Tuesday, January 31, 2006

Time To Raise Ticket Prices

Alberta’s twin cities of Edmonton and Calgary announced their bid today for the 2009 World Junior Hockey Championship.

Jim Peplinski and Lyle Best are the bid’s public faces, indicating support from the Battle of Alberta franchises. Hockey Canada will announce the host city in May.

The 2009 event will be the Tournament’s eighth stop in Canada; it last touched down in Alberta at Red Deer 2005, where a locked-out Ryan Smyth played hero and Canada went undefeated. Since then, the holiday tournament’s Canadian visits have set attendance and television records.

Media coverage – and the promotional efforts of hockey Canada – make a great deal of the event’s financial credentials. Organizer’s project Vancouver’s profit from the event at over $9 million, half of which goes to Hockey Canada, one-third to the CHL and the rest to provincial amateur hockey.

Vancouver’s ticket sales hit 400,000, although 75,000 didn’t bother showing up to the games. Simple division puts the skim at slightly more than $22 per ticket-sold. Implication: that’s a lot of merch.

I’m excited that the event could return to Alberta. The cities are famous for their volunteerism and boast enthusiastic and knowledgeable hockey fans. But I hope that the promoters sell the tournament on its merits: a great hockey experience for the fans, and an event that pays its own way (assuming it will).

Phil Miller, a contributor at The Sports Economist, has a timely entry that dissects claims of “economic impact” from sports events. The latest peek behind the curtain: uncovering the real economic impact of Super Bowl Sunday on the host city. Disinterested reviews suggest that far from generating $300 million, as the NFL claims, the event may results in a few tens of millions in new spending at community businesses, and a net expenditure for the government.

I have no idea whether organizers intend to ask the city or province for financial support. But any request based on similarly inflated estimates of economic impact should be ignored. The event can fund itself.

If organizers need to ensure their margins, and ticket sales are as strong as in recent years, they should explore a different concept: charging more for games where Team Canada plays. There are a couple of fine justifications for the idea in Alan Krueger’s Super Bowl XXXV column, and Brad Humphreys has a rather stunning chart showing the escalation in Super Bowl ticket prices since 1985, when the NFL figured out that demand exceeded supply by such a wide margin, prices could be quadrupled over 20 years.


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