(The following was originally published at SB*Nation’s Pinstriped Bible)
Empty seats have been more common at Yankee Stadium this season.
“Nobody goes there anymore. It’s too crowded.” – Yogi Berra
The turnstiles at Yankee Stadium have not been spinning as often this season. Through the first nine home games of the year, the average crowd in the Bronx has been 38,432, which compared to the same point last season, represents a drop of nearly 4,000 fans per game. Although still good enough to rank sixth in the majors, the attendance at Yankee Stadium has fallen significantly when compared to the recent past. Not only has the team’s average dipped below 40,000 for the first time since 2000, but five crowds have been the smallest to attend a game in the Bronx since 2004, and each has taken turns setting the new Yankee Stadium’s all-time low attendance mark.
With only nine games played on the home schedule, there’s plenty of time for the Yankees’ attendance to rebound. However, it seems clear that the smaller crowds are not the result of temporary factors like weather, but rather the byproduct of a significantly eroded season ticket base. If so, and the declines remain consistent, it will represent the acceleration of a more gradual trend that has seen crowds in the Bronx dwindle from over 90% capacity to less than 80%.
Yankees’ Attendance/Game vs. Capacity, 1993 to 2013YTD
Note: 2013 data as of April 24, 2013.
Source: baseball-reference.com
What explains the precipitous drop off in the Yankees’ attendance? The most obvious answer seems to be the rising influence of the secondary market. Over the past two years, the team’s financial hierarchy has complained about the cannibalization of primary sales caused by the availability of deeply discounted tickets on websites like StubHub. In response to that perceived impact, the Yankees decided to opt out of MLB’s deal with StubHub andform their own secondary market called TicketExchange. To this point, it seems as if the new venture has helped stem the extent of discounting, but there are still tickets on various exchanges being offered at prices below face value, so the incentive to purchase tickets from other fans, and not the Yankees, remains.
Because season ticket deposits were due months before TicketExchange was unveiled, plan holders who canceled their accounts were not able to factor the new secondary market into their decision. As a result, the Yankees won’t find out whether their new venture will help recapture ticket sales until next offseason. However, if TicketExchange’s price floors, combined with a tilted supply/demand balance stemming from the conversion of former season plan holders into secondary market buyers, successfully inflate re-sale prices, then the team could wind up winning some fans back.
The secondary market is only relevant if fans want to see the team in the first place. Over the past two decades, motivation hasn’t been a problem for Yankee fans, but is apathy starting to emerge? The team’s inability to sell out last year’s ALDS seems to corroborate this thesis, but that’s really a knee jerk reaction. There were several mitigating factors, including early start times and last minute scheduling, which contributed to the less than capacity crowds in that series, so it isn’t fair to equate the empty seats with indifference.
Buck Showalter once observed, “Fans don’t come to see the Yankees play; they come to see the Yankees win”. Presumably, his Boss agreed.
Although it’s easy to explain away the lack of sellouts in October, the smaller crowds this April could be a more systemic issue. For the second straight winter, the Yankees’ brain trust threw cold water on the hot stove by eschewing free agents, including their own, and promulgating the idea of cost cutting. With pessimism at a relative high among the team’s fan base, the expectation of a second division finish in the standings, and not the impact of the secondary market, could be the main driver of declining attendance. After all, as former Yankees’ manager Buck Showalter once observed: “Fans don’t come to see the Yankees play; they come to see the Yankees win”.
Showalter’s observation is only partly right. Fans not only come to watch the Yankees win, but they also expect to see superstars. Maybe that’s why crowds at Yankee Stadium stagnated until the team signed Alex Rodriguez? Having “Murderers’ Row and Robbie Cano” is good for the box office, but now that Francisco Cervelli is batting fifth and you can’t make out the team’s lineup without a scorecard, “at any moment, a great moment” probably no longer applies.
Hal Steinbrenner has already aggressively tackled the secondary market, so the size of future Yankee crowds could depend on how committed he remains to fielding a compelling team. While the Yankees’ principal owner is busy crunching the savings the team can expect to enjoy from dipping below the luxury tax threshold, he might also want to calculate the impact of declining attendance. Even though baseball’s revenue model is increasingly being built around television rights fees, gate receipts and ancillary income are still vital contributors to a team’s bottom line.
Potential Impact of Lost Gate Receipts
Note: Base case is based on the 2012 Fan Cost Index estimates for Yankee Stadium. The bear case is half the FCI, and the bull case is double the FCI.
Source: fancostexperience.com
It will be interesting to see how Yankee fans react to this year’s team. Will the crowds grow larger as the weather heats up or star players like Arod, Derek Jeter and Mark Teixeira return to the lineup? If the team defies lower expectations, will more fans make their way to the Bronx? Or, has off season apathy and secondary market poaching taken an irreversible toll on fans interest in attending games? The answers to these questions could have a significant impact on the team’s plans for the future, unless, of course, the Yankees’ money men have already decided that smaller crowds are one of the costs of doing business.
I think you forgot one, very important factor: the prices. I believe the Yankees have finally crossed the line where fans don’t want to pay the prices anymore. Combine this with those seemingly always empty arm chairs that you see on TV and it feels like the team could give a crap about normal people. They should dial back prices and put a winning team on the field.
I agree fans don’t want to pay the prices anymore, but I don’t think that’s because they are inherently adverse to them. Rather, they don’t want to pay those prices when: (1) tickets are cheaper on the secondary market; and (2) the team does little in the off season to improve.
If prices were directly the problem, we you’d have to explain why they became so prohibitive in 2012. There have been modest price increases, and some drastic cuts in premium seat prices, but nothing to suggest an elastic response.
Finally, it’s funny you say dial back prices AND put a winning team on the field. I am off the belief that fans can only demand one of the two.
I think price is very relevant. I’m not a Yankee fan, but I enjoy going to baseball games. Over the past few years I would pick up 3-6 games a year on StubHub, usually day games during the week, as that’s my favorite time to be at the park. I would pay 25-60 bucks for a seat and spend 1-2 times that in beers and food. I’m somewhat anomalous in that I’m not a fan of the Yanks, and I like to go midweek during the day. However, with a floor in place that forces me to pay more, I’m not as interested. I’m also very turned off by the Yankees obsession with capturing the secondary market prices via skyhigh face prices and now floors in the secondary market, enough so that this money grabbing obsession affects my willingness to come out to the games.
One thing promoters of all types seem to not get, including the Yankees – ‘scalpers’ don’t by and sell tickets, actually, they buy and sell risk. By pricing themselves into the maximum of the secondary market prices, the Yankees have assumed that risk and now it’s backfiring on them. Also, to the degree that pricing affects it, when stadiums fail to sell out, the rate at which they sell tickets decreases as people realize they can pick up an occasional ticket whenever they feel like it and not have to buy a strip in advance. That behavior is affected by both the secondary market AND the declining willingness of casual fans to pony up big.
BTW, your chart shows declining attendance every year but one since the new stadium opened. I’d say price has a great deal to do with that. It takes time to change peoples habits. As they come to realize the degree to which the Yankees are fleecing them by jacking every price in the stadium to the maximum pain point, behaviors will slowly change. As we’re seeing now. It’s not just StubHub, it’s the demand side of the supply/demand curve, to the degree that it is influenced by price.
As a purchaser on the secondary market, you do not impact attendance, so the impact those prices have on you, and those like you, is irrelevant to the issue of attendance.
I am not sure what you mean by buying and selling risk…that’s not what scalpers do…but the Yankees goal is to maximize revenue. Neither you nor I know what the optimal price is, but setting a price that ensures sellouts is likely not it.
Finally, I think you are reading the charts incorrectly. Attendance increased in 2010, and 2011 was about the same as 2009, so if price was a problem, it took fans three years to notice.
Hi William,
Thanks for the reply.
I would think that the secondary market purchasers would definitely affect attendance. 1) I’m pretty sure attendance figures are for those who come through the turnstile, not tickets sold. So if I do not purchase that ticket, then I do not come to the park and do not get counted as attending. Now, someone else may buy the ticket, but cumulative effect of others like me is to lower the number of people going to the park. 2) In terms of secondary market ticket affecting _sales_, it’s clear both from selling patterns I observe and from conversation with those in the area of the seats I usually buy (I prefer grandstand level, front row, behind home plate) that huge chunks of these seats are bought solely, or at least primarily, for purpose of secondary market resale. I also know, anecdotally, that some season tickets are bought to attend playoffs and world series games, with regular season secondary market sales funding the purchasers ‘free’ playoff games, or alternately, huge secondary market playoff and world series ticket prices funding ‘free’ regular season games. Either way, many season ticket purchasers are counting on the secondary market for funding a large chunk of the entire season strip of tickets. So I’d say we secondary market purchasers have a large effect on sales, as many primary purchasers count on us to underwrite large chunk of their purchase.
Regarding the chart, it’s a little difficult to read as the exact numbers aren’t there, but I only see one year to year increase, and the yest, year to year, are negative. But to your point of taking three years to notice – I’d posit that since season ticket purchasers drive most sales (as far as I know – may be wrong) that’s only three major purchase instances. People’s behaviors, especially ingrained habits, which going to the Stadium obviously is, take some time to change. There hasn’t been a game since the new stadium where I don’t hear massive grumbling about prices and I think the effect on sales is cumulative.
Your second paragraph is the most interesting. First, in regards to ticket pricing and maximizing revenue. This is very interesting. I don’t have a citation, so bear with me. In some stadium negotiations for a particular stadium, the stadium owner wanted a larger number of seats, while the sports team tenant wanted a smaller number. With a smaller number, the team was more assured of a sellout. When a sellout was assured, ticket buyers were eager to buy tickets in advance to avoid being locked out from the event or having to pay more to, and deal with, scalpers. Once a sellout is not assured, ticket buyers do not rush out and buy tickets because they know they can always get a ticket later, and overall ticket purchases drop.
I do recall a discussion in EC101 talking about maximizing revenue for a stadium for a given event, and it was not a sellout, as you say. The optimal price to maximize revenue is a higher average price with no sellout. But if we’re talking about a season, not an event, we’re into the feedback loops where a purchaser says to himself “Oh, I can always get a ticket later, no need to buy now.” I would think that attitude would definitely would affect aggregate pre-season sales, big time. So a sellout season at a lower price would maximize revenue over a season, but not, as we agree, for a given event.
Lastly, the idea of a scalper as a risk manager is the most interesting part of the discussion, to me. So, a ticket is a perishable good. The risk is that no one buys the ticket and the seat expires unused. The scalper buys the ticket and now assumes the risk for the item going unsold, or for having to dump it at a loss. In exchange for taking that risk off the hands of the Yankees, the scalper needs to earn a return. Assume the scalper does nothing but study the ability to earn the maximal spread, I’d argue that the scalper is better able judge the expected future price for the ticket than the Yankees are. I’d also argue that the number of empty seats proves that point. Do you think a scalper would count on an early season, mid-week game against Toronto is going to bring over $1000 for a seat? No way. But the Yankees have set that price for a seat and it’s obvious many of those seats are going unused, just by looking around the Stadium.
It turns out I’m not the only one to view scalpers as risk-allocaters. I just found the article below, with London School of Economics PhD student Vincent Geloso writing this:
“Mick Jagger does not have an incentive to search correct price and supply. In fact, it is logical – in a maximization of risk to value – to under-supply tickets relative to demand and under-price tickets relative to the market price.
The logic is the following:
Estimating the audience-maximizing (and revenue-maximizing) supply (and price) is a very risky venture, especially since his markets change with every Rolling Stones concert tour. Hence, there is great volatility in the returns (and possible losses) of his portfolio of concerts. To minimize these risks, he would have to spend considerable resources to collect information and the marginal returns (relative to other uses) of using additional resources to correctly estimate price and supply. Therefore, it is rational to check what the desired profit margin is, and set price and supply to obtain this the easiest way possible.
As a result, the scalping market will emerge to reallocate tickets afterwards because it specializes in managing those risks only!”
http://www.aei-ideas.org/2013/04/ticket-scalping-as-an-efficient-market-for-risk-management-that-helps-not-hurts-mick-jagger-and-the-rolling-stones/
It just seems to me that pricing every seat to grab every last drop of revenue that a scalper would get for, say, a Sox game in a close season down the stretch, means the Yankees can no longer offload the risk of ensuring those seats will sell, and I think that idea has blown up in their faces.
Anyway, this is way too long already, I apologize for that, and hats off to you for your great blog. You know way more than I do about what’s going on with the Yankees. Me, I just want to get a decent last-minute seat for a cheap price for a mid-week day game (and the reduced number of midweek day games is a whole ‘nother topic!)
Regards,
Mike
Attendance figures are tickets sold, not those who are actually at the game. That’s why secondary sales have no direct impact on attendance, although they do impact primary buying decisions (as I discussed above).
You are correct about many primary season plan holders relying on the secondary market to recoup costs, and that’s exactly why the Yankees launched TicketExchange…to counteract the cut rates prices on StubHub that were lessening the value proposition of having a season plan. As a now former season ticket holder, what drove me away wasn’t the high price of the my ticket, but the heavy discounting on StubHub. If it looks like TicketExchange has restored value to the season plan, I’ll likely be back. That’s what the Yankees are banking on. However, I think they need to do more, including loyalty programs.
Regarding the chart, I am pretty sure you are looking at the blue bars, which represents winning percentage.
Too much else to respond to directly, but I’d sum it up this way. The Yankees goal is not to fill the ballpark, but maximize revenue. However, it also needs to create an experience and cultivate a fan base. Although baseball tickets are not inelastic to price, I strongly believe more important influences are value proposition and distinction of being a season ticket holder as well as the appeal of rooting for a superior product and premium brand. In other words, if Yanks want to getting attendance moving up again, they need to keep spending on stars, make sure the secondary market doesn’t dilute value of primary sales, and add a robust loyalty plan that offers unique experiences (e.g., batting practice on the field; meet and greets; etc.)
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For 2013, the Ticket Exchange is the cause for smaller crowds. We are Angels fans who were extremely excited about the new Angels Ticket Exchange because StubHub’s fees were too high. If you look at the Yankees and Angels websites, the link for “Buy Tickets” directs prospective buyers to the Ticketmaster unsold non-season seat inventory. The Ticket Exchange (TE) requires additional ‘clicks’ or drill downs to view any season seat holder (SSH) listings.
We have always had about an 80% success rate of sales on StubHub. In 2013, we have yet to sell one game on the TE and have observed the same results on the Yankees message board. Most SSH fans cannot attend 81 games a year…..we have lives and we have budgets. Many fans cannot afford season seats, yet bringing these SSH sellers and the non-SSH buyers to transact a ticket sale is virtually impossible because the Yankees and Angels refuse to advertise the TE adequately and refuse to link the TE alongside the unsold TicketMaster inventory. Both are run by Ticketmaster so we have yet to comprehend their reasoning. The pockets of empty seats are the SSH listings that remain unsold.
I have spoken with Angels fans at the stadium and at my office who purchased their tickets at face value with convenience fees on the website. When I told them about the TE, they had no idea and asked for ‘instructions’ on how to navigate the website to the TE. It is buried under ‘Tickets’It shouldn’t be this way, and unfortunately we will not renew after several years of owning our seats. We are not scalpers and all our listings are below face. We just want assurance that every time we attend an Angels game, we will have the same prime location.
As a secondary market, TicketExchange is not the reason crowds are smaller. It can’t be. It is selling tickets that have already been sold. It’s a common misconception, but wrong nonetheless.
My experience so far is in complete contrast with yours. TicketExchange listings are very easy to find, not much more expensive than StubHub, and much easier to transact. Maybe the Angels have done it differently, but the Yankees have aggressively promoted TicketExchange, so anyone who watches games on TV likely knows about it.
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