I'm too lazy to go back and re-read my first post in this thread (Besides, it's too long. [grin1]), but I think my points in general are two:
1. The Packers should charge "all the market will bear."
This is where my $400 number came in. I said, essentially, "IF the market can bear a price of $400, then the Packers ought to charge $400."
2. The market for Packer tickets can bear a lot bigger increase in prices than wpr thinks.
My evidence for this is the waiting list itself. Shortages (more people willing to buy at a specified price than can buy) exist because the price in a market is below its market-clearing level. To say it another way, the only way you can get rid of a shortage is to raise the price.
A waiting list is prima facie evidence that a shortage exists. (Economists don't agree on everything, but all agree on this point.)
And a "big" waiting list is virtually conclusive evidence of that shortage's existence. Because of positive information costs and other "costs of transacting", the participants in a particular market will want to have some "give". Sometimes this means the price is kept "below" the market-clearing level (as ticket prices for sports and concerts routinely are).
Thus the real dispute here is "how much will a given change in price" change the size of the waiting list. What kind of price increase will knock the waiting list down to an "unsafe level"? ISTM that keeping a waiting list of at least 10 percent of the stadium's capacity (after contemplated increases thereto) is probably a good thing. So if the Packers contemplate increasing the stadium capacity to, say, 100,000 seats, they should have at least 10,000 spaces on the waiting list after those new seats have been sold. (Or about 35,000 before breaking ground on the addition.)
But there's a big difference between a maintaining the insurance of a waiting list of 35,000 and the current waiting list that is above 80,000.
So how responsive are Packer ticket buyers to changes in the price? Let's play with the math a bit, shall we?
/enter Econ 201 pedantic lecture mode
2012 single-game ticket prices (face value) are going to be between $72 and $92. [I'll can add the "seat license" fee, which I understand to be a one-time fee any first-time ticket holder has to pay (not an annual ticket price), into the story in a bit if someone wants, but I'm not smart enough to do everything at once. And this is going to bore some people to tears even without that complication.]
This is an increase of $3 for the cheap seats and $5 for the expensive ones between the 20-yard lines. Or, in percentage terms, 4.3% and 5.6%. [The way most of us would calculate the percentage change (= (this year's price - last year's price)/last year's price) yields slightly different numbers, namely 4.4 and 5.7%. This is because I'm using the average of this year's and last year's prices as my base instead of "last year's price) to avoid problems later.]
My argument (and I believe Dodd's) is that the team's net return would still go up, even had they increased prices significantly more than 4.3-5.7% a year.
Net return is of course equal to total revenue less total cost. But except for the possible (amortizable) cost of increasing capacity past its current level, there is no change in the cost of providing one of the current seats just because the price on the ticket is different. So we can concentrate on what happens to total revenue. If the Packers increase the price "too little" they will leave extra revenue on the table. If they increase the price "too much", they will see a decline in revenue.
Now there's a real interesting relationship between total revenue and the average price. Whenever, following a particular price change, the absolute value of the percentage change in the quantity people are willing to buy is greater than the absolute value of the percentage change in the price [we call this "having elastic demand"], total revenue will move in the opposite direction from the price change. A seller that faces elastic demand should not raise its price. On the other hand, the seller should always raise the price when demand is "inelastic", i.e. when the percentage change in the quantity is smaller than the percentage change in price (again, in absolute value).
Okay, now let's take a price increase of a lot more than 4.3-5.7% per year. Suppose the increase in price was roughly ten times bigger, or about 50%. (Using the same base convention, this would mean a price increase for the cheap seats from $69 to $115 and for the expensive seats from $87 to $145. Only if
Q ≡[attendance + 35,000] falls by more than 50 percent will Packer revenue from ticket sales actually fall. If we take Lambeau capacity as currently about 75,000, that means Q would have to fall from 110,000 to 66,000 [(110,000-66,000)/((110,000+66,000)/2) = .5.] Prior to the price change the number of people willing to buy tickets was roughly 150,000 (current Lambeau capacity plus a waiting list of roughly the same amount). So a fifty percent decrease in attendance would actually require the total people willing to buy a ticket to fall from 150,000 to 66,000.
IMO this is unlikely. But this is the kind of worst-case-scenario-type eventuality a 35,000 waiting list would be maintained to insure against.
But it's insurance demanding a serious premium, namely:
Case 1 (actual decision by GBP): 5 percent increase, maintain waiting list at 80,000.
Total revenue from ticket sales: (37,500 x 72) + (37,500 x 92) = $6.15 million per game.
Case 2 (worst case scenario if 50 percent increase, followed by waiting list disappearing and attendance falling to 66,000).
Total revenue from ticket sales: (33,000 x 115) + (33,000 x 145) = $8.58 million per game.
Effective premium (= lost revenue): $8.58 million - $6.15 million = $2.43 million per game.
Maybe $400 is too high (especially as a one-shot deal). Maybe increasing it to $115-$145 is too high. I don't know enough about the details of the market and the effects of a price change on Packers other revenue streams ("cross-price elasticities," to use the jargon). But this "back-of-the-envelope" type simulation tells me one thing for sure -- it tells me that the market for Packer tickets can handle more than a $5/ticket increase every year.
A lot more.
/exit pedantic lecture mode.
I love playing with numbers, even if it does make me an asshole. [grin1]
[aiee]
And do not be conformed to this world, but be transformed by the renewing of your mind, that you may prove what is that good and acceptable and perfect will of God.
Romans 12:2 (NKJV)