Saturday, 27 February 2016

Are Premier League tickets too expensive?

There has been a lot of media coverage recently on the cost of attending Premier League football matches. One particular focal point was a protest by Liverpool supporters over plans to charge £77 for a ticket. In response to this protest the owners of Liverpool back-tracked and said they would keep prices pegged at current levels (where the highest price is £59). But, why should prices not go higher?
          The data on Premier League attendances shows that, for the vast majority of games, stadia are full. And there is no doubt that many more would attend if they could get tickets. Such excess demand clearly means that plenty of people are willing to pay high prices. This gives a strong rationale for clubs to push prices higher and increase profit. Indeed, it is what the economic textbook says they should do.
        But, the main consequence of an increase in prices is to extract surplus from supporters. Essentially supporters are pushed to the point where they are only just willing to pay to go to matches. This takes away the enjoyment of the football experience. And that is a problem because of the fairly unique nature of football. 
           The supporters of a club are an integral part of what that club is. This can manifest itself in many, many ways - support spurring the team on to victory, bailing out the club in hard times etc. In economic terms this means that the value of the club (and its ability to generate income) depends on its fans. Moreover, it means that fans can legitimately claim part ownership of the club. Note that this is different to most other goods. A restaurant, for example, fills up on a Saturday evening because it produces good food and not because it has a loyal fan base who cheer on the waiter. 
           Once we position supporters as having legitimate claim to part ownership of a club it becomes hard to justify high prices. Supporters deserve something and a ticket they can easily afford is probably a fair compensation. To say, therefore, that supporters can afford to pay high prices is not enough to justify them. And it is worth remembering that gate receipts are a relatively small proportion of revenue. At Liverpool, for instance, they are only around 20%. Much more money comes from TV rights. To squeeze every penny out of fans does not, therefore, make sense. 
           The protest at Liverpool showed the genuine bargaining power that fans have, if they can coordinate themselves. The owners U-turn showed good common sense.  

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