As the Dust Settles

http://liberalorder.typepad.com/the_liberal_order/economics/index.html

This articles talks about the how the Buffalo Sabres, an NHL franchise, is trying to attract more people to their games. The article mentions that they use a method that is called, “variable price ticket scheme.” This method categorizes 41 of the Sabres’ homes games into 4 different categories, Gold, Silver, Bronze and Value. Any games that are considered Gold would be games that generate the most interest. The example provided from the article, uses a home game against Toronto Maple Leaf. Ticket prices for this particular game would be higher compared to that of Silver, Bronze or Value because a larger amount of people are willing pay more to see this game. In contrast, games that are categorized as Value will have ticket price at an extremely low price but would still generate revenue due to increase in demand. For example, any home games against the Carolina Hurricanes would be considered value games because there is a lack of interest for the games. However with the reduced ticket price, the Sabres’ hope to sellout the games by attracting the poor fans or the non-hockey people to the Value games. If this method does succeed then majority of the Buffalo’s home games would be sold-out.

Chapter 2- Inelasticity, Elasticity, Demand

Chapter two talked about the inelasticity and elasticity for demand and this article give two good examples of them. The hockey market in Buffalo is not as strong as it is in Canada, with the exception of Calgary, their just bandwagoners, and as a result of this they are forced to come up with this marketing strategy to fill more seats in their arena. The demands for Gold games are inelastic because they will sellout regardless of the ticket prices. Even if the local hockey fans are unwilling to pay the increased ticket prices, Leafs fans would gladly drive 3 hours down to Buffalo and watch their Maple Leafs lose. Hockey is almost a necessity to Canadians and although there are substitutes, we as Canadians simply refuse to recognize them. The increased price would result in an increase in total revenue. On the other hand, the Value games are the complete opposite because the demands for them are elastic. When the prices of the tickets are reduced, the demand would immediately increase, resulting in an increase in total revenue. Here is an interesting example of a product being both elastic and inelastic. However I feel that there is a flaw to this method. For example, what kind of message would the Sabres be sending to their fans? “We charge less for admissions to games against Carolina because they suck.” Mr. Gary Bettman wouldn’t like that…