NFL Blackouts
One of the stories this year in the NFL is an expected one, NFL teams are unable to sell out their stadiums and therefore several are faced with blackouts for the local viewing area. San Diego and Jacksonville could potentially not sell out a single game this year. Of course, NFL teams and their markets are blaming the economy and the recession on falling ticket sales, and asking the NFL to lift the blackout rules. But that’s not the issue. Hundreds of colleges sell out their games across the country and 32 NFL teams (most with smaller stadiums that college teams and in much larger markets) can’t sell out? No, the problem is basic economics. Supply and demand. Without a large capital investment to reduce or increase the amount of seating, NFL stadium capacity is for the most part fixed or static. So, supply of seats is inelastic. In that unique economic situation, the only way to increase demand is to reduce prices. NFL teams are unwilling to even consider this possibility, so, therefore, they don’t sell out and don’t make as much revenue from the large NFL TV contracts because the games are blacked out. If the average ticket price is $200 and you can’t sell them, basic economics says that by reducing the average price to $100, you can sell double the amount that you could sell at $200 because supply is inelastic. Any NFL team should easily be able to figure out the percentage of empty seats in the stadium that they need to fill to sell out and reduce average ticket price by that same percentage. Then every game is a sell-out and you maximize your local TV contract, NFL TV contract, concession sales, souvenir sales, parking lot fees, etc on down the line. I’ve heard several times in the past that because of the huge NFL TV contract and revenue sharing, no NFL team needs to sell a single ticket to be profitable. Might as well reduce ticket prices and get the most money you can, right? Another economic principle largely ignored by NFL teams is opportunity cost. That upper deck ticket that costs $80, unsold it makes you $0. Sold for $50, it makes you $50. I understand event security, parking attendants, etc all cost money and I’m not saying to operate game day as a loss, but not selling a ticket is far more expensive that selling it at a reduced price that barely covers expenses or breaks even. As kickoff nears, sell the remaining tickets cheap to radio stations, fan websites and blogs, and local business for them to give away as promotional items. They get a great marketing tool and you get a sold out stadium. Basically, the whole “the recession has caused us to not be able to sell out” argument several teams are making really irks me. You can’t sell out because you priced out the real fans years ago and now all those corporate sponsorships are drying up because they are cutting back costs. Time to go back to the real fans and start selling to them again, but remember, we can’t afford those hi-jacked prices you were charging to corporations.