To Snyder - Cut Prices, Increase Revenues, Polish Your Image

[Dan T.]

After the first 2008 home game came the usual amount of complaints about ticketholders being gouged by exhorbitant prices for FedEx concessions. Almost everybody I know limits the amount of concessions they buy at the stadium because of the high prices. Many buy NOTHING inside the stadium; instead they eatand drink to their hearts' content while tailgating, rather than feel robbed every time they line up at the concession stand.

Here's a strictly business proposal for Daniel Snyder, one that has the side benefit of giving the appearance that he actually cares about the fans:

Cut concession prices across the board by one dollar. On everything. Have someone on your front office staff with a human heart and writing skills draft a press release that says "because the Washington Redskins appreciate the loyalty of our fans, because we want to improve the game day experience of our fans, and because we recognize the difficult economic times our fans face, we are lowering our prices." Make a big but humble splash about it. Then hire more minimum wage vendors to handle the new onslaught of fans buying cheaper beer, dogs, chicken fingers, and soda pop. The markup will still be there. The prices will still be high. But a dollar drop across the board will seem like a bargain, and people will respond to a bargain.

The resulting increase in volume will cover the drop in prices.

Result: Increased revenue. PR coup for the caring ownership.

Thoughts?

[LD0506]

A non-starter, it makes too much sense

[Califan007 The Constipated]

The markup will still be there.

Unfortunately, we don't know that. We assume that it should be...but in economics, the prices are usually set for reasons other than "greed". I know that the cost of the soda in the cup is less than the cup itself (that's why you get free refills in so many places...maybe FedEx should give free refills lol).

[ttr77]

I agree that Dan needs to polish his image, but I don't think a $1 price cut will do so.

Actually, I'm not sure if anything could do so...

[AKM311]

Does not make sense on many levels.

First off going from $8 a beer to $7 a beer is not a big difference.

Second hiring more min wage concession stand employees and lower costs is not the same markup. Markup is not just generated per item, you have to manage overhead costs and the 'new' employees will cut into that.

Third higher revenues results in high profit sharing to other teams. Lower margins, but an increase in revenues, HURTS Snyder and does not help. Remember the players get 60% or something close of all revenues earned at the stadium. That means if we have less margin, were losing even MORE profit because we ahve to share it with the players and other teams.

It is not as easy as people think by just decreasing costs. What Snyder would need to do is renegotiate with the beer vendors at a lower cost to implement such a thing. But there is no leverage in Snyder's corner to do so. Miller Lite and Bud Lite are prob the cheapest beer he can find from vendors.

[zoony]

I think there's a few fundamentals of economics in that first post.

For the record, I agree with the OP, although more than $1.

But I'll throw in the long-term business idea of protecting and developing your brand. Something that is currently not happening because of a focus on short-term gain.

[PleaseBlitz]

The economic fundamentals espoused by the first post are solid, but they dont work inside the stadium because there is no outside competition and people wont move in droves to buy concessions that are STILL ridiculously overpriced, just $1 less so.

The PR move would be brilliant, but the Skins franchise has proved time and time againt that it doesnt care about PR. We are all hooked, and there is nothing we can do about that.

[Rocky21]

Snyder is too greedy to ever lower prices. Demand for everything will have to drop dramatically and be painfully obvious for something like this to ever take place.

[ouvan59]

Ahhhh, the Tuna with a heart theory. Everything would be ice cream and rainbows. Good luck with that. What Danny is going to do is exactly what he should do and charge what the market will bear. This isn't a non-profit enterprise he is running. Does anybody really buy food at the stadium anyway? Show up early, tailgate, have your fill and if you must buy a couple of beers to bridge you over from the pregame tailgate to the aftergame tailgate.

[ouvan59]

The PR move would be brilliant, but the Skins franchise has proved time and time againt that it doesnt care about PR. We are all hooked, and there is nothing we can do about that.

And what exactly would there be to gain from the brilliant PR move?

[PleaseBlitz]

And what exactly would there be to gain from the brilliant PR move?

Very little.

[kiddhan625]

Considering the cost living has gone up recently...what makes you think the cost of Operating a NFL Team has not gone up?????

[PleaseBlitz]

Considering the cost living has gone up recently...what makes you think the cost of Operating a NFL Team has not gone up?????

Note the presence of the words "increase revenue" in the thread title.

[zoony]

The economic fundamentals espoused by the first post are solid, but they dont work inside the stadium because there is no outside competition and people wont move in droves to buy concessions that are STILL ridiculously overpriced, just $1 less so.

The PR move would be brilliant, but the Skins franchise has proved time and time againt that it doesnt care about PR. We are all hooked, and there is nothing we can do about that.

your forgetting that demand is elastic here PB- for instance, if hot dogs are $5, I might have one. If they're $10, I won't.

[da#1skinsfan]

This simply will not work. No way no how. Would have a negative impact on revenues guaranteed.

The loss of $1 per item for every single person who would buy that item anyway FAR outweighs the small number of people who will now buy the item when they wouldnt have before. Won't work.

[PleaseBlitz]

your forgetting that demand is elastic here PB- for instance, if hot dogs are $5, I might have one. If they're $10, I won't.

Im not forgetting. But if a beer in the stadium is $8 or $7, its still way too much either way. Lowering the price $1 to $7 isnt going to get people that normally wouldnt buy them to flock to the concession stands when they can fuel up before and after for 50 cents per can of beer (or people like me that BYOB ). I serioulsy doubt that it brings in enough people to cover the loss in revenue for charging the people that dont care and still buy 6 beers $1 less. The post above mine sums this up pretty concisely.

And after that, even IF there is an increase, which I doubt, you get into the whole discussion about whether the increase in revenue is worth the increase in drunkeness, to which point we get at least 5 threads every week from people whining about "drunks ruining their stadium experience."

[Dan T.]

Does not make sense on many levels.

First off going from $8 a beer to $7 a beer is not a big difference.

Second hiring more min wage concession stand employees and lower costs is not the same markup. Markup is not just generated per item, you have to manage overhead costs and the 'new' employees will cut into that.

Third higher revenues results in high profit sharing to other teams. Lower margins, but an increase in revenues, HURTS Snyder and does not help. Remember the players get 60% or something close of all revenues earned at the stadium. That means if we have less margin, were losing even MORE profit because we ahve to share it with the players and other teams.

It is not as easy as people think by just decreasing costs. What Snyder would need to do is renegotiate with the beer vendors at a lower cost to implement such a thing. But there is no leverage in Snyder's corner to do so. Miller Lite and Bud Lite are prob the cheapest beer he can find from vendors.

Sorry, I don't have the time or the inclination to do the actual number crunching. I'm the tree shaker, not the jelly maker.

I'm sure the bean counters can make the numbers work. And they can't put a price on the PR. The road to mending the owner's image begins with one step.

Thoughtful post, though, thanks.

One other PR move: Keep the old prices displayed at the concession stands, with big red X's through them and the new prices written in beside. Sponsorship tie-in: the red X's could be sponsored by Dos Equis beer.

[phishisthegreatstuff]

Yeah your assuming a lot buddy. For all you know, the prices are set at the market equilibrium right now which by definition maximizes profits... Just because you "think" prices are to high, doesn't mean they really are. I think the redskins prices are pretty normal around the league.

[PleaseBlitz]

I'm sure the bean counters can make the numbers work. And they can't put a price on the PR.

The bean counters ARE making the numbers work.* Thats why the costs go up every year.

*"Work" means "make as much revenue as possible for the Danny."

The road to mending the owner's image begins with one step.

Yeah, the one step is winning a Super Bowl.

[RFKFedEx]

The stadium supposedly sells out for every game. There are always long lines at all of the concession stands as it is. Why lower the prices? PR doesn't matter b/c this is a recession proof business.

[zoony]

Ahhhh, the Tuna with a heart theory. Everything would be ice cream and rainbows. Good luck with that. What Danny is going to do is exactly what he should do and charge what the market will bear. This isn't a non-profit enterprise he is running. Does anybody really buy food at the stadium anyway? Show up early, tailgate, have your fill and if you must buy a couple of beers to bridge you over from the pregame tailgate to the aftergame tailgate.

This simply will not work. No way no how. Would have a negative impact on revenues guaranteed.

The loss of $1 per item for every single person who would buy that item anyway FAR outweighs the small number of people who will now buy the item when they wouldnt have before. Won't work.

http://en.wikipedia.org/wiki/Economies_of_Scale

[PleaseBlitz]

http://en.wikipedia.org/wiki/Economies_of_Scale

That doesnt fit this situation Zoon.

PS, you sig is hideous. Just thought you should know that.

[Dan T.]

Ahhhh, the Tuna with a heart theory. Everything would be ice cream and rainbows. Good luck with that. What Danny is going to do is exactly what he should do and charge what the market will bear. This isn't a non-profit enterprise he is running. Does anybody really buy food at the stadium anyway?

You answered your own question. No, many people don't buy food at the stadium, and the main reason is because of the feeling that prices are too high. But if Snyder can create the illusion that he is offering a relative bargain by making big splash about reducing those prices, people who didn't buy in the past will do so now.

They'll sell more chicken fingers Coca-Cola, offsetting the lower per-item margin. And he gets a public relations coup in the bargain.

[Dan T.]

The bean counters ARE making the numbers work.* Thats why the costs go up every year.

*"Work" means "make as much revenue as possible for the Danny."

I agree. And I contend that he can increase sales volume, and thus revenue, by lowering prices.

[Horatio]

You know what Snyder is most likely to do?

Outlaw tailgating altogether, forcing you to buy concessions in the stadium. Or come up with a new Platinum Tailgate Pass for only $4,250 per season!!