NEW YORK (CNN/Money) -
Another baseball season starts with record player salaries, record ticket and concession prices and, despite what owners would like fans to think, little if any relation between the two.
Among the great myths in modern sports none seems so deeply held by fans as the idea that they are paying so much for tickets because the owners have to pay so much to the players.
"The greedy players have gone too far," wrote Dan Wilcox of Long Beach, Calif., after last week's column on the chances of a players' strike this year. "Last year I took my grandson to a Dodger game and wanted good seats. With parking, food, a small souvenir and cost for the seats it came to over $250.00. Real baseball is a thing of the past. I will not attend any major league games again."
I certainly can't dispute Wilcox's accounting of his trip to the park. I used to think the Team Marketing Report's Fan Cost Index, which estimates the cost of a trip to a game for a family of four, over-estimated actual cost, until I started taking my five-year-old to games and watching her appetite for food and souvenirs reach new heights. Now I know that the index, which put the cost of a Dodger game at $145.53, is probably a very conservative estimate.
And I certainly understand fans feeling disconnected from players who this year will have an average annual salary of $2.4 million, or more than a career's worth of earnings for the average household.
|The champion Diamondbacks' tickets are the sixth cheapest in the majors, even though the team has the fourth highest payroll this year.
But the ticket and concession prices aren't set based on salary demands. They're set, as is the price of any good or service, based on each team's reading of supply and demand for its product, and what price will produce the maximum possible revenue.
If the cost of a product determined pricing, then few if any companies would ever have to worry about losses because they would just raise prices when their own costs increased. But with a free market economy costs, including payroll expenses, don't determine pricing.
"Player salaries are high because ticket prices are high, not the other way around," said Bruce Johnson, professor of economics at Centre College in Danville, Ky. "The only way teams can charge high ticket prices is with fans willing to pay them. The only reason they're willing to pay is because they want to see talented players. But if you cut pay for players, it would just mean more money left for owners."
If teams raised prices above fans' perceived value of the team, their sales would drop. So even if the team's payroll increases significantly, market forces limit the amount owners can change fans.
Similarly, in the case of the 10 teams that saw their total team payrolls decrease this season from last, only one cut its ticket prices -- the Tampa Bay Devil Rays, whose payroll costs fell 37 percent to $34.4 million, the lowest in the league. Its average ticket prices fell 1.9 percent after owners realized fans were willing to pay only for the cheap seats in the upper deck last year, leaving the prime seats close to the field mostly unfilled.
|Kansas City cut ticket prices this year even as team payroll increased by nearly a third.
By contrast, the largest percentage increase in ticket prices came from the Boston Red Sox, which already sported the league's most expensive ticket and is one of the 10 that actually trimmed team payroll.
Six of the 10 teams that cut payroll kept ticket prices unchanged. But so did four of the other 20 teams that hiked payroll. And the three other teams charging their fans less this year -- the Kansas City Royals, the Atlanta Braves and the Detroit Tigers -- all had double-digit payroll increases. The Royals posted the third-largest jump in payroll costs, raising their player salaries by about a third.
One proof of the disconnect between ticket prices and payroll costs comes when you compare where the teams rank in terms of those two measures.
Only three teams in the majors carry a higher payroll than the Arizona Diamondbacks, yet just five teams offer cheaper seats than the defending champ. National League cellar dweller Pittsburgh, meanwhile, cut its payroll to seventh-lowest in the league but still raised ticket prices, making seats at PNC Park the league's 10th most expensive.
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Another sign of the disconnect, said Johnson, is the fact that major college sports teams often charge ticket prices close to those charged by the pros, even though the players are unpaid.
"Look at ticket prices to the Rose Bowl or NCAA Final Four -- they're pretty high, even though those players don't get paid," Johnson said. "If it was player salaries driving, the tickets would be much cheaper."