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John Henry thinks Red Sox fans don't understand economics

Dec 2, 2009, 10:30 AM EDT

John Henry, regretting that the Red Sox are raising ticket prices again:

“I am concerned with how expensive it is for four people to attend a game these days . . . Unfortunately virtually all contracts in baseball go up each year for on-field and off-field members of the organization.”

As Baseball Prospectus’ Joe Sheehan so eloquently put it nearly eight years ago “The price of tickets is not set to recoup costs, but to maximize revenue.” Indeed, this is how the price of just about every item in the stream of commerce is set (the price of razor blades and printer ink is apparently set by the Russian mob, however). Supply and demand you know.

If you don’t believe it, ask yourself why it costs so much to go to a Notre Dame or Ohio State game. They don’t have any salary expenses to recoup. Or the NFL, NHL and NBA, where salary caps have kept overall costs basically constant and certainly predictable, yet ticket prices have spiraled in ways wholly unrelated to expenses.

A smart organization sets ticket prices at the absolutely highest level they can be set without negatively impacting demand. The Red Sox sold out their games at last year’s prices. They will likely sell out their games at 2010’s prices. Those prices will continue to be raised until the exact moment people decide they are not worth the price and cease to buy Red Sox tickets. John Henry’s suggestions to the contrary are exercises in public relations.

  1. Chris Simonds - Dec 2, 2009 at 11:05 AM

    I’m trying to re-write an old folk song.
    “John Henry was a deal drivin’ man, Lord, Lord… ”
    or maybe
    “John Henry was a real jivin’ man… ”
    But I get to the part where John Henry dies on the job (of terminal hot air perhaps) and try to picture new wife Linda Pizzuti as PollyAnn, drivin’ steel, er, deals, like a man Lord, Lord and I have to give up.

  2. Jacob - Dec 2, 2009 at 11:13 AM

    I’m not sure that the average fan does understand economics. I can’t tell you how many times I’ve heard people rail against high player salaries as the reason tickets are so expensive. The argument doesn’t make any sense, but it seems widely accepted among a certain segment of baseball fans.

  3. RobRob - Dec 2, 2009 at 11:47 AM

    Revenue drives payroll. Demand drives ticket prices.
    For anyone who disputes this, ask yourself why ticket prices are so high at places like StubHub. None of the people selling those tickets have to pay players’ salaries. None of them have to pay any more than the original face value of the ticket. None of them have to worry about back-loaded contracts, or paying down stadium debt (HA!). Yet, prices at StubHub are routinely many percentage points (if not many times) higher than the face value.
    Ask yourself why on Earth, if someone can sell something for $50, would they ever sell it for $40? If the Red Sox sell out every game at $75, why would they ever ask for $65?
    PS: Craig, you are obviously ignoring the multi-million dollar salaries of guys like Jim Tressel. Obviously, if they could get some dumb schmo (like me) to coach for a tenth of Tressel’s contract, those OSU ticket prices would come way way down.

  4. jwb - Dec 2, 2009 at 12:30 PM

    Silly people! When the White Sox cut their player payroll by 20% last season, the prices of tickets, concessions, parking, and in-stadium souvenirs all went down by 20%!
    Of course they didn’t.

  5. JBerardi - Dec 2, 2009 at 1:14 PM

    As high as Red Sox tickets prices are, the team still has them well below their true value in the marketplace. If you don’t believe me, just ask the scalpers in Kenmore Square… those guys will teach you a thing or two about economics.

  6. JL - Dec 2, 2009 at 1:26 PM

    I think a merging of “John Henry” with “The Jolly Banker” might be an appropriate folk song remix in this case.

  7. Old Gator - Dec 2, 2009 at 1:57 PM

    Ticket prices spiral because people are lemmings. College football is a great example. Instead of skimping on the baby formula and buying those generic batteries for your pacemaker to afford tickets to the game, whatever game, try staying home a bit more and watch what happens to ticket prices. It’s a market economy. Flex your muscles.

  8. embroidered shirts - Feb 8, 2010 at 10:56 PM

    what do you think was the best halftime show ever do think Sunday’s “The Who” was good. what do you think was the best halftime(I personally like Janet’s wardrobe malfunction), what did you guys like?

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