Date: May 28, 2015
From: Kendrick Peters
Subject: Proposal on if ticket prices are to high for professional sporting events
The purpose of this research study is to see if ticket sales of professional sports across the board are being over priced, and if this is causing a lower consumer satisfaction causing people to stay at home and watch games on television.
When it comes to sporting events there is nothing like seeing your favorite stars in real life action. Professional sporting events pricing of tickets and generating the correct amount of ticket revenue depends on many key factors. These factors and key decision-making on the management’s part can lead to the livelihood of the franchise.
As we know, there are many complaints by the consumer on the overpricing of professional sporting events. Management has to deal with these complaints daily and make vital decisions to keep their franchise running efficiently. One of those key factors is finding out the demographics of your surrounding areas franchise. Some of the aspects of geographic areas that must be looked into are GDP per captia. Another aspect that must be looked at is the median age of the surrounding area and finding out your target audience. Another factor that is hard to put a valuation on is if you have star players on your franchise how much is this going to affect the price of each ticket.
This has led to growing concern of losing consumers because of overly high ticket prices and having the option of streaming the game at home on live television. A research study has been conducted by ethnographic qualitative evaluation of the surrounding population of Christopher Newport students. A survey will be conducted to engage how higher ticket prices can effect the mindset of the consumer when purchasing tickets. Some of the questions that will be provided on an online survey are giving question such as what ticket price would you prefer for this sections of seating, would offering a meal package for a ticket allow you to pay a higher price, how often do you attend our games, would a certain promotion night cause you to pay a higher price, would package deals for tickets be more accessible for you, List in rank of importance of proximity to the playing field, food option, promotional give aways, entertainment during breaks, chances to be entered to win concerts, and also would the chance of meeting a star player convince you to pay more. This research will lead to a recommendation for professional sporting event ticket prices on how the sports industry can persuade more viewers at home to come to games.
The professional sporting industry is largely affected by the expansion of the television and broadcasting industry. The professional sports market place generates around 25.8 billion dollars a year and the TV and broadcasting of sports generates around 8.12 billion dollars a year. This makes up about 31% of the growing sports industry(List of Professional Sports Leagues by Revenue. (2015, May 22). The revenue of television broadcasting is generated through partnerships within in professional sports leagues such as: the National Football League( NFL), the Major League of Baseball(MLB), The National Basketball Association(NBA), the National Hockey League(NHL), and many other professional sports. The major television broadcasting networks that see an opportunity within the industry and branch out to homes across the nation are ESPN, FOX, NBC, TBS, TNT, and many more. When studying the consumer market these are brand names that are recognized for sports viewing across the nation.
When conducting research about professional sports watching, there are many different types of demographics that it can cover. Therefore, this research is concentrated to ethnographic research inside of the Christopher Newport University in order to narrow the field size to college student sport viewers. In this ethnographic research study the research will be conducted to see what factors determine if college students are going to use their disposable income on watching sporting events live or stream at home on television.
i. In order for this to be achieved in ethnographic research the habits of everyday lives are analyzed to build a theory. The factors of everyday lives that analyzed through an online survey at Christopher Newport University are disposable income in college student’s budgets. This means how much of their income goes towards things that aren’t necessities such as professional sporting events. Another factor analyzed in this survey were aspects of lifestyles from individual to individual. Also another factor was looking at this subset group and what portion were interested in sports. If this portion of the group was interested in sports then what is their overall perspective on sports and how it should be viewed.
In conducting ethnographic research, the researcher determines what type of ethnography pertains to the situation. Realist Ethnography fit this research study because a particular stance was taken on the topic, and it was up to the individuals being surveyed to respond with their opinions. The stance that was taken was that ticket prices are to high for professional sporting events and this would cause consumers to stream the game at home. Then the survey was conducted by asking engaging questions to build up interest in this topic and give feedback on the topic through opened questions
II. These objective questions were made and analyzed on Google Forms. Then the survey was distributed on social media through my fraternity group and my personal twitter and Facebook feeds. This resulted in 43 responses to the survey with rhetorical information from text filled answers. Some the questions distributed were to find out the demographics that were answering the survey. These questions included what is your age and what sports do you play. This resulted in a median age of around 20 and the most popular sport being played was basketball. These questions were intended to find out what the target demographics were, and what sports they would be viewing.
Then some questions were asked about what amount of disposable income would the participants in this survey use to watch professional sporting events. Questions related to disposable income and its use included: How many professional sporting events to you attend a year, What is your price range for professional sporting tickets, what is the most important factor to you when attending a sporting event. The results of these questions showed that 87.9% of the participants would only be will to pay up to $75 dollars for tickets. It also showed that only 35% attend more than 3 games a year. Also in the survey respondents gave high ticket prices as their top reason why they don’t attend sporting events.
III. Another important factor that was observed through this survey was the lifestyle of students at Christopher Newport University. Some of the questions that were asked to find out about their different lifestyles that relate to this research study including what do your weekends consist of, what do you watch on television, what professional sports teams do you watch, what professional sports do you watch on television. These questions were asked in order to find out the details about the target audiences extra-curricular activities. By trying to gauge how the participants spend their time on weekends and what they watch on TV a prediction can be made on their sport viewing habits. This is because analyzing these question about weekends on Many Eyes word analyzing software, it was found that the top words used were friends, out, and Netflix. This could infer that friends are key to every key activity of this age group. This also could imply that if their friends are going to a sporting event then they are more likely to attend. This is where marketing strategies come into play with promotions and sales tactics to target audiences. Next the question of what do you watch on television was analyzed. The response to this question showed that most television users of this age group watch Netflix and Sporting events. This is important because it shows where all the promotional advertising can be done to reach the target market of Christopher Newport students.
IV. The next part of the survey was designated to find the perspective of Christopher Newport students on professional sports watching. Some of the questions that were asked include how do you think the prices of professional sporting tickets are made, Do you think athletes are overpaid, do you think that professional sporting events are over priced, and how do prices for professional sporting events make you feel. The most popular responses to how ticket prices are made were demand and supply. This is important when identifying the key factors for setting ticket prices because consumer demand helps set the price level for franchises. When looking at the question on professional sporting events being overpriced there were 74% participants that said yes. Also it is important to figure out how consumers feel about the rising ticket prices in order to figure out how to market against that. From the results of this survey, the most common words that appeared from this question are poor and sad. This negative response means that professional sports teams have not expanded their market enough to reach the price point of college students.
There are different points of view when it comes to ticket prices between managers and the individuals buying the tickets. In the managers perspective of pricing tickets it is much like trading commodities in the stock market. Some of the factors that can change process day to day are playing popular opponents, opposing teams having major stars of the game, post season birth potential, weather conditions, and winning streaks. Franchises use methods such as dynamic ticket pricing to track demand of customers and see where the most popular sections of the stadium are at certain price levels. Based on that franchises gauge price levels for future games while accounting for opportunity costs forgone of not liquating the seats in the stadium.
V. Also answering the questions of if professional athletes are over paid has many gray areas to its answer. In the survey that was conducted 76% said yes they are over paid. The consumer usually makes this assumption based on the fact that professional athlete is paid more than the average American. On the other hand this can be evaluated through economic analysis through measuring each players economic production and performance to earn their salary. The factors of performance that are measured are static categories, which if increased can raise the pay grade of an individual athlete. One example can be used in baseball by measuring batting average, on base percentage, runs scored, strike outs, walks, and hits. Increase in positive statics such as homeruns would lead to an increase in pay for players; while strikeout would lead to decrease in pay. This is because if statics that are increased that have a positive outcome usually result in more wins for the team and more fans willing to pay higher prices (Dennis W. 2004). Therefore if productivity across professional sports increases then tickets prices will go up. This is because management will have to pay more to their athletes and make up the costs by raising ticket prices.
The Discussion pertaining to ticket prices being to high for the consumer is the inevitable because as inflation increases and prices on normal goods go up so will the price of professional sports tickets. Tickets are commodity, when prices go up in the market so do ticket prices. This means management often can not control ticket prices because of sport market conditions and are forced to raise ticket prices in order to make a profit. This leads to the inevitable rise in professional ticket prices.
Prices maybe be rising in the sports market, but management can draw in customers to the inevitable factors. One of the ways is by promotional advertising. In the professional sports world fans are looking for an overall experience that will keep them coming back to see more games. In other words if management can create the ideal atmosphere for the consumer then this can lead to an ideal retention rate of customers. Another way that management of franchises could exploit the market place is by using TV advertisements to show their promotions. This could lead to more customers responding to incentives of the promotions and going to professional sporting events. When came to television in this research study most of the viewers were either watching professional sporting events or Netflix. This shows that are untapped markets in advertisement on television with promotional advertisement. One of those current untapped markets is Netflix because there are currently very sparse pieces of advertising while watching it. This can also lead to more jobs in the promotional advertising sector of professional sports to make sure viewers on television know about their deals. This shows that the sports industry can use this opportunity to advertise and being promotional presence in the market place. Then by becoming more promotionally savvy franchises can avoid the looming effect of losing customers to at home viewing.
“List of Professional Sports Leagues by Revenue.” Wikipedia. Wikipedia, 22 May 2015.
Dennis, W. (2004). Labor Markets in the Classroom: Marginal Revenue Product of Major League Baseball.
“Professional Sports Watching.” Google Forms. Google.