Rise and Fall of Mlb Ticket Prices

The Rise and Fall of MLB ticket prices

Jim Zambrano

ECO/561

December 19, 2013

Harry Dzakwasi

The Rise and Fall of MLB ticket prices

It is called America’s pastime. A sport that has connected generations of fans throughout the years and has provided many memories dating back to our childhood, Major League Baseball. For over a century now, MLB has enriched the lives of the American people. Since its humble beginnings, fans have been filling up the seats to catch a glimpse of their favorite player. However, a closer look inside the economics of MLB will reveal the game’s struggles from its inception years and challenges families face to today to enjoy a day in the ballpark. This paper will discuss a business proposal, market structure, and the elasticity of demand of MLB tickets as it relates to today’s evolving game and dating back to its early roots. Also to be discussed will pricing and non-pricing strategies, along with barriers to entry. Finally, how changes in business operations affect variable costs?

Introduction

The early origins of the game of baseball are widely disputed among historians and although many consider Abner Doubleday to have invented the game of baseball, it was actually Alexander Cartwright that notated the rules of the game in 1845. The game grew increasingly popular during the Civil War and by the end of the war, it was already doted America’s pastime. Although at first the game was considered an amateur sport, a sense of professionalism was accepted once owners began to receive revenues from ticket sales. In 1876, the National League was formed and was recognized as the modern major league. During this time, several leagues evolved and failed. However, in 1901, a Western league declared their intentions of operating professionally and thus was renamed the American League.

Market Structure

Although today baseball is considered a monopoly, back then there were several independent leagues trying to operate at the professional level. Therefore, in 1902, both the American League and National League signed an agreement to be recognized as Major League of Baseball. In 1903, the first World Series was played as the Boston Americans defeated the Pittsburgh Pirates. During the first 20 years of the 20th century, the game went through what is called now the dead-ball era. Attendance was low, due in part to low scoring games and the game being dominated by pitchers like Cy Young and Walter Johnson. Also, the average cost of a baseball back then was the equivalent of $60 today. This forced teams to use one ball for most