The Economics of Overpriced Yankees Tickets

Much has been made of the high price of Yankee tickets this year. Since moving into their new stadium in April, the Yankees have had marked struggles filling seats–something the once proud franchise hasn’t had to deal with seriously since the 1970s. At work is the simple law of supply and demand. Particularly in a recession, New Yorkers aren’t willing to shell out $1,000 to take the family to a Saturday afternoon game. Sure there is a supply of tickets, but not supplied at a price demanded.

The pinstripe’s management has caught on to this and created an elaborate system of price reductions. But complaints about the high prices in an economic downturn are only one of the arguments going against the Yankees (and, to be fair, against the Mets who are pricing high this year too at their new Citi Field). New York City taxpayers chipped in a boatload of money for the $1.5 billion stadium–yes, the stadium cost 10 times as much as the AIG bonuses. All totaled NYC residents are covering $363 million of the cost of the stadium, plus another $200 million to build a park and memorial where the old Yankee Stadium currently sits.

The argument from New Yorkers, understandably, goes something like this: why does a private business get taxpayer money but give little to no benefit to the taxpayers. A similar argument is being made by Americans who want better mortgage deals from banks bailed out by the Fed.

But when it comes to the Yankees, the team owners would probably argue that they are bringing economic vibrancy to the city, particularly the area of the Bronx where the team resides. Plus, the rest of the city benefits from fans traveling to the Big Apple to see games and probably catch a Broadway show and nice dinner in the Village or Upper East Side. And furthermore, it could be argued that the taxes generated from those sales more than pay for the tax benefits the Yankees get (though I haven’t seen that kind of economic research done yet).

When it comes to banks, the argument can be made that just because the financial giants have been bailed out, it doesn’t mean they have to start acting like charity organizations. The only way for them to get back on their feet is to act like businesses and shed the weight of government patronage as quickly as Jacoby Ellsbury stole home against Andy Pettitte earlier this year.

But back to baseball. Positive economic externalities aside, economics tells us the games are overpriced, as evidenced by the lack of fans–though the dismal performance of the team who is under .500 this year probably hasn’t helped sales. Neither has the news of star Alex Rodriguez’s cheating ways as a steroid user brought out the kids. Still, the team has every right to price the games as they so choose–even with the taxpayer money, because reduced entrance fare was never part of the cost sharing agreement. However, the team has to shoulder all responsibility for losses incurred–both monetary in ticket sales and in passion of the fan base, which also hurts business.

Ultimately, what will get ticket prices reversed is fan based outcry like that of NY Post reader Gary Cicio, who did the research on two ways to see a Yankees-Mariners game this season from the best seats available:

“Option 1: Two tickets to Tuesday night, June 30, Mariners at Yanks, cost for just the tickets, $5,000.

Option 2: Two round-trip airline tickets to Seattle, Friday, Aug. 14, return Sunday the 16th, rental car for three days, two-night double occupancy stay in four-star hotel, two top tickets to both the Saturday and Sunday Yanks-Mariners games, two best-restaurant-in-town dinners for two. Total cost, $2,800. Plus-frequent flyer miles.”

Simply stunning. If the Yankees can fill the seats at those prices, more power to them. Of course, it doesn’t seem like that’s been the case the this year. Ultimately its a business decision.

(Disclosure: I bleed Curt-Schilling-bloody-sock-red as a long time member of Red Sox Nation. And we welcome any defectors tired of the shenanigans of the Steinbrenner family.)