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
Substitute goods are different on for different market segments see (4.1) For most of the customers these substitute products cannot satisfy the needs covered by PC computers.
Siegfried, J., & Zimbalist, A. (2000). The economics of sports facilities and their communities. The Journal of Economic Perspectives, , 95-114.
The simulation game together with the class material provide with useful insight on how to define and select a target market. They both provide the bases for segmenting consumer markets. As state in the ...
Their price must be one that is attainable and reasonable for the offerings. The Kotler & Keller text suggests that facilities analyze competitors and their offerings, estimate their own costs, and determine demand, in order to set the appropriate price.
The precursor to this cost was a decade of skyrocketing salaries and the trend to build huge public ally financed megaplexis to house these professional athletes. The current response to this ostentatious decade is to put forth bills to prevent and/or set limits on public financed projects (Shafroth, 1996). The history of stadiums shows that it was always the norm of publicly building stadiums, however, with the cost of these projects astronomical the public is more skeptical (Rosentraub, 1991). The reason why state and local governments continue to want to finance these stadiums has been much debated. The main debate is one of economic impact. The following two excerpts illustrate this debate:
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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