Humble Beginnings

I will be conducting my research on the attendance of A-League matches, as dictated by a number of variables. This will include ticket price, and potentially include variables on venues, per capita income, team performance and/or new variables that can be measured accurately and are significant to the prediction of attendance. Questions around this topic include:
– What are the variables that drive match attendance?
– What is the appropriate pricing method to maximise profits?
– What are variables that cannot be captured through measurement, but may hold significance?

I found myself to be significantly overwhelmed with the amount of information available on this topic. While beneficial to understanding the scope of the topic, it has been difficult to filter through relevancy and meticulous wording to find true understanding and meaning; what can I apply to my own research.

I have chosen this topic as it appeals to me on a number of factors. Firstly, and most importantly; it relates to my currently employment in football. While there may be speculation as to conflict of interest, it is a widely discussed topic of the cost of football, both relating to fan engagement and grassroots participation. I seek to clarify and dig deeper so as to provide more discussion to effective pricing and further meaning behind the numbers. My unique position also gives me access to parties involved, context and clarification on why items are priced and information gathered. Secondly, football is a personal passion of mine. I believe to write a topic within a strict deadline, one has to be engaged enough to drive through for results. Finally, the articles and literature that currently exist are targeted towards American competitions. While I have found some papers in relation to international competitions such as the Serie A (First Team Italian club football – see reference list below), I believe it is important to recognise the commercial potential that may not be captured, and also beneficial to the new emerging A-League clubs.

While it is a large mountain to club, my unique position provides access to resources that would otherwise be difficult to attain. I seek to use this opportunity to its full potential and provide a comprehensive report within the given timeframe. I anticipate there to be many challenges, particularly around availability of data and creating the regression to be robust and thoroughly tested. I will need to begin reviewing previous work completed in ECON339 to ensure that I am across using analysis, EVIEWS and interpretation of results. To begin this process, I’ve included some beginning literature below:

– Can We Find It at the Concessions? Understanding Price Elasticity in Professional Sports (Krautmann and Berri, 2007); This paper seeks to understand the relationship between inelastic ticket pricing and elastic demand of stadium goods and services. 

– Ticket Pricing Per Team: The Case of Major League baseball (MLB), (Lee, Park and Miller, 2013); The conclusions drawn through Error Correction Model (ECM) determined there are specific team factors that impact attendance, however overall, attendance was inelastic to pricing. 

– Variable Ticket Pricing in Major League Baseball, (Mark and Matt, 2007); Mark and Matt hypothesised that different times of the year and themed rounds (Memorial round and Independence Day) with variable ticket pricing brought in further revenues for clubs. The difference identified between fixed and variable tickets was 2.8%. This was adjusted on capacity constraints. 

– Ticket Pricing, Concessions and Attendance at Professional Sporting Events, (Coates and Humphreys, 2007); This paper explores three codes, Major League Baseball, National Football League (American Football) and National Basketball League. Similarly to the above, prices are determined to be inelastic with the notion that codes have the ability to hold monopolies in markets; revenue is maximised when prices are determined from inelastic areas of the demand curve.

– Optimal ticket pricing in the sport industry. The case of the Italian Serie A, (Silvestri, 2017); Clubs are regional monopolists, and market power arises from fan loyalty. This paper also confirms, as common in the above papers, that the Marginal Cost of selling additional tickets is zero, thus prices falling within the inelastic area of the demand curve. The paper literature review explores the idea of tickets providing the right to consume in the event as well as attend, bringing attention to ancillary revenue. It is reviewed that prices to tickets are lowered to that of the optimum, so the attendees are enticed to consume at the staduim.

Next Steps:
– Compile Literature into Excel matrix
– Begin to create potential regression
– Source meaningful and robust data

Additional Reasource: LaTrobe University – Inelastic Pricing ( https://www.youtube.com/watch?v=-mv9-TqHnKc )