fans per season would have to each spend over $110 on concessions and memorabilia to just break even in revenue, and I find that unlikely.
In order to break even at about $129 million in ticket revenue, a 10% drop in average ticket price would have to result in a 67% increase in single game ticket demand. That is also unlikely without a dramatic increase in team performance, but if we figure that in, then there is really no reason to even consider a price drop since better performance will sell more tickets regardless of price.
So while I appreciate Cubbie Doc's desire to keep ticket prices in check, the only way to really make ticket prices go down is to make season ticket holders stop buying. I don't think that is going to happen as much as I thought it might earlier this year. I took a poll in Aisle 424 last night and when posed with the question, "Will you renew next year?", most thought long and hard about it and said they probably would end up renewing. I know Yellon has stated that not even the crime of the Cubs selling $10 bleacher seats to games he paid $60 for will keep him from renewing. It doesn't sound like Cubbie Doc is going to stop buying.
Look what happens if the Cubs decide to raise the average ticket price by 10% next year and that causes single game ticket demand to fall of a cliff by 50%:
Despite lowering the average game attendance to 27,500, they would still come out ahead in revenue from our baseline assumptions. Granted, they will burn through that 100,000 wait list like it was set on fire by the Cubs' bullpen, but if they really wanted to raise ticket prices while hoping and praying that the on-field team performs well enough to justify it for future seasons, they could probably do that and get away with it. That is the kind of cushion they have and that is the reason they had representatives in their ticket office brazenly talk about how Cubs tickets are practically recession proof.
As long as the season ticket waiting list exists and season tickets sell out every year, all the Cubs technically need to do is find out how much pain their most loyal fans are willing to endure every year, both on the field and in their pocketbooks.
Today, Bruce Miles reported on a pow-wow between Tom Ricketts and the beat writers on a few things, but included these bits about ticket prices and ticket sales:
--On whether the Cubs would hold the line on ticket prices for next year, Tom was noncommittal, saying the Cubs hadn't formulated their pricing strategy yet.
--On attendance being down this year and thousands of seats being empty of late, Tom said: "Obviously, we want every seat full every game. The attendance has been very, very strong in the grandstand. But certain day games and then the last couple of night games, the bleachers have been softer. We've got to put a winning product on the field to make sure all the seats are full every year."
Allow me to translate the Cubs-speak that was being fed to the reporters:
- "Hadn't formulated their pricing strategy yet" = ticket prices probably aren't going to move in the downward direction much, if at all.
- "Attendance has been very, very strong in the grandstand" = We love that our season ticket holders keep coming back for this shit.
- "The bleachers have been softer" = There are only a few fools who buy those ridiculously bad seats in full season packages at secondary market prices.
- "We've got to put a winning product on the field to make sure the seats are full every year" = We've got to get our smoke and mirror tricks down pat to fool people into thinking this roster is going to contend next year.
As long as the season ticket holders continue to line up like cattle, ticket prices aren't going anywhere but up, and as business-people, the Ricketts would be foolish to do anything otherwise.