there's an inexhaustible number of fans willing and able to spend thousands of dollars over the course of 7 Saturday afternoons each fall.
I did not make this headline up
anything you can charge I can charge at almost equal efficiency
A cherry-picked statistic from Michigan's worst home schedule in a long time and an eyebrow-cocking assertion caught my attention yesterday:
Michigan increased football ticket prices for this fall's six home games, but could another increase be in the works?
It certainly seems that's the direction.
Dave Brandon, Michigan's athletic director who spoke to the Wolverines Caucus on Tuesday, said 43 percent of the athletic department revenue comes from ticket sales.
"We're woefully under-market," Brandon said.
Michigan earlier this spring announced what it called a "modest" increase in football ticket prices. The six home-game package is $390, or an average $65 per game. Ohio State charges $75 a game, and Brandon said that gives the Buckeyes more money to put back into their athletic program and makes them more competitive.
This claim probably catches anyone who writes a check to the university by surprise so I thought I'd check it. It's hard to do so since the documents you can FOIA from the two schools list things a lot differently. They also do things differently: OSU has no mandatory annual PSLs. Instead they have a "Buckeye Fund" you donate to which gets you points that gets you priority, etc.
But the bottom line is I don't think Michigan fans are getting off easy. In 2010 OSU's eight-game home schedule netted them a total of $42.1 million. Michigan's seven games that year brought in 33.1 million. In 2011 OSU's seven home games were projected to bring in $36.4 million; Michigan's eight were projected to bring in 41.3 million. Over those two years that's a deficit for Michigan of about 270k per game, or about $2.45 a ticket.
It's hard to get a grip on exactly what the comparable numbers are in donationland but Michigan seems to have an advantage. In 2010 Buckeye Fund donations were around 10 million. Michigan's PSDs were $8.9 million plus another three million in "other gifts." Their nascent club seats and suites brought in $7.8; the year after things got in full swing and the fancy seat donations brought in $13 million. In 2011 OSU brought in $11 million from its fancy seats and another 3.5 from a "stadium ticket surcharge".
Add it all up and…
|Regular ticket sales||78.5||74.4|
|Suites and club*||22||26|
*[I used the 2011 numbers twice here since it was clear Michigan expected the 2011 number to be closer to accuracy going forward.]
…the gap is essentially nonexistent, the equivalent of $1.70 a ticket over those two years. Without the temporary surcharge Michigan would have an advantage. It's not clear what market Brandon's looking at. If it's the one in Columbus he's wrong.
there's an inexhaustible number of fans willing and able to spend thousands of dollars over the course of 7 Saturday afternoons each fall.
If the data did say that, I would believe it.
as long as the total ticket price doesn't exceed the prices in the online secondary market. If I cant afford to go I will just sell my tickets to someone that can. I'm never giving up my seats as long as I can break even if I want to sell them.
I can almost guarantee you that this year's ticket package will exceed its value on the secondary market, whether it be on line or outside the stadium.
I can't disagree more. Not if you amortize the $500 PSD as part of the total ticket price.
Do you really think I could sell my two tickets for $300 Air Force, Umass, Illinois, Northwestern, or Iowa?
If you had a heart, you'd give your AF tickets to an AF veteran.
Want my email address?
I think that we might be saying the same thing.
I think that this year, you could easily buy all six games on the street or stubhub for less money than you would pay for the season package. From a purely economic standpoint, I almost view this year's package as "how much money do I want to pay to have a guaranteed MSU ticket in case both teams are Top 10 ranked?" I'm thinking that's over half the value of the package right there.
Mike Ilitich probably thought that same thing ten years ago when there was a long waiting list for Red Wings season tickets. Assuming that your customers are nothing but a bottomless pool willing to pay anything and absorb an endless series of assreamings is arrogance at its worst and a recipe for failure.
add the generic donations to that list when comparing the revenue streams of the two since they're not correlated to the actual ticket sales, which is what is being compared here.
If you take those out you have an approx $7.5M difference between the two, which is a sizable difference - heck, isn't that double the amount that has FSU's panties in a bunch?
Generic donations on the OSU side are donations to the "Buckeye Fund" and clearly should be added to ticket revenue. Most of the generic donations on the Michigan side are mandatory seat PSLs. A small amount is not specified; my assumption is that those are people raising their victors points levels to get seats or get better seats. In any case, the difference in ticket revenue alone between the two schools is negligible.
He's talking about ticket revenue as a percentage of total AD revenue. Hooray not-lying with stats!
Michigan takes in more money than other schools in licensing revenue, so we should increase ticket prices to keep that ratio the same?
If Stephen Ross donates $100M to the athletic program next year, is that a problem because it lowers the percentage of AD revenue brought in by tickets?
Here's how this went down:
Brandon: I want to raise ticket prices... find me a number that helps me
AD Stats person: Hey! If we take our ticket revenue, divide by total revenue, and do some doctoring... I get X. If I do the same with OSU, I get Y. Since X<Y, we're behind OSU!!!
It is a shame, Brian, that we have to "fisk" Brandon as if he were Mark Snyder or an oppo-blogger.
But it seems to be necessary. I think it is huge that you are on this story; it is superb work on your part in this case. Kudos.
The next time that Brandon starts whining about increased revenues, I'd like to ask him what is he doing, cooperatively with other AD's, to try to keep costs down. I'm getting awfully tired of the story that 'we need to raise more revenue, and spend more, to remain competitive with Ohio State...' How about we just all agree to spend less? I don't want to become any less competitive, but where does the spending race end? And I certainly don't care about paying more money in football seat PSD's so that the Athletic Department can increase the budget for softball.
... I think the jihad against Brandon is leading to poor takeaways from an incomplete understanding of the numbers. We simply do not know what the gap is, and Brian's made some potentially big assumptions.
I equate this to what banks do in trying to predict company performance by sleuthing various inputs from different sources that inevitably end up being grossly inaccurate.
We don't have to take Brandon for his word. That's fine. But we shouldn't hold the underinformed analysis of one blogger -- regardless of his credibility -- as gospel against the ADs claim.
NCAA football is pure untaxed, unregulated capitalism. You can rail against it, but unless people stop buying tickets, Brandon should raise the prices.
/preparing for being negged for voicing an unpopular opinion.
NCAA football is pure untaxed, unregulated capitalism. You can rail against it, but unless people stop buying tickets, Brandon should raise the prices
If the goal of the athletic department is "make money," then your idea has some validity (I would still argue against the idea that maximum allowable prices will lead to maximum profit long-term, but it's at least logical). But that's a pretty myopic view of an athletic department.
Besides, Michigan already does VERY well financially (see below), so claiming we're "woefully below market" without any numerical support calls for some better information. Brian provides some information, which is of course open to interpretation, which seems to contradict Brandon's theory.
Seriously; look at this chart, and tell me that Michigan is woefully behind ANYTHING.
Plus, if the appropriate strategy is to be as profit-driven and capitalistic as possible, shouldn't we cut the non-revenue sports?
There are many other objectives at play with public university athletics.
Also if I wanted to root for a team backed by a money sucking business focused solely on revenue extraction and victory, I'd own a lot more clothing with the words "Dallas Cowboys".
Any place I live in will likely have at least one pro sports team that does fairly well for themselves. A team whose home stadium I can easily drive to and a team I can talk about with the locals. The reason people fly the Michigan flag in enemy territory and fly across the globe to see The Game is because of the tradition and loyalty. The trick is loyalty works as two way loyalty, not as give us your money and watch ads on the jumbotron.
I'm only 27, but I feel old.
Nah, I'm negging you for calling NCAA football "pure" and "unregulated."
How much does the labor get paid, again?
Wouldn't the failure to pay the labor be evidence that it's unregulated?
Is a school's failure to pay its players a product of its independent decision not to do so, or a product of a big thick book of byzantine, hopelessly contradictory rules (a/k/a NCAA regulations)?
... between self-regulation and government regulation. NCAA is self-regulation. Pure capitalism allows for this.
we have gone wildly off the rails.
It is untaxed for a reason. That reason being the provision of a public good (in this case: circensis), and the acknowledgment that the existing infrastructure can provide said good better than a government program could.
Making big bucks is important, but maximizing revenue is not the ultimate goal of an AD. If it is, then their revenue should be taxed.
But it's funny to see the these two words, "good better", in succession!
I may be reading this wrong, but I think you're looking at the wrong numbers Brian. It sounds to me like DB has done what all statistics seek to do: Manipulate data to tell the story you want to tell.
For Brandon's 43% of the revenue to come from ticket sales and be "under market" you're looking at the wrong data set.
Don't just look at how much cash OSU brings in, look at their total AD Budget, then take how much cash they get from tickets and calculate that percentage. That's what Brandon is talking about.
These numbers might be dated, but Michigan had total AD revenue of $122,486,490 in 2010-2011. If we take Brandon's 43% number that means across ALL ticket sales (Football, hockey, basketball, $5 tickets to non-revenue generating sports, etc) totalled $52,669,190. Which is close to your $60,000,000ish number that you calculate from Football tickets (figure variations from the suites in 2010-2011, rounding errors and what not).
According to that site, OSU actually generated about $10M more through their AD, and if your numbers above are correct OSU generated >50% of their AD revenue through tickets. (2010-2011 had 8 home games for OSU, plus all the other sports.) Using your numbers above I get that OSU generated 41M+11M+10M+3.25+ = 65M from football alone, and their revenue for 2010-2011 was about $131M. So yeah, they got more than 50% of their AD Revenue from ticket sales, where we only got 43%.
The question isn't the gross cashflow generated, it's what percentage of your AD budget is generated by ticket sales. And there we are actually behind OSU right now. I'm not saying a ticket increase is needed/right/whatever, just that Brandon's playing with the stats in such a way that his math adds up.
I don't understand why the ratio is indicative of what ticket prices should be. Maybe I'm just dense. Please to advise please.
I don't think the ratio itself matters at all. I don't want ticket prices to increase. All I am saying is that Brandon has found real numbers that are true. Only getting 43% of your ad revenue from tickets is below market.
does that matter? Not in my opinion. But Brandon wants to raise prices, so he's using these real numbers that don't actually matter as justificaion. It's marketing.
I don't think it is OK for our AD to state some number, which while mathematically accurate, has nothing to do (meaningfully) with what football prices "should" be.
Money quote to explain what I mean: ""An accurate statement is factually correct; a true statement, besides being accurate, should mean what it seems to mean.""
DB is making it seem like UM football's ticket prices are too low, compared to what its main competitors are. And not just a bit low, "woefully under-market." If you look at what fans actually pay to attend a game (and not some ratio that "doesn't matter at all", that fans wouldn't be able to calculate without a TI-83), that is untrue. I don't call that marketing - I call that lying.
To be fair, The Big House is about 7% larger than the Shoe, so we should be making around 7% greater revenue (at least).
Taking in $270k less per game, when your stadium holds several thousand more seats, does imply you're charging less than you could (considering demand for both schools' football is certainly comparable.)
That said, I live in Boston and doubt I'll head to a game any time soon, so I'm a disinterested spectator as to whether or not DB should actually jack up prices.
out of the equation......... A bigger stadium may generate more sales but it also requires more vendors, staff, municipal police support, water usage, etc. It certainly isn't a linear equation.
We're talking revenue here. Not profit.
I mean, yes, bigger stadium has more costs, but on a per attendee basis, costs will generally be lower, so that argument doesn't do much to justify increasing ticket prices.
Really, Michigan football is a revenue maximizing entity, or at least that's what DB's goal for them is. And he feels, looking at similar entities, that there is more revenue to squeeze. There wiill come a certain time when too much is too much, and prices get too high and hurt the product of a great crowd/atmosphere, which in turn hurts revenue/demand. I think that he's not there yet, but he may be closer than he thinks.
Or maybe they are charging too much.
Nah, that could never be the case.
I feel like such a statistic lately.
Brandon is actually charging MORE on a quality basis. Over the last 4 years UOS has played Miami, USC and Colorado AT HOME. This year they have Cal. What do we get to look forward to? The Horror II.
My yearly Eastern (or equivalent) tickets are certainly worth $95/each with my PSD....Right...
Looking at the terrible home schedule this year along with selling out for the JJ bowl, he should really think before he speaks.
Well the schedule is also because we have ND on the slot. Notice how OSU only really has 1 marquee name per year? We have ND for that. We don't have that much negotiating room with other teams because we can't risk only having 2 home non-conference games. Big-time Athletic Departments rely on the revenue brought in from about 7 home games a year. 3-4 NonCon, and 3-5 home conference games
The end of the unending masses of season ticket holders if the price of tickets keep rising for terrible home schedules. Hopefully, they will be a higher demand for better games in the future to bring them back.
Sure, we are overpaying for the 2012 schedule, but we just underpaid for the 2011 schedule. UTL, OSU and Nebraska were worth more than we were charged. What is the difference if we underpay one year and overpay the next or pay the same for two consecutive balanced seasons?
should have worked Nebraska in the schedule at home in the year opposite ND and OSU. Then we'd have a more balanced schedule (for the permanent schools) that supports tickets prices. Especially when you add a home Pac12 game in the years we play ND away.
I wonder how much money Ohio's basketball team brings into their program. Looking online, it's an incredibly profitable program (something like $11 million profit). That also has to be looked at. Does Michigan's basketball program turn a similar profit? And if it doesn't, maybe that's why Brandon has to milk the football teat.
If we stop bringing the band to games the costs will even out.
I've never had a problem with Michigan scheduling tomato cans, just don't make them the same tomato cans. I get we want to benefit the Michigan MAC schools, but there is no reason we have to schedule two in a season.
Obviously I'm not thrilled with seeing Akron in 2013, but it beats seeing the same directional Michigan schools over and over.
There is no reason DB can't bring in some of the lower level CUSA schools (Memphis, UAB, Tulane).
In this area. I mean, isn't it Brandon's job, along with all the other stuff, to make sure that we don't have ND-NB-OSU all on the road in one year, let alone every other one? Not only does it make every other year's home schedule poor, thus disadvantaging fans, but he is actually creating a huge disadvantage to Michigan's football program with this schedule. What am I missing here and how did he allow this?
ticket prices still gonna go up.
Brandon picked an interesting time to talk about price increases, especially with a pretty weak home schedule. Keep in mind he indicated future schedules will have dates filled shortly - maybe a way to sooth the masses?
Keep in mind if FBS schools go the route of compensating players, especially with Spurrier-like numbers, the money is going to need to come from somewhere. Licensing fees and ticket increases may be met with some resistence, but likely will still bring the money in.
You can only charge so much for a hot dog and coke.
Wait a second...wasn't one of the points of putting in the suites and lux boxes was to keep regular ticket prices from increasing? Back me up on this. Does anyone else remember that statement when they were pitching the suites?
Both Martin and Brandon repeatedly stated that the addtion of premium seating would lessen the need for ticket price increases . Those promises lasted for oh, a good 3 or 4 months or so. They'll never reach a point where they feel they have enough money.