Time for Part 2, you can read Part 1 here
Why do Arsenal increase the price of tickets if it doesn't generate significant revenue?
Leading on from Part 1 you can see that increasing ticket prices hasn't had a big impact on the clubs revenue. So why do Arsenal keep on increasing ticket prices?
Why do Arsenal increase the price of tickets if it doesn't generate significant revenue?
Leading on from Part 1 you can see that increasing ticket prices hasn't had a big impact on the clubs revenue. So why do Arsenal keep on increasing ticket prices?
The reason why Arsenal keep on increasing ticket prices is because of the 'price elasticity of demand' of Arsenal tickets. Using the data from the table in Part 1 you can find the price elasticity of demand of Arsenal tickets for the Premier League; however this is difficult as the demand (average attendance) keeps on varying and the price's only increase. The only year that you can see a significant change in price and slight change in average attendance is the change from the 10-11 season to the 11-12 season. However this change in demand might not be due to price increase and might be due to the fact Arsenal sold two of their best players before the season began (Cesc Fàbregas and $amir Nasri). |
Price elasticity of demand is the change in demand divided by the change in price. The lower the value the more addictive the product is and price change will make a smaller difference in demand for the product. Normally if a good is inelastic (X < 1) than it means it's an essential or doesn't cost a lot meaning a change in price won't be significant. Where as elastic products (X > 1) tend to be luxury products and not essential.
Season: 10-11 to 11-12
Change in Demand = 0.042%
Change in price = 4%
Price Elasticity of Arsenal Premier League tickets = 0.0105 (Very Inelastic)
To understand what this means you need to compare it to other products, there are some examples below of products and their 'price elasticity of demand' according to mackinac.org:
Arsenal Premier League Tickets: 0.0105
Food Salt: 0.1
Coffee: 0.25
Tobacco products: 0.45
Taxi Fare's: 0.6
Private education: 1.1
Restaurant meals: 2.3
As you can see a Premier league ticket for Arsenal at the Emirates is very inelastic, this means that Arsenal can demand more money and raise ticket prices and there will hardly be a change in demand.
Part 1 / Part 2 / Part 3 coming soon...
Season: 10-11 to 11-12
Change in Demand = 0.042%
Change in price = 4%
Price Elasticity of Arsenal Premier League tickets = 0.0105 (Very Inelastic)
To understand what this means you need to compare it to other products, there are some examples below of products and their 'price elasticity of demand' according to mackinac.org:
Arsenal Premier League Tickets: 0.0105
Food Salt: 0.1
Coffee: 0.25
Tobacco products: 0.45
Taxi Fare's: 0.6
Private education: 1.1
Restaurant meals: 2.3
As you can see a Premier league ticket for Arsenal at the Emirates is very inelastic, this means that Arsenal can demand more money and raise ticket prices and there will hardly be a change in demand.
Part 1 / Part 2 / Part 3 coming soon...