Venture: the economics of baseball

Venture: the economics of baseball
Venture: the economics of baseball

Venture: the economics of baseball

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Amid all the economic news coming out this week, from manufacturing data to housing stats, there’s another event that has just as much to do with dollars and cents: Opening Day.

Cable sports pundits and Las Vegas oddsmakers may not be divining a 2011 World Series championship for Chicago, but at least Cubs and White Sox fans won’t have to dish out too much more money to cheer for their chosen home team this season.

The cost for a family of four to attend a baseball game at Chicago’s Major League ballparks will remain nearly flat this season, thanks in part to ongoing sensitivity to the economic downturn, according to Team Marketing Report, a Wilmette-based sports research firm.

The company’s annual Fan Cost Index for baseball will be released Friday, the official Opening Day of the regular season. The index adds up the costs for two adults and two children to attend a Major League Baseball game: tickets, soda, beer, hot dogs, parking, programs and two souvenir ball caps.

And while Chicago fans may notice only nominal price bumps this season, they may still suffer major league sticker shock when they arrive at Wrigley or U.S. Cellular Field, said Jon Greenberg, who calculates the Fan Cost Index.

“We’re not telling you this is what you should spend. We’re saying, ‘Look out, this is what it could be,’” Greenberg said.

The Chicago Cubs grabbed some unwanted headlines in 2010 when Greenberg calculated their average ticket price at $52.56, edging out the Boston Red Sox for the most expensive in the league. (The Cubs dispute Greenberg’s calculations, and say they likely ranked third or fourth.) That put the Cubs’ Fan Cost Index at $329.74 per game, the sport’s second-highest. Spending a day with the White Sox at The Cell was cheaper, but it still weighed in at $249.60, nabbing the No. 4 spot behind the New York Yankees.

Greenberg declined to release his 2011 calculations before Friday. But a representative for the Cubs stressed that average ticket prices would be flat this year, while a White Sox representative said the team will be offering more discount days at The Cell.

“We’ve come to a point in sports where I think people are still [just] hoping the fans are coming back,” Greenberg said. “And [the fans] still are talking about a recession or … are worried about their discretionary spending.”

Though they’ve now leveled out, Chicago home team prices have risen quite a bit over the past few years. By Greenberg’s calculations, the White Sox index increased 30 percent between 2006 and 2010.

But the Cubs, who were tied for the worst home record in baseball last year, have seen their index jump by 50 percent over the same period.

So how can the North Siders justify the big price bumps? It all comes down to one factor, according to Greenberg: tourists.

“Every year the Cubs draw 10,000 more fans a game than the White Sox,” he said. “Those are probably tourists. And the fact that those are tourists that aren’t gonna come back [means] you can charge that money.”

A study commissioned by the Cubs in November of 2010 estimated that 37 percent of home game fans who attend games at Wrigley Field come from outside of Illinois. Compare that to a White Sox tourist attendance rate of 10 to 15 percent.

A devoted, local fan base may be a boon for the White Sox, but it’s also a financial liability, said Greenberg.

“That’s the problem [for the White Sox]: You have real fans. So if you’re not doing well, they’re not gonna come out there. Whereas [with] the Cubs, people make vacation plans to come here.”

Shelling out big bucks to watch a losing baseball team may not seem logical, but it makes good economic sense, said Charles Wheelan, who teaches economics and public policy at the University of Chicago’s Harris School.

The Cubs’ success as a business, in spite of its failures as a baseball team, can be explained by the economic concept of utility maximization, Wheelan said. Utility is a concept like happiness or well-being, but broader: it takes into account the non-financial factors that go into making an economic decision.

“Even when you add up all those relatively significant costs [of attending a baseball game], most people out there are happier sitting in the bleachers, sitting in the stands with friends watching a losing team,” he said. “That outweighs all of the costs that we’ve enumerated.”

One of those costs, of course, is parking, which leads us to our Windy Indicator. That’s where we parachute into a part of the economy you may not have thought much about, like the homeowners near Wrigley Field who rent out their garage spots to Cubs fans.

Anand Aidasani is one of them. He said in recent years he’s noticed deflation when it comes to pricing for those spots. He said the price has fallen from about $40 for a game to about $20, and instead of renting out a spot in a few minutes, it takes homeowners about an hour to find someone.

Why? Two words: supply and demand. Aidasani guessed that as the economy slumped, more people started to rent their spots as a way to make a bit of extra dough. And at the same time, the Cubs’ performance faltered, leading to lower attendance.

So what does Aidasani plan for this year? He’s just going to post his spot on Craigslist and try to find a renter for the whole season. He said it’s just not worth his time to hang out trying to hawk his garage spot for twenty bucks.

Chicago baseball on the cheap

Chicago may be a pricey baseball town, but don’t let that stop you from enjoying a day at the ball game. Jon Greenberg offers four tips for making the most of America’s pastime for less.

Be prepared to bargain for your tickets. Hit up sites such as StubHub or Craigslist to find a good deal, Greenberg said. And be prepared to barter: “People are always selling. Make an offer and … be firm at what you want to pay.” Tickets for low-stakes, early season games will always be cheaper than the mid-July match-up against the long-time rival. And don’t be afraid to play the waiting game: If your team is lousy at the end of the regular season, at least you might be able to snag some cheap tickets for a home game.

Bring your walking shoes. Aside from tickets, parking may be one of your biggest costs, Greenberg said. Take public transportation or, if you have to drive, park far away: “I have friends who are Sox fans who find street parking in the South Side,” he said. “Wrigley’s a little tougher, but you can park and walk.”

Dare to smuggle. The folks in the front office may not like it, but Greenberg said sneaking in some food or soda to avoid the exorbitant in-park prices is usually easier than you’d think: “They’re not gonna pat you down,” he said. “You’re not going into a jail.”

Bring your smart phone, but leave the kids. Baseball stat wonks can skip out on splurging for a program by looking up ERAs and RBIs on a smart phone, Greenberg said. But why no kids? Simple: “Kids eat a lot,” he said.