The Price of Success and Labour in Sports – Evidence from Match-day Ticket Pricing Strategies in the English Premier League

Abstract

Match-day revenue is still an important source of income for many professional sports clubs. This paper studies the determinants of ticket pricing in professional sports and examines whether stadium visitors pay a premium for teams’ sporting success and any excesses in the players’ labour market. We use panel data to estimate fixed effects regression models for clubs playing in the English Premier League (EPL) for the five seasons between 2014/15 and 2018/19 inclusive, yielding a total of 2698 observations. Our study shows that ticket prices are driven by several variables such as the timing of a game (weekday, weekend), the status of the opponent (in particular, the Big Six), team rivalries, as well as the opponent’s performance in the previous season. Total labour costs of a club have an impact on the prices of the most expensive tickets, but not on the cheapest ones. Moreover, capacity utilisation plays an important role in the prices of the cheapest tickets, but not for the most expensive tickets. This research provides insights that are instrumental to stakeholders such as clubs as well as league administrators. For example, clubs benefit from positive externalities generated by visiting teams who spend high in the labour market or can be classed as ‘big.’

Keywords: ticket pricing, competitive strategy, spectator demand, externalities in sports, freeriding strategies in football

JEL Classification: L83