People are changing their spending habits while prices are rising at a rate not seen in four decades, and making choices that favor experiences. That means a huge demand for live sports.
Demand for sports attendance “doesn’t typically respond to price changes,” said Dennis Coates, a professor of sports economics at the University of Maryland, Baltimore County. “Good times, bad times, high prices – it doesn’t change consumer behavior” in relation to spending on sports.
Now that pandemic restrictions are being eased, even as cases remain elevated in several places, people want to get out more. “I think people want high-end experiences, want out, and they’ve been pent up for a few years now,” Ari Emanuel, CEO of Ultimate Fighting Championship owner Endeavour, recently told CNBC. “They want to live life a little.”
That was evident earlier this month when ticket prices for upcoming 2022 NFL games averaged $307 immediately after the league’s schedule was released, said aftermarket platform SeatGeek. While that price is down from an average of $411 last year, it’s up from the $305 average in 2020, when attendance was restricted due to Covid. The average in 2019, before the disease swept the globe, was $258. Ticket prices reflect demand and typically fluctuate throughout the season.
As demand increases, teams and organizations raise prices. A concession menu for the PGA Championship this week featured $18 beers. Spending per fan has increased for the NFL and NBA in recent seasons, according to the Fan Cost Index compiled by Team Marketing Report, a Chicago-based sports marketing firm. The index calculates what it would cost for non-premium seats, two beers, four sodas, two hot dogs, merchandise and parking costs, according to company CEO Chris Hartweg.
This spring, fans will fill the arenas for the NHL and NBA playoffs. Hugo Figueroa, 29, said he paid $1,200 for three tickets to a playoff game between the Boston Celtics and the Brooklyn Nets.
“Work hard, play hard,” Figueroa told CNBC last month while standing in the Nets’ fan shop at Brooklyn’s Barclays Center. He said he bought a beer at the game but “ate it before I got here because I didn’t want to pay for food”. In sports and entertainment venues, discounts are usually higher than in typical restaurants and food courts.
Figueroa said he has two jobs so he can cope with rising prices. “I work so I can spend money,” he said.
Sports fans shop at the Brooklyn Nets Fan Shop in the Barclays Center.
Jabari Young | CNBC
According to Judd Cramer, a sports economist at Harvard University who served in President Barack Obama’s administration, strong consumer balance sheets, bolstered in part by previous Covid stimulus payments and support programs, are helping people spend more on sports.
“It seems like consumers could have dealt with that,” Cramer said. “Looking back historically, we’ve had low inflation for a long time – but during the recession in the early 1980s when GDP was falling, sports spending was actually high.”
When ticket prices get too high for some fans, “there’s another person that’s there” to buy inventory, Cramer said.
Emily Ushko, 32, told CNBC she has “a bit of disposable income” and wants to spend it on sports. She said she paid over $600 for two tickets to a Nets-Celtics playoff game last month.
“This is a one-time thing,” Ushko said. “You want to see these players live, get a feel for the audience and experience it.”
An empty Levi’s Stadium can be seen before an NFL football game in this October 4, 2020 file photo.
Toni Avelar | AP
But while consumers have remained resilient amid booming inflation, there are concerns that the US economy could be headed for recession, forcing some middle- and working-class fans to make tougher spending decisions.
“People could get hurt a little bit,” Harvard’s Cramer said.
Team Marketing Report’s Hartweg warned that more consumers may eventually “slam on the brakes” as prices of essential items rise.
Figueroa, the NBA fan, said he would “reconsider” coming to the Barclays Center next season if inflation continues.
Still, there are fans who will keep going even as prices continue to climb and economic uncertainty mounts. Philadelphia fan Kevin Washington, 58, and his wife Tawana, 53, have been Sixers season ticket holders for five years and don’t want to give up their seats.
“Never crossed my mind,” Washington said. “You just have to be a little more careful. You still need some enjoyment. A break away from reality.”
However, a recession has not yet happened and it may not happen at all. It would take a “major disaster” with high unemployment to cause another slowdown, said sports economics professor Coates. The unemployment rate is 3.6%.
“If it’s a normal-sized recession,” he said, “I think people will mostly weather it.”
https://www.cnbc.com/2022/05/22/inflation-is-rising-but-fans-are-paying-for-nba-nfl-other-sports-tickets.html Inflation is rising, but fans are paying for NBA, NFL and other sports tickets