Club objectives and ticket pricing in professional team sports
Faculty of Applied Economics
Antwerp :UA, 2002
Research paper / Faculty of Applied Economics UFSIA-RUCA ; 2002:018
University of Antwerp
In this paper the simultaneous decision of a professional sports club on gate ticket prices and talent demand is analysed for a profit and a win maximizing sports club. Although the pricing rule is the same in both scenarios, the ticket price and the talent demand turn out to be higher in a win maximizing club. Somewhat unexpected is the result that an increase of salary level lowers the optimal ticket price, which complicates the impact of a salary cap on the ticket price. One of the consequences of the identical pricing rule is that all tests based on the pricing rule cannot be conclusive w.r.t. the objective of a club. Also the value of the estimated price elasticity of the demand for tickets can hardly reveal anything about the objective of a sports club. More reliable tests could be based on the comparison of the marginal productivity and the salary level, or on the different impact of revenue sharing.