Persons are changing their spending habits as prices surge at rates not seen in 4 many years, making decisions that favor experiences. Meaning big demand for live sports.
Demand for sports attendance is normally “unresponsive to cost changes,” said Dennis Coates, a sports economics professor on the University of Maryland, Baltimore County. “Good times, bad times, high prices — it doesn’t change consumers’ behavior” around spending on sports.
Now that pandemic restrictions are easing, at the same time as cases remain elevated in several places, people need to get out more. “I believe people want high-end experiences, wish to get out, and so they’ve been pent-up for several years now,” Ari Emanuel, CEO of Ultimate Fighting Championship owner Endeavor, said recently on CNBC. “They wish to live life a bit of bit.”
That was illustrated earlier this month, when ticket prices for upcoming 2022 NFL games were averaging $307 immediately following the discharge of the league’s schedule, said secondary market platform SeatGeek. Though that price is down from a mean of $411 out of the gate last 12 months, it’s higher than the common of $305 in 2020, when attendance was restricted on account of Covid. The typical in 2019, before the disease gripped the globe, was $258. Ticket prices reflect demand, and so they normally fluctuate throughout the season.
As demand surges, teams and organizations are raising prices. A concession menu for the PGA Championship this week showed $18 beers. Spending rates per fan grew for the NFL and the NBA of their most up-to-date seasons, based on the Fan Cost Index produced by Team Marketing Report, a sports marketing firm in Chicago. The index calculates what it will cost for nonpremium seats, two beers, 4 sodas, two hot dogs, merchandise and parking costs, based on the firm’s CEO, Chris Hartweg.
This spring, fans are packing arenas for the NHL and NBA playoffs. Hugo Figueroa, 29, said he paid $1,200 for 3 tickets to a playoff game between the Boston Celtics and the Brooklyn Nets.
“Work hard, play hard,” Figueroa told CNBC last month as he stood contained in the Nets’ fan shop at Barclays Center in Brooklyn. He said he purchased a beer at the sport but “ate before I came because I didn’t wish to pay for food.” Concessions are typically marked up higher at sports and entertainment venues than at typical restaurants and food courts.
Figueroa said he works two jobs, so he can contend with rising prices. “I work so I can spend,” he said.
Sports fans shop on the Brooklyn Nets Fan shop at Barclays Center.
Jabari Young | CNBC
Strong consumer balance sheets, bolstered partly by previous Covid stimulus payments and support programs, are helping people afford to pay more on sports, based on Judd Cramer, a sports economist at Harvard University who served in President Barack Obama’s administration.
“It looks like consumers have been capable of cope with it,” Cramer said. “After I look back historically, we have had low inflation for an extended while — but in the course of the recession within the early Nineteen Eighties, when GDP declined, sports spending was actually strong.”
If ticket prices get too high for some fans, “there’s one other one that is there” to buy inventory, Cramer said.
Emily Ushko, 32, told CNBC she has “a bit of little bit of disposable income” and needs to spend it on sports. She said she paid over $600 for 2 tickets for a Nets-Celtics playoff game last month.
“It is a once-in-a-lifetime form of thing,” Ushko said. “You would like to see these players live, get the texture for the audience and experience it.”
On this Oct. 4, 2020 file photo is an empty Levi’s Stadium before an NFL football game.
Tony Avelar | AP
Yet while consumers have remained resilient within the face of booming inflation, there are concerns that the U.S. economy might be headed for a recession, forcing some middle- and working-class fans to make tougher decisions about spending.
“People could get hurt a bit of bit,” Harvard’s Cramer said.
Hartweg of Team Marketing Report warned more consumers could eventually “tap the brakes” if prices for essential items increase.
Figueroa, the NBA fan, said he “would reconsider coming” to the Barclays Center next season if inflation persists.
Still, there are fans who will keep coming, even when prices keep going up and economic uncertainty rises. Philadelphia fan Kevin Washington, 58, and his wife, Tawana, 53, have been Sixers season ticket-holders for five years and don’t need to lose their seats.
“Never entered my mind,” Washington said. “You simply should budget a bit of higher. You continue to need some enjoyment. You wish a while away from the truth of life.”
A recession has yet to materialize, nonetheless, and it won’t occur in any respect. It’ll take a “huge catastrophe” with high unemployment to cause one other slowdown, said Coates, the sports economics professor. The unemployment rate stands at 3.6%.
“If it’s a standard size recession,” he said, “I believe people ride it out for essentially the most part.”