People are changing their consumption habits as prices rise at rates not seen in four decades, making choices that drive experiences. This means high demand for live sports.
Sports attendance demand is generally “insensitive to price changes,” said Dennis Coates, professor of sports economics at the University of Maryland, Baltimore County. “Good times, bad times, high prices – it doesn’t change consumer behavior” when it comes to sports spending.
Now that pandemic restrictions are easing, even though cases remain high in several places, people are looking to get out more. “I think people want high-end experiences, want to go out, and they’ve been turned away for several years now,” Ari Emanuel, CEO of Ultimate Fighting Championship owner Endeavor, told CNBC recently. “They want to live life a little bit.”
This was exemplified earlier this month, when ticket prices for upcoming NFL games in 2022 averaged $307 immediately after the league schedule was released, the secondary market platform said. SeatGeek. Although this price is down from an average of $411 last year, it is above the average of $305 in 2020, when attendance was limited due to Covid. The average in 2019, before the disease took hold of the world, was $258. Ticket prices reflect demand and generally fluctuate throughout the season.
As demand increases, teams and organizations are raising prices. A concession menu for the PGA Championship this week showed $18 beers. Spend rates per fan have increased for the NFL and the NBA in their most recent seasons, according to the Fan Cost Index produced by Team Marketing Report, a Chicago sports marketing firm. The index calculates what it would cost for non-premium seats, two beers, four sodas, two hot dogs, merchandise and parking fees, according to company CEO Chris Hartweg.
This spring, fans are filling 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 Brooklyn Nets.
“Work hard, play hard,” Figueroa told CNBC last month while standing in the Nets fan shop at the Barclays Center in Brooklyn. He said he bought a beer at the game but “ate before I got here because I didn’t want to pay for the food”. Concessions are generally higher at sports and entertainment venues than at typical restaurants and food courts.
Figueroa said he worked two jobs, so he could cope with rising prices. “I work so I can spend,” he said.
Sports fans shop at the Brooklyn Nets Fan shop at Barclays Center.
Jabari young | CNBC
Strong consumer balance sheets, bolstered in part by previous Covid stimulus payments and support programs, are helping people afford to pay more for sport, according to Judd Cramer, a sports economist at Harvard University who has served in the administration of President Barack Obama.
“It looks like consumers were able to deal with it,” Cramer said. “When I look back, we had low inflation for a long time – but during the recession of the early 1980s, when GDP fell, sports spending was actually strong.”
If ticket prices get too high for some fans, “there’s another person who’s there” to buy inventory, Cramer said.
Emily Ushko, 32, told CNBC she has “some disposable income” and wants to spend it on sports. She said she paid more than $600 for two tickets to a Nets-Celtics playoff game last month.
“It’s a once-in-a-lifetime thing,” Ushko said. “You want to see these players live, feel the audience and experience them.”
Yet while consumers have remained resilient in the face of soaring inflation, there are fears that the U.S. economy may be heading into a recession, forcing some middle and working class fans to make tougher choices when it comes to expenses.
“People might be a little hurt,” Cramer said of Harvard.
Team Marketing Report’s Hartweg warned that more consumers could eventually “step on the brakes” if prices for essential items rise.
Figueroa, the NBA fan, said he would “reconsider coming” to Barclays Center next season if inflation persists.
Still, there are fans who will keep coming, even as prices continue to rise and economic uncertainty grows. Philadelphia fan Kevin Washington, 58, and his wife, Tawana, 53, have been Sixers season ticket holders for five years and don’t want to lose their spots.
“It never occurred to me,” Washington said. “You just need a little better budget. You still need fun. You need time away from the reality of life.”
However, a recession has yet to materialize and it may not happen at all. It will take a “huge disaster” with high unemployment to cause another downturn, said Coates, a sports economics professor. The unemployment rate stands at 3.6%.
“If it’s a normal-sized recession,” he said, “I think people are mostly okay with it.”
