Ticket prices for sport and entertainment events are rocketing. Are these sky-high charges just a bubble, or here to stay, asks Alan Shipman.
Wimbledon has, of course, chosen to give men and women equal prizes – unlike the economy in general, whose median £26,500 figure that glosses over a tramline-sized gender gap. The average man in full-time employment took home £28,700 in 2012, while female full-timers averaged £23,100. But even with very above-average scrimping, or some extraordinary success on the horses, few tennis fans had any chance of stretching their pay-packets further than the big screen on Henman/Murray Hill.
If they looked elsewhere in the great British summer of entertainment and sport, it was a similar story for those who follow superstars but can’t quite earn like them. The Rolling Stones brought music to the huddled masses when they performed in Hyde Park in 1969. But when they returned in 2013, it cost over £300 just to stand near enough to notice that Charlie Watts has gone a bit grey.
Even when the Stones aren’t filling football stadiums, the ordinary fans aren’t getting satisfaction, as season ticket prices arc skywards like the ball in England’s penalty shootouts.
In case this all sounds anecdotal, superstar economist Alan Krueger has carefully tracked the rise in concert ticket price, relative to the general price index, and showed that a substantial inflation was well under way before the turn of the century.
Raising the roof
The reasons for sky-rocketing admission charges to big events seem fairly obvious. There is, by definition, only one Number One tennis player, and one World’s Greatest Rock ‘n’ Roll Band. In a city the size of London, the number of people who want to see them live exceeds the number of stadium seats (or park standing-areas) available, even if they play for several nights. Event organisers have a choice between setting an ‘affordable’ price and letting people queue for tickets until they sell out, or charging a price that will chop down the demand to match the limited supply.
In practice, they tend to mix the two approaches – making some of the tickets available at reasonable prices for those willing to queue overnight or book months in advance, while putting a premium on the best seats, so that queues are confined to the lower tiers.
This dual pricing carries risks. Even after trying to ban re-selling and clear away the ticket touts, it’s impossible (especially with the growth of online auctions) to stop some of those who get the cheap tickets from selling them on at a premium as the final date approaches. Even West End theatres, which hope their shows will run and run, have seen the resale ratchet unleashed for those who can only stay for one night.
But why has the superstars’ premium grown, so that people pay (after adjusting for price changes) far more to spectate on Murray than Perry, and more for Mick & Keith at age 69 than at 19? It could be argued that the standard of their play is now higher. But it’s not clear that this is true – some bands allegedly auto-tune and mime their way through ‘live’ sets, and no-one has yet emulated Rod Laver’s double grand slam – or that it makes for greater entertainment value. Undoubtedly, the uncontrollable copying and ‘sharing’ of video footage of past events makes it more important for artists and sportspeople to make money from ‘live’ events. But if recordings have been eroded as a revenue stream, plenty of celebrity endorsements and perfume ranges have opened up to replace them. And while stadiums have been upgraded, with health-and-safety more in evidence as today’s crowds assemble, a cramped patch of Hyde Park grass is much the same now as half a century ago.
'media exposure has reinforced the winner-take-all effect'
Economists point to two other reasons for the remorseless inflation of big-event prices. First, the UK’s average wage is now almost three times what it was in 1936 (the year of Perry’s last Wimbledon victory), after adjusting for price increases and despite stagnation in the past ten years. This ‘real’ average wage has risen 82% even in the shorter interval since the Stones first stormed the Park in 1969. These and many other price and wage changes can be quickly gauged from the immeasurably worthwhile Measuring Worth website.
As people get richer, they spend a declining proportion of their income on food and other necessities, and an increasing proportion on the slightly less necessary. You might regard ‘Gimme Shelter’ as essential listening, and England’s certain march to the next World Cup as unmissable viewing; but that’s the point. Income has risen, and demand for these events has risen much faster than income – so as they are staged no more frequently than before, their price has inevitably been bid up.
The bidding is intensified because the quality of base-lines and bass-lines isn’t the only source of value on these occasions. There’s also a reward just from being in the crowd that’s there to witness them. Tickets to Meat Loaf’s farewell performances, and Usain Bolt’s Olympic 100m appearance, are ‘positional goods’, deriving part of their value from the fact that few people could be there because of the exorbitant entrance fee. Tickets prices’ initial boost, due to scarcity, leads to a second boost responding to the scarcity. The first boost may be driven by those who are desperate to watch history being made; the second is from those who might not even watch or understand the history, but just want to be able to show that they were there.
On top of this, there’s live television coverage, in its ever-escalating high-definition, three-dimensional glory. In principle, the opportunity to watch a good-quality telecast at home (or on the hill outside the stadium) should reduce the competition for tickets, and bring prices down. But this is now a paid-for opportunity – increasingly confined to subscription channels and pay-per-view screens, now that private media groups have broken the public broadcasters’ monopoly. And the global availability of TV pictures at big events has magnified demand for the biggest events, at the expense of the more minor ones.
Before TV and cheap travel, people mostly went to local concerts and sports events, involving their neighbourhood players. Now, a growing portion of the world’s population can travel to see the ‘best’ exponents of each art and sport, or have film of the ‘best’ channelled into their homes. Manchester United now has thousands of followers across Africa, Asia and the Americas, who in consequence are less likely to turn out to watch their local team (unless it signs a prominent ex-ManU midfielder). Bob Dylan has a similarly global band of loyal followers, who consequently pay less attention to other singer-songwriters who may be equally erudite but still haven’t toured further than the next-door pub. Media exposure has reinforced the ‘winner take all’ effect that concentrates global demand on a handful of performers, while confining to shrinking local markets those with slightly less good lyrics or a slightly slower left foot.
A creative bubble?
The continued rise in main-event prices, despite a lack of growth in European and American real wages since 2000, may contain a warning for tomorrow’s impresarios. The biggest tickets may now be experiencing a bubble, driven more by cheap credit than the increased scarcity or quality of top performers. But whereas those who anticipate a housing or stock-price bubble can profit by selling now and buying-back after it bursts, that tactic isn’t available to sports or arts fans. Would you forgo the chance to see Bruce Springsteen this year on the basis that he might do the next tour at a discount? Those whose best-known work is mass-produced and pickled in formaldehyde, like Damian Hirst, may be heading for that kind of ‘correction’. The Boss is unlikely to suffer such a loss.
Alan Shipman 7 July 2013
Alan Shipman is a lecturer in Economics at the Open University. He is responsible for the modules You and your money:personal finance in context and Personal investment in an uncertain world, part of the foundation degree in Financial Services.
The views expressed in this post, as in all posts on Society Matters, are the views of the author, not The Open University.
Cartoon by Gary Edwards