Ticket Pricing Strategy for the new Wembley Stadium
1 Introduction
OBJECTIVE To maximise profits from ticket sales at Wembley Stadium
KEY ASSUMPTIONS 1. Wembley has a monopoly on certain types of match
2. Wembley is run by profit maximising managers selling tickets to utility maximising buyers
STRATEGY Set prices for seats as close to the willingness to pay as possible using price discrimination
KEY CHOICES What type of seating to sell and at what price?
2 Scope
This strategy is limited to the following football matches:
• England home matches – competitive and friendly
• Major cup semi-finals and final
• Lower league play-off finals
Wembley has a monopoly on these matches due to Football Association (FA) policy2. Theory states that Wembley should charge as close to the willingness to pay of its customers as possible to maximise its profits1. The ability to do this depends on demand and the ability to price discriminate between market segments.
3 Absolute Demand
Absolute demand for tickets will be high due to several factors:
• Football is England’s national sport
• Watching live matches is popular
• Wembley Stadium is the ‘home of football’ with a long and distinguished history
There is good evidence for assuming high demand:
• The last three competitive England home games were sold-out2
• Attendance figures for club matches are consistently high3
• Recent cup finals at Cardiff Millennium Stadium were sold-out4
Actual demand varies between market segments but can be found from market research, e.g. membership schemes and studying events at similar grounds.
4 Market Segmentation
The table below shows the range of customers that buy tickets for football matches. Elasticity of demand is shown for each category and explained below:
Market Segments
Elasticity of Demand Reason for Elasticity
1 &nbs...
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...y for rugby union and league
• Pop concerts – outdoor arenas are alternatives with similar capacity
There are a wide range of substitutes available for these that affect willingness to pay.
11 Other Event-Related Income
Stadiums contain much more than just an arena to watch sport including:
• Refreshments and merchandise
• Broadcasting rights
• Advertising
• Car parking
• Other events, e.g. conferences
Income for the above would be approximately proportional to the number of people in the stadium.
12 References
1. Cabral, Luis. “Introduction to Industrial Organization”, MIT Press, 2000.
2. www.thefa.com
3. http://stats.football.co.uk/dom/ENG/PR/attend.html
4. http://stats.football.co.uk/dom/ENG/trn/ENGFAC_F.html#F
5. www.wembleystadium.com
6. www.millenniumstadium.com
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According to Berg (1972) calculate losses due to the inefficiencies, demand that are statistically estimated and used in a discussion of market efficiency (p.33). The demand for low-calorie food can change if there is a change in consumer income, the pricing of competitor product and the price of goods such as complimentary microwave oven. This shift can happen because of consumer taste and preference.
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Noll, Roger, and Zimbalist, Andrew. Sports, Jobs, and Taxes: The Economic Impact of Sports Teams and Stadiums. Brooking institutions press, Summer 1997. Vol. 15 No. 3.
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Elasticity is one of the most important theories in economics and it is a measure of responsiveness (Baker, 2006)i. There are mainly two types of elasticity, the elasticity of demand which includes price elasticity of demand, income elasticity of demand, and cross elasticity of demand as well as elasticity of supply (McConnell, Brue, & Flynn, 2009)ii. The degree to which a demand or supply curve reacts to a change in price is the curve's elasticity (Lingham, 2009)iii. Elasticity varies among products because some products may be more essential to the consumer.
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