Wembley Stadium pricing study Essay -- essays research papers

Ticket Pricing Strategy for the new Wembley Stadium 1  Ã‚  Ã‚  Ã‚  Ã‚  Introduction OBJECTIVE  Ã‚  Ã‚  Ã‚  Ã‚  To maximise profits from ticket sales at Wembley Stadium KEY ASSUMPTIONS  Ã‚  Ã‚  Ã‚  Ã‚  1. Wembley has a monopoly on certain types of match 2. Wembley is run by profit maximising managers selling tickets to utility maximising buyers STRATEGY  Ã‚  Ã‚  Ã‚  Ã‚  Set prices for seats as close to the willingness to pay as possible using price discrimination KEY CHOICES  Ã‚  Ã‚  Ã‚  Ã‚  What type of seating to sell and at what price? 2  Ã‚  Ã‚  Ã‚  Ã‚  Scope This strategy is limited to the following football matches: †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  England home matches – competitive and friendly †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Major cup semi-finals and final †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Lower league play-off finals Wembley has a monopoly on these matches due to Football Association (FA) policy2. Theory states that Wembley should charge as close to the willingness to pay of its customers as possible to maximise its profits1. The ability to do this depends on demand and the ability to price discriminate between market segments. 3  Ã‚  Ã‚  Ã‚  Ã‚  Absolute Demand Absolute demand for tickets will be high due to several factors: †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Football is England’s national sport †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Watching live matches is popular †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Wembley Stadium is the ‘home of football’ with a long and distinguished history There is good evidence for assuming high demand: †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  The last three competitive England home games were sold-out2 †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Attendance figures for club matches are consistently high3 †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Recent cup finals at Cardiff Millennium Stadium were sold-out4 Actual demand varies between market segments but can be found from market research, e.g. membership schemes and studying events at similar grounds. 4  Ã‚  Ã‚  Ã‚  Ã‚  Market Segmentation The table below shows the range of customers that buy tickets for football matches. Elasticity of demand is shown for each category and explained below: Market Segments   Ã‚  Ã‚  Ã‚  Ã‚  Elasticity of Demand  Ã‚  Ã‚  Ã‚  Ã‚  Reason for Elasticity 1  Ã‚  &nbs... ...y for rugby union and league †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Pop concerts – outdoor arenas are alternatives with similar capacity There are a wide range of substitutes available for these that affect willingness to pay. 11  Ã‚  Ã‚  Ã‚  Ã‚  Other Event-Related Income Stadiums contain much more than just an arena to watch sport including: †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Refreshments and merchandise †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Broadcasting rights †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Advertising †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Car parking †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Other events, e.g. conferences Income for the above would be approximately proportional to the number of people in the stadium. 12  Ã‚  Ã‚  Ã‚  Ã‚  References 1.  Ã‚  Ã‚  Ã‚  Ã‚  Cabral, Luis. â€Å"Introduction to Industrial Organization†, MIT Press, 2000. 2.  Ã‚  Ã‚  Ã‚  Ã‚  www.thefa.com 3.  Ã‚  Ã‚  Ã‚  Ã‚  http://stats.football.co.uk/dom/ENG/PR/attend.html 4.  Ã‚  Ã‚  Ã‚  Ã‚  http://stats.football.co.uk/dom/ENG/trn/ENGFAC_F.html#F 5.  Ã‚  Ã‚  Ã‚  Ã‚  www.wembleystadium.com 6.  Ã‚  Ã‚  Ã‚  Ã‚  www.millenniumstadium.com