(This is the English version of my Afrikaans story in Die Papier on Friday 10 July)
On Saturday before last, the Springboks ran out against England in front of a packed Ellis Park. But the Tuesday before that, the stadium had been on track to be half empty. Tickets started at R950, sales were sluggish, and supporters did the sums out loud: if you’re a family of four and you add in transport and a boerewors roll, it’s a five-thousand-rand outing. Reportedly, SA Rugby relented and dropped the price of the cheapest tickets to R650, and some blocks to R450. The stadium filled up, and a convincing Springbok win helped ensure that the supporters who’d paid more didn’t feel too aggrieved. Still, you don’t want to be in that situation again, and it’s time for an economist to offer some advice from the sidelines.
Supply and demand set the price. There’s a fixed supply of seats in the stadium, and when the Springboks play as well as they have in recent years, there’s demand to be there. But not all seats are equal, and different blocks carry different prices. There are seats on the halfway line for corporate guests, cheaper seats behind the posts, and everyone sorts themselves according to what they’re willing to pay. On top of that, a full stadium is part of the product. It also sells parking, food, and replica jerseys. It looks better on television, where the big money is. And the moment the whistle blows for kickoff, an empty seat is worth nothing. You could instead sell it at a clearance price right at the end, but then you run the risk that loyal supporters who bought full-price tickets early feel they’ve been treated unfairly. If they then delay their purchases next time and wait for discounted seats, things get tricky. So the price of a seat has to do three jobs at once: fill the stadium, fund the game, and keep the supporters’ trust.
The key, then, is to get the price of the cheapest ticket right the first time, even if it’s so low that the rugby union feels they’re leaving a bit of money on the table. They need to realise that the supporter who chooses the cheapest ticket isn’t someone downgrading from a more expensive one. It’s the cheap ticket or the couch at home.
If they get it wrong, there are better plans to make than simply cutting the price. Rather, fill the seats by offering discounts to specific target groups, such as schoolchildren and students, or local residents.
The flip side is to give benefits to supporters who buy early. This could range from better seats to better prices for group bookings. Perhaps they could get the chance to book before general sales open. Remember, the people who buy early help with cash flow. It’s also possible to announce a ceiling price and a floor price in advance. Then, supporters can decide whether to wait for the floor price, but they also run the risk that tickets sell out before then. Even better would be to offer a refund-the-difference guarantee if prices are cut — and that could simply be credit toward the next ticket you buy.
So it’s not for nothing that there’s an entire field of study called sports economics.