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Win a world series, raise ticket prices. But, excessively?

JEL L83

The Boston Red Sox celebrated wildly on the field in St. Louis in October 2004, having just completed a sweep of the Cardinals and ending an 86-year World Series championship drought. Prior to the 2004 season, diehard Red Sox fans would have been willing to pay practically anything to see their beloved Red Sox break the "Curse of the Bambino." However, in the spring of 2005, the Red Sox announced ticket prices for the coming season and many fans experienced sticker shock. Ticket prices in Boston climbed 9.3% to a league-high $44.56 (http://money.cnn.com/2005/ 04/04/news/funny/baseball_ticket_prices/). Was the 9.3% increase commensurate with ticket price increase elsewhere or were Red Sox fans paying the price of winning a championship?

Does a World Series championship in Major League Baseball (MLB) translate into significantly higher ticket prices in the following season? If winning a title increases the demand for tickets, then ceteris paribus ticket prices should rise. As other teams attempt to improve team quality to become more competitive, their ticket prices will also rise. Presumably, ticket sales are sensitive to the previous season's standing and higher winning percentages have led to higher ticket prices [P.M. Sommers (1994), "Ticket Prices and Players Salaries in Major League Baseball," Journal of Recreational Mathematics, 26(4), 274-276], but will ticket prices for World Series champions rise even higher? Using data on ticket prices for all teams over the period 1991 to 2006, we find that owners of a World Series champion increase ticket prices differently from the rest of the league.

Ticket price data are from http://rodneyfort.com/PHSportsEcon/SportsEcon.htm and were used to find the average ticket price increase (all of which are weighted averages by seat type) for World Series winners and all other teams in MLB from 1991 to 2005 (excluding 1994, when, in August, the players went on strike, leading to cancellation of the remainder of the season, including the World Series). A series of one-tailed, one-sample t-tests were performed on the null hypothesis, [H.sub.0]: [mu] = [[mu].sub.World Series winner], against the alternative hypothesis, [H.sub.A]: [mu] < [[mu].sub.World Series winner], where [mu] denotes the average ticket price increase of all non-championship teams and [[mu].sub.World Series winner] denotes the ticket price increase for the title holder. In eight of the 14 comparisons (nine, if the level of significance is [alpha] = 0.10 rather than [alpha] = 0.05), the World Series champion hiked ticket prices more than the average increase for all other clubs. The 2005 Chicago White Sox notwithstanding, the only exceptions to this pattern are teams that repeated as World Series champions over the period 1991-2005 [namely, the Toronto Blue Jays in 1993 (after winning in 1992), the New York Yankees in 1999 and 2000 (after winning in 1998), and the Florida Marlins in 2003 (after winning 6 years earlier in 1997)].

The league's average ticket price has gone up every year from 1991 through 2005, but World Series winners have raised ticket prices substantially more in the following season. This result is neither a single-team nor a market size phenomenon; seven different franchises hiked ticket prices more than other clubs after winning the World Series. If fans pay above-average (below-average) ticket prices for above-average (below-average) baseball, then they should expect to and, more often than not, actually do pay dearly to watch a championship team.

Published online: 21 June 2008

R. M. Keohane * P. M. Sommers ([mail])

Department of Economics, Middlebury College, Middlebury, VT 05753, USA

e-mail: psommers@middlebury.edu
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Title Annotation:ANTHOLOGY; Boston Red Sox
Author:Keohane, Ryan M.; Sommers, Paul M.
Publication:Atlantic Economic Journal
Geographic Code:1USA
Date:Sep 1, 2008
Words:603
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