Wednesday, October 27, 2010

On MLS Attendance

Two things happened recently that got me thinking about the growth of MLS. For the first time in its history, Major League Soccer passed the 4 million person mark in its regular season attendance. Teams also started preparing for season ticket renewals and the announced price hikes didn't go over well with some fans. Toronto FC issued an open letter to its fans, while Sounders FC General Manager Adrian Hanauer admitted that the communication between the club and fans could have been better and that they are working hard to ensure that season ticket holders are happy.

I wanted to take a look at how price hikes like these were affecting attendance. Tracking down MLS ticket prices proved harder than it should be, but the Portland PGE Park proposal had some data in it. The ticket prices for 2007 were:

1. Los Angeles Galaxy ($32.50)
2. Toronto FC ($30.29)
3. D.C. United ($29.00)
4. Chicago Fire ($24.00)
5. New England Revolution ($24.00)
League Average $22.47
6. New York Red Bulls ($21.83)
7. Houston Dynamo ($20.50)
8. Chivas USA ($19.40)
9. FC Dallas ($18.50)
9. Columbus Crew ($18.50)
11. Real Salt Lake ($18.25)
12. Colorado Rapids ($17.90)
13. Kansas City Wizards ($17.50)
Portland 2011 $33.65

The proposal also mentions Portland wanting to raise prices 3% a year (the same rate mentioned by the Sounders Front Office). Working backwards to 2007, this would put Portland's average ticket price at $29.90 -- 3rd in the league. Pretty ballsy for an expansion team. They're trying to position themselves with LA Galaxy, Toronto FC and presumably Sounders FC -- not bad company if you ask me. Is there a correlation between attendance and ticket prices?

This is only for 2007, but the correlation is pretty strong. It's also curious that there are so many teams at the lower end of the price range. Do expansion clubs have an advantage over the older clubs because they aren't locked in to a pricing model that potentially devalues the product? Looking at attendence of expansion versus non-expansion clubs, it looks like expansion teams are at a definite advantage. In fact, excluding the LA Galaxy, the attendance of the non-expansion clubs is actually declining.

So what's going on here? One possible explanation is that originally MLS set prices too low. In attempting to provide an affordable option for good, family entertainment, the low price signalled to the consumer that the product wasn't very good. Any attempts to raise the price were met with resistance. In 1996, the average ticket price was $18. Using the 3% growth rate, by 2007 the average price should have been around $27, but instead was hovering around $22, showing that teams have not been able to increase prices very much. Meanwhile, expansion teams don't have a baseline price and therefore can set their price to whatever they want.

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