Economics
The sold-out football club
A football club sells out every home match, yet it does not raise ticket prices. Is it being irrational?
- Hint 1What else does the club earn money from when the stadium is full?
- Hint 2Think about the long run: who are tomorrow's fans and how do fans react to prices?
- A sell-out suggests demand exceeds supply at the current price, so a higher price could raise ticket revenue today.
- But the club also earns from a full, loud stadium: TV appeal, sponsorship, food and shirts.
- Low prices build loyalty and the next generation of fans, a long-run investment.
- Fans may see sharp rises as unfair and react against the club.
- So keeping prices down can maximise long-run profit, or reflect goals other than profit.
Where it lands: Not necessarily: ticket revenue is only part of what a full stadium earns, now and later.
The trap: Stopping at 'demand exceeds supply, so raise the price' without asking what the club is actually maximising.
What a tutor might ask next: Why do touts exist for sold-out matches, and who gains from them?
Now do one out loud. In the interview you think aloud with a tutor. Try an Economics problem with hints, follow-ups and Mia's feedback on how you think.