People are changing their spending habits as prices rise at rates not seen in four decades, making choices favor experiments. This means that there is a huge demand for live sports.
Dennis Coates, professor of sports economics at the University of Maryland, Baltimore County, said demand for sports attendance is usually “unresponsive to price changes.” “Good times, bad times, high prices – they don’t change consumer behaviour” in terms of spending on sports.
Now that the pandemic restrictions have eased, even as cases continue to rise in several places, people are looking to get out more. “I think people want high-end experiences, they want out, and they’ve been repressed for several years,” Ari Emmanuel, CEO of Ultimate Fighting Championship owner Endeavor, said recently on CNBC. “They just want to live a little life.”
That was clarified earlier this month, when average ticket prices for upcoming 2022 NFL games were $307 right after the league table was released, secondary market platform SeatGeek reported. Although that price is down from an average of $411 out of the gate last year, it’s up from an average of $305 in 2020, when attendance was restricted due to Covid. The median in 2019, before the disease swept the world, was $258. Ticket prices reflect demand, and usually fluctuate throughout the season.
As demand increases, teams and institutions raise prices. This week’s PGA Championship franchise listing showed $18 of beer. Per-fan spending rates in the NFL and the National Basketball Association (NBA) have grown in recent seasons, according to a fan cost index produced by Team Marketing Report, a Chicago sports marketing firm. The index calculates the cost of non-premium seats, two beers, four sodas, two sausages, merchandise and parking costs, according to the company’s CEO, Chris Hartwig.
This spring, fans are filling the NHL and NBA playoff arenas. Hugo Figueroa, 29, said he paid $1,200 for three tickets to a playoff between the Boston Celtics and the Brooklyn Nets.
“Work hard, play hard,” Figueroa told CNBC last month, standing inside the Nets fan store at the Barclays Center in Brooklyn. He said he bought beer at the game but “eat before I got here because I didn’t want to pay for the food.” Perks are usually higher in sports and entertainment venues than in typical restaurants and food courts.
Figueroa said he works two jobs, so he can cope with the rising prices. “I work so I can spend,” he said.
Sports fans shop at the Brooklyn Nets Fan Store in Barclays Center.
Jabari Young | CNBC
Strong consumer balance sheets, buoyed in part by pre-Covid stimulus payments and support programs, are helping people pay more for sports, according to Judd Kramer, a Harvard sports economist who served in President Barack Obama’s administration.
“It looks like consumers have been able to handle it,” Kramer said. “When I look back historically, we find that inflation has been low for a long time – but during the recession of the early 1980s, when GDP fell, sports spending was actually strong.”
If ticket prices go up too much for some fans, Kramer said, “there’s someone else out there” to buy stock.
Emily Oshko, 32, told CNBC that she has “little disposable income” and wants to spend it on sports. She said she paid more than $600 for two playoff tickets at Nets-Celtics last month.
“It’s a once-in-a-lifetime kind,” Oshko said. “You want to see these players live, feel and experience the audience.”
In this October 4, 2020 photo, an empty Levi’s stadium before an NFL football game.
Tony Avillar | AP
However, while consumers have remained resilient in the face of booming inflation, there are concerns that the US economy may be heading into a recession, forcing some middle- and working-class fans to make tougher spending choices.
“People can get hurt quite a bit,” said Kramer of Harvard University.
Ultimately, Hartweg of the Team Marketing Report warns more consumers to “squeeze the brakes” if prices for essential items go up.
Figueroa, the NBA fan, said he would “reconsider coming” to the Barclays Center next season if inflation continues.
However, there are fans who will continue to come, even if prices continue to rise and economic uncertainty increases. Kevin Washington, the 58-year-old Philadelphia cheerleader, and his wife, Tawana, 53, have been Sixers season ticket holders for five years and don’t want to lose their seats.
“It never crossed my mind,” Washington said. “You just have to budget a little bit better. You still need some fun. You need some time away from the reality of life.”
But the recession has yet to materialize, and it may not happen at all. Coats, a professor of mathematical economics, said it would take a “huge disaster” with rising unemployment to trigger another slowdown. The unemployment rate is 3.6%.
“If stagnation is life-size, I think people get rid of it mostly,” he said.