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

[PleaseBlitz]

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

I disagree with your contention, but it is a thought provoking thread.

[zoony]

That doesnt fit this situation Zoon.

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

I think it does- assuming a drop in price will increase demand. Marginal costs go way down and an economy of sale is created.

Sure, margin % goes down- but total margin $'s go up. High margin %'s look nice, but you can't spend %'s.

...

[zoony]

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

Jrock's not THAT ugly, is he?

[TheLongshot]

I'm curious: how many here have been to other NFL stadiums? Have they looked at the concessions to see if the prices The Danny charges are unreasonable in comparison? I have a feeling that in similar markets you will find similar prices.

Personally, I generally don't buy from concessions either, but it isn't about the price, but the opportunity cost. Is it worth it for me to miss part of the game to get something to eat? For me, it isn't. So, even dropping the cost isn't going to make me want to buy food in the stadium, particularly since demand would rise, making the lines even longer.

Jason

[XxSpearheadxX]

I just make me lady stick some whiskey in her hoo hoo.

[PleaseBlitz]

I think it does- assuming a drop in price will increase demand. Marginal costs go way down and an economy of sale is created.

Sure, margin % goes down- but total margin $'s go up. High margin %'s look nice, but you can't spend %'s.

...

Economies of scale would be like if Snyder expanded the stadium by 40,000 seats, then he could lower prices for his 'real' product (the football game) and make more money.

I understand what everyone is saying about the marginal costs and increasing revenue by lowering prices to sell more. I just dont think it would work..........and im POSITIVE that if it would, Danny would be doing it. What reason could he have to keep prices high and make less on purpose?

[PleaseBlitz]

Jrock's not THAT ugly, is he?

OLS. That picture of him SCREAMS "I told you so, *****"

[elkabong82]

I wonder if anyone has the information about average concession prices around the league. I'm interested to see where the Skins rank among the 32 NFL teams in terms of overall price avg. of concessions. I've been to other sporting venues in different states, and the prices are always relatively the same.

[zoony]

Economies of scale would be like if Snyder expanded the stadium by 40,000 seats, then he could lower prices for his 'real' product (the football game) and make more money.

I understand what everyone is saying about the marginal costs and increasing revenue by lowering prices to sell more. I just dont think it would work..........and im POSITIVE that if it would, Danny would be doing it. What reason could he have to keep prices high and make less on purpose?

You're the econ major- but I thought all that was required for an economy of scale is an increase in production? Increased demand would create that-

But as for why Danny might not do it- (1) it is risky given that you are forecasting an increase in demand that you really have no evidence for and (2) who says anyone's mentioned it to him? He only gets 8 shots at bringing in vendor revenue over the course of 1 year- I don't think he's interested in risking to much.

But to Dan's point- he could also do his brand a HUGE favor by helping public perception and the gameday experience for fans. So he could almost look at it as a marketing cost.

And yah, JRock won the battle, but I'm going to win the war. He'll see the light by seasons' end

[ouvan59]

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.

My not buying food at the stadium has very little to do with the cost. I get there early for several reasons. I hate having to wait in lines and if I get to the stadium early enough I don't have to. Next, I think tailgating is an absolute blast and the food I bring is much better than what they sell in the stadium. Lastly, I hate missing any of the game and that brings me back to my first point. I hate waiting in lines. I don't buy food at Terp games either and they aren't nearly as expensive.

But in the end it doesn't matter. Snyder knows that people will come back no matter how much they grumble about the beer prices and it doesn't make him heartless or a dick. It makes him a business man who not only makes a lot of money but spends a lot of money on his football team. Good for him.

[jivelikenice]

Here's a proposal....Cut prices but add a PSL which most other teams charge.

I mean come on. I would complain ifthe money wasn't re-invested in the team but it obviously is. Snyder isn't great but to me there are worse owners around and he seems to be paying a lot for mistakes he made early in his tenure.

[ouvan59]

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."

:applause:

[PleaseBlitz]

You're the econ major- but I thought all that was required for an economy of scale is an increase in production? Increased demand would create that-

Its just the wrong term, but i know what you are getting at.

But as for why Danny might not do it- (1) it is risky given that you are forecasting an increase in demand that you really have no evidence for and (2) who says anyone's mentioned it to him? He only gets 8 shots at bringing in vendor revenue over the course of 1 year- I don't think he's interested in risking to much.

Well, all evidence suggests that he's studied it and came to the conclusion that he can make more money by RAISING prices.....since he's done that twice in the last 4 years. :mad:

#2, you just think it hasnt occurred to him? This is a team with an official bank (BofA), official chicken (Popeyes), official pizza (Papa Johns), official ticket marketplace (Stubhub), official radio station (980), official everything, and you think squeezing more money out of concessions just hasnt occurred to him?

But to Dan's point- he could also do his brand a HUGE favor by helping public perception and the gameday experience for fans. So he could almost look at it as a marketing cost.

And how would that help him? The games sell out every week with a mile long waiting list for tickets. So if the people that DO buy the tix and the concessions get fed up, eff'em, there are 50,000 other suckers ready to take their place.

he doesnt need goodwill, unfortunately.

[ttr77]

Here's a proposal....Cut prices but add a PSL which most other teams charge.

I mean come on. I would complain ifthe money wasn't re-invested in the team but it obviously is. Snyder isn't great but to me there are worse owners around and he seems to be paying a lot for mistakes he made early in his tenure.

At last count, only 14 teams charge PSLs. And pretty much all off them either have new stadiums or have done major renovations to an old one.

[Fifty Gut]

Some of ya'll whine and cry about trivial **** that just doesn't matter, like concession prices. Suck it up and focus on being a good fan in the stands.

[nace14]

Dear Valued Customers,

Mr. Snyder has built the most profitable sports franchise in the country. If you think that you have a suggestion to help him increase revenue, please don't bother telling him. He's doing fine on his own.

P.S. if you are going to issue a complaint about FedEx field, please direct into to a traffic control department. You can find them sitting in golf carts and drinking beer while watching all the cars take over an hour to get out of the parking lots. In case you can't get in touch with them, that is probably because they don't care about you and are busy laughing at how you are trying to squeeze your Tahoe between two Toyotas seperate by a mere 4 inches.

[zoony]

And how would that help him? The games sell out every week with a mile long waiting list for tickets. So if the people that DO buy the tix and the concessions get fed up, eff'em, there are 50,000 other suckers ready to take their place.

While the tickets are sold, I see thousands of empty seats, even for divisional games. Would a friendlier stadium atmosphere increase traffic? I bet it would.

But yes, not even sports franchises are imune from poor branding and the threats therein. Maybe less likely to succumb, but not immune.

[Ghost of]

I went to Comerica Park (not as good sounding as Tiger Stadium, eh?) and they charged something like 8-9 bucks for a cup of beer. Granted it was a good size cup but it was still hefty. Hot dogs/brats/etc were at least 5, I think maybe 6-7.

I'd bet FedEx is actually not that outrageous.

Though I did not major in Econ and I understand PleaseBlitz's argument, I'd argue that 'rationality' in this case is what is dictated by scarce resources and a limited opportunity to take risks. The high prices at concessions have to do with the PERCEIVED rational end of maximizing revenue due to a captive market. However, economic history is replete with firms and individuals that have pursued their ends using 'rational consideration' but have ended up in the toilet. Mistaken and uniquely correct and prescient observations are made quite frequently about one's customer base, market, etc.

Also, there ARE a lot of people who are fooled into thinking something is a deal when it's not. That's why retail stores mark up prices, then have 'sales' every other week. The markup is already extraordinary, I'd guess, and thus any 'sale' could be done temporarily to experiment with reaction by customers.

I think, if anything, you can argue there is a diminishing marginal return on each increase in the cost of food.

Thought experiment: Movie concession prices move to 'true market' level. (um, assuming it's not JUST popcorn but a few other items because I can't stand a salty, dried out mouth and all the idiots crackling their popcorn when I'm trying to hear dialogue.) Are more units moved? I think yes. The question is what price point will guarantee no loss in revenue.

I'm pretty sure that a cut in cost BEYOND a dollar would increase sales. Now, you can argue the consequences and how much it would cost in additional staff (would it REALLY take more. How about they try and see how much more they'd need) but I don't think you can argue that if you lower the cost X level, that gross rev would go up. Just don't know what X is at this point. Maybe his peeps do and simply think it's more effective to keep the price, so that the 'overall market price' eventually creeps closer to the FedEx prices (thus justifying future increases.)

[zoony]

Some of ya'll whine and cry about trivial **** that just doesn't matter, like concession prices. Suck it up and focus on being a good fan in the stands.

And some of you have been on ES for years- but continue to add nothing

[JoeGibbsRypenGClark91]

Nope. People with money will buy a small hot dog for 5 dollars. Peoplewho are broke and blue collar won't. Simple as that.

[ttr77]

Nope. People with money will buy a small hot dog for 5 dollars. Peoplewho are broke and blue collar won't. Simple as that.

So only poor people understand the word 'value'? Interesting theory.

[PleaseBlitz]

I went to Comerica Park (not as good sounding as Tiger Stadium, eh?) and they charged something like 8-9 bucks for a cup of beer. Granted it was a good size cup but it was still hefty. Hot dogs/brats/etc were at least 5, I think maybe 6-7.

I'd bet FedEx is actually not that outrageous.

Im certain that ESPN the Magazine did a comparison of stadium experiences including prices and concession prices not too long ago, but i cant find it online.

Though I did not major in Econ and I understand PleaseBlitz's argument, I'd argue that 'rationality' in this case is what is dictated by scarce resources and a limited opportunity to take risks. The high prices at concessions have to do with the PERCEIVED rational end of maximizing revenue due to a captive market. However, economic history is replete with firms and individuals that have pursued their ends using 'rational consideration' but have ended up in the toilet. Mistaken and uniquely correct and prescient observations are made quite frequently about one's customer base, market, etc.

But again, Danny HAS experimented with the prices of concessions, and they keep going UP. He has NO reason to set prices anywhere but where he would net the most.

Also, there ARE a lot of people who are fooled into thinking something is a deal when it's not. That's why retail stores mark up prices, then have 'sales' every other week. The markup is already extraordinary, I'd guess, and thus any 'sale' could be done temporarily to experiment with reaction by customers.

Car dealerships are another example. The difference is that most people dont really know what a car or piece of clothing really should cost. I know that i can buy a case of 24 Bud lights for $14 at 7-11, but that same $14 wont get me 2 beers inside the stadium, so I KNOW that im getting ripped off.

I think, if anything, you can argue there is a diminishing marginal return on each increase in the cost of food.

There has to be, but obviously the margin per unit increases. So Danny's minions are tasked with finding the sweet spot.

Thought experiment: Movie concession prices move to 'true market' level. (um, assuming it's not JUST popcorn but a few other items because I can't stand a salty, dried out mouth and all the idiots crackling their popcorn when I'm trying to hear dialogue.) Are more units moved? I think yes. The question is what price point will guarantee no loss in revenue.

Some people HAVE to have popcorn and soda when they go to the movies. My g/f is like this. I think she would pay $10 for a tub of popcorn at the movies. I just cringe.

I'm pretty sure that a cut in cost BEYOND a dollar would increase sales. Now, you can argue the consequences and how much it would cost in additional staff (would it REALLY take more. How about they try and see how much more they'd need) but I don't think you can argue that if you lower the cost X level, that gross rev would go up. Just don't know what X is at this point. Maybe his peeps do and simply think it's more effective to keep the price, so that the 'overall market price' eventually creeps closer to the FedEx prices (thus justifying future increases.)

Thats the million dollar question. Lets say they cut the price in half. Are more than twice the amount going to be sold PLUS enough to cover the increase in staff? I really doubt it.

[zoony]

Nope. People with money will buy a small hot dog for 5 dollars. Peoplewho are broke and blue collar won't. Simple as that.

So only poor people understand the word 'value'? Interesting theory.

Actually, there is a huge amount of evidence of exactly the oppositte- that lower economic classes are much less discretionary with their spending than the higher classes.

...

[Mark The Homer]

Actually, there is a huge amount of evidence of exactly the oppositte- that lower economic classes are much less discretionary with their spending than the higher classes.

...

No wonder I'm poor. Now I know!

[ttr77]

Actually, there is a huge amount of evidence of exactly the oppositte- that lower economic classes are much less discretionary with their spending than the higher classes.

...

Makes sense...some of the richest people I know are also the cheapest.

While I am certainly not rich, I can afford a $5 hotdog. But I would certainly not buy one.