Celtics should have increased ticket prices

[Kim Malo]

At 12:33 PM 8/7/2007, Phil Maymin wrote:
>Now it is probably too late. But they should have announced that
>ticket prices will increase starting in September or next January
>something like that, at least for the most expensive seats.
>
>There's lots of behavioral research on the topic of fairness that
>suggests people don't mind price increases when it reflects increased
>costs but they do object quite strongly when it is due to increased
>demand (though of course in pure economic theory both should be fine).
>
>At the very least they should have increased the prices of the most
>expensive seats to extract the maximum value from the standard price
>discrimination approach of charging those who are willing to pay a lot
>more for a little better seats.
>
>Of course as a consumer I prefer cheaper seats but I'm afraid this
>will eventually mean ticket prices will go up at the worst possible
>time, when demand has abated, and then ownership will blame poor
>ticket sales on the lower revenue, and refuse to sign who we need to
>accomplish our upcoming threepeat.

Nope, bad economics. Salaries are paid largely by the much larger 
monies received through media contracts and marketing / shared 
revenue, not by gate. Ticket prices are a function of supply and 
demand NOT salaries, although owners will certainly use salaries as 
an excuse to raise prices because as you note, people are more 
willing to accept that.

The cap is based on shared revenue money - i.e. the owners already 
will receive enough money to pay that portion of their salary bill 
without having to raise ticket prices, so the bulk of the salaries 
are already covered without a price increase, even if you've moved a 
bit into luxury tax territory.

The expensive seats did have a ticket increase BTW, it's the median 
and low priced ones that didn't.
Kim