MLB Cartel

Steve Malanga/ Real Clear Markets explains why pro sports can get away with charging exorbitant ticket prices ala Yankee Stadium.

Even though the Yanks have been forced for the time being to cut their top prices, time and demographics are on the side of the Yankees--and most other teams, too. Even the worst U.S. recession in more than a generation, even here in New York, the home of our sickly financial markets, isn’t likely to moderate the upward spiral of ticket prices. Why? Because for decades now major professional sports leagues, and especially Major League Baseball, have used certain cartel powers tolerated by government to restrict supply, even as we as a country have grown more populous and richer (the current recession notwithstanding). Pro sports aren’t retailing, where every economic uptick finds businesses elbowing each other for prime locations. Instead, the leagues have divided the country nicely, and short of some kind of major court decision or legislation in Washington that drastically reshapes the way leagues must do business (which would probably disconcert the very fans who abhor rising prices), the cost of attending games just about everywhere is likely to continue growing at a faster rate than most prices. The Yankees are merely leading the way.

To understand what I mean about sports and demographic trends, just take a look at the way the New York metropolitan area has changed in the last 47 years, and the way baseball hasn’t. Since 1962, when the Mets joined the Yankees in New York, MLB’s capacity in the area hasn’t grown. The teams both play a home-season schedule of 81 games, as they have since ’62, and their stadium capacities are actually somewhat smaller today than 47 years ago.

But since the last time the league added capacity in New York, the population of the metropolitan area has grown by some 3 million, or by nearly a fifth. More important, the wealth of that population has increased robustly. Per capita income, after adjusting for inflation, has nearly doubled in the region. All of those extra people and the additional wealth per person mean total income in the region, after adjusting for inflation is up by 115 percent. That’s a marketplace you’d love to have more or less to yourselves, as the Yankees and Mets do.