Some Economics of Football

The most recent game of the Ukrainian national football wasn’t a particular success on the pitch for Ukraine but Mr Akhmetov and Mr Surkis’s pre-match confrontation on ticket prices might well bring Ukrainian football to economics class rooms all around the world. The ticket price discussion indeed makes an excellent case study, illustrating many economic principles.

That a match organizer fixes a price that is too high to get a full stadium is not a surprise – the organizer is a monopolist (he’s the only one to organize that specific match) who will aim to maximize profit, not to maximize attendance. By restricting the demand somewhat, a monopolist will be able to charge a higher price, resulting in a higher profit overall. In fact, very few matches in Ukraine’s national competition, including Shaktar’s home matches at the Donbass Arena are completely sold out. If match organizers would be interested in maximizing audience, they clearly should put very low or even zero UAH prices.

It’s also not surprising that a stadium owner will be interested in having more spectators than the match organizer. Indeed, some research on US sports found that a spectator spends about as much on the ticket to the event as on consumption of drinks, food and souvenirs in the stadium.

A social planner, who has the good of the whole society in mind, also would opt to fill the stadium completely as once the event takes place, the more people can attend the better.

Economists also can understand Mr Akhmetov’s concern about the size of the audience as there is some research that shows that the size of the audience does influence the outcome of football games. It’s indeed a well established fact that there is a ‘home advantage’ in football, that is, everything else equal , the home team is much more likely to win a game. One explanation for this home advantage is the presence of the home fans. One thus could argue, though there is little scientific evidence for this, that the home players will play better if there is a larger audience who cheers them on. A second explanation, for which there is some scientific evidence, goes through the effect of crowd size on the referee – larger crowd sizes make it more likely that the referee will make decisions in favor of the home team. Given Mr Akhmetov’s recent warning to referees, referring to his past as a boxer, it’s likely Mr Akhmetov was thinking about this second explanation.

With Euro 2012 coming up, the issue of the right level of ticket prices is likely to resurface in the future. To minimize future discussions, I would advice to Mr Akhmetov and Mr Surkis to start thinking about dynamic pricing – given it’s hard to know the demand for a match beforehand, rather than setting fixed prices, it would make sense to vary prices over time, increasing them when demand for tickets is high and decreasing prices when prices seem to be too high, not unlike airline companies are doing now. In the US, some sports teams have already started to experiment with dynamic pricing and companies have been founded that specialize in helping sport venues to optimize their pricing strategy. Maybe Mr Akhmetov and Mr Surkis could start a joint venture to professionalize ticket pricing in Europe?