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An examination of underlying consumer demand and sport pricing using secondary market data

Author

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  • Joris Drayer
  • Daniel A. Rascher
  • Chad D. McEvoy

Abstract

► The purpose of the study is to understand demand, consumer surplus, and pricing (in)efficiency. ► Secondary market prices, instead of number of transactions, explain changes in consumer demand. ► Data indicate that NFL teams may be able to sell 20,000 additional seats for each game. ► There is approximately $260,000 in consumer surplus per game that is captured by resellers.The growth of the secondary ticket market has given sport managers a new way to understand consumer demand for tickets. In the secondary market, transaction prices and the number of transactions are highly variable and respond directly to consumer preferences, making it ripe for exploration. Using secondary market data for the NFL provided by a secondary market firm, the purpose of the current study is to understand a variety of traditional sport economics issues such as demand, consumer surplus, and pricing (in)efficiency. Results show that secondary market prices, instead of number of transactions, respond to the factors commonly associated with consumer demand. Further, the data indicate that teams may be able to sell 20,000 additional seats for each game. However, given that teams cannot easily add this number of seats (and may not want to given the NFL's blackout rule), there is approximately $260,000 in consumer surplus per game that is captured by resellers.

Suggested Citation

  • Joris Drayer & Daniel A. Rascher & Chad D. McEvoy, 2012. "An examination of underlying consumer demand and sport pricing using secondary market data," Sport Management Review, Taylor & Francis Journals, vol. 15(4), pages 448-460, October.
    • Handle: RePEc:taf:rsmrxx:v:15:y:2012:i:4:p:448-460
    DOI: 10.1016/j.smr.2012.03.005
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    3. Shapiro, Stephen L. & Drayer, Joris, 2014. "An examination of dynamic ticket pricing and secondary market price determinants in Major League Baseball," Sport Management Review, Elsevier, vol. 17(2), pages 145-159.
    4. Arne Feddersen & Brad R. Humphreys & Brian P. Soebbing, 2017. "Sentiment Bias And Asset Prices: Evidence From Sports Betting Markets And Social Media," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 1119-1129, April.
    5. Christopher Huth & Markus Kurscheidt, 2022. "Season Ticketing as a Risk Management Tool in Professional Team Sports: A Pricing Analysis of German Soccer and Basketball," JRFM, MDPI, vol. 15(9), pages 1-18, September.
    6. Budzinski, Oliver & Feddersen, Arne, 2015. "Grundlagen der Sportnachfrage: Theorie und Empirie der Einflussfaktoren auf die Zuschauernachfrage," Ilmenau Economics Discussion Papers 94, Ilmenau University of Technology, Institute of Economics.
    7. Jung-Sup Bae & Weisheng Chiu & Sang-Back Nam, 2021. "Sport Fans’ Price Sensitivity Based on Loyalty Levels: A Case of Korean Professional Baseball League," Sustainability, MDPI, vol. 13(6), pages 1-13, March.
    8. Mark A. Diehl & Joel G. Maxcy & Joris Drayer, 2015. "Price Elasticity of Demand in the Secondary Market," Journal of Sports Economics, , vol. 16(6), pages 557-575, August.

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