Saturday, August 29, 2009

The Great American Beergame


Diamondbacks 14, Astros 7. Yeah, that's what happened last night at Chase Field.

A friend of mine invited me out yesterday to go to the game, and seeing as how it was a free ticket, I happily obliged. I don't often go to sports games given the price and as is the case with baseball, just not worth it to me. Granted, with the new light rail directly linking me to Central Phoenix, going to games, concerts, and the like is much more appealing than it was when you had to take the 30 for an hour or so to get downtown.

But I digress. While watching the game (and the unforgettable third inning) my friend bought us a few beers to go with our $4.50 bag of peanuts. I asked how much they were, and they were a whopping $4 each. Christ. So I slowly enjoyed that beer but I knew the right thing to do would be to buy another round. (sigh...) I go to the kiosk and they don't take credit. I'm sorry, I thought I lived in the 21st century in the US. Every place took credit except the beer stands. But, if I wanted, I could go any of the restaurants/fast food eateries and buy beer for $9 a pop. Wait? What?

At this point, I'm getting frustrated. If I pay with a card, it's an extra $5 per glass, but I don't have any cash to avoid it. What's more is that I'm in Chase Field and lo and behold I don't bank with them so if I use the ATM I'll get charged. Well, I went to the Chase ATM (grrr), withdrew $40, and paid a friendly $3 fee plus whatever my bank is going to charge me. The sad thing is, this is all planned out, and although I hate to say it: The Pragmatic Economist applauds you, Chase Field (albeit reluctantly...)

When buying naming rights to the stadium you'd better believe they got the banking rights as well. And although you can buy food at the same price regardless the method of payment, beer sales have vertical restrictions imposed. This means the owner (Chase) can tell kiosks where they can sell their wares (between sections 141 and 143, for example), for how much ($4), and how (cash only). This limits free movement. And though this doesn't directly contribute to inflated prices (I guarantee beer would be $4 regardless), it does force a small, yet sizable, chunk of attendees to stop at the local ATM. Given the lines I witnessed, and knowing that not all of these people are Chase customers, you can make a good chunk of change just by giving people their own money which they will subsequently spend in your stadium!

I remember talking about this type of thing in a class a few years ago. Cheap tickets are subsidized by high concessions. Barring the small percentage of people who can smuggle food in, you are a hungry, thirsty captive audience lured in by inexpensive seats. This surely doesn't surprise anyone, but think about what the opposite arrangement would be like.

Assume tickets subsidized concession prices. For example, a nosebleed seat costs $30 but you eat and drink for free. I bet this would be a fabulous business model. We already know a hot dog costs next to nothing to produce and beer can flow freely without much cost either. There would be significant expenses naturally, and you might not sell-out games, but you could make a good profit. So, why don't ballparks do this then?

1) It will drive people who don't consume concessions away. So I guess we lose the straight-edge vegan demographic. On the other hand, you get the frat boy crowd. Families would likely be out due to stifling ticket prices.

Solution: Give people who don't want free concessions cheaper tickets, and to ensure they don't cheat, use indelible ink to keep track, or segregate them. Or, pass out drink and food "tickets".
Caveat: People could get a full-paying person to buy goods. And "tickets" defeat the purpose of concessions subsidies when you think about it.

2) Drunk-driving groups would pounce immediately, politicians would talk about how the Great American Pastime has been morally corrupted or some such nonsense, et cetera. All in all, lots of complaints.

Solution: Roadblocks, breathalyzers, and the like. Arizona already has one of the strictest DUI laws in the country, use that as a threat.
Caveat: Left to their own devices, people drink too much, willingly or not. And most people (and I in no way advocate this) will take the risk of getting caught/killed.

So I guess in the end, it's not such a good idea, but for a moment it seemed like a distant yet attainable possibility. Kudos to the light rail by the way, a quick 30 minutes ride or so that didn't smell like vomit or urine.

Extra Credit: Thank you to "thegordons" of Flickr for the image of Chase Field.


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