I was recently working on an assignment with my biology lab partner. On our drive home, he mentioned that he was part of the Student Athletic Activities Board at Ohio State. I started to tune him out until he said “total revenue” and it sparked my interest. I was like “hey! I know what that is!” All of a sudden I was engaged in the conversation and I’m sure he thought I was crazy but we started discussing how the economy is impacting athletic events at OSU. Due to college students, and really the rest of the spectators, being even poorer than usual, the amount of total revenue brought in from athletic events has decreased. I told him this is because athletic events are highly elastic. There are many close substitutes for going to the games, such as watching the game on t.v. when it is televised, or choosing an alternate way to spend one’s time. When I was at the hockey game this past weekend, I realized that there was a surplus of tickets; a lot of the seats in the arena were empty. My lab partner and I discussed that if prices were lowered to accommodate the spectators willingness to pay, Ohio State might be able to bring in more revenue. This is because if the price is lowered it would be closer to the equilibrium price and essentially at the equilibrium price, a ticket would be sold for every seat in the arena. Then our discussion turned to opportunity cost, a student could go to a hockey game for $6, pay for a hot dog that costs around $4, and a drink that costs approximately $3.50. So in total the Total Cost for going to a hockey game for two people is $37. However, staying in and watching the game on your own t.v. and splitting a case of Natty Light for two people has a Total Cost of $12. But, then we considered “implicit costs” for attending the game. These include the school spirit and encouragement to the players and putting money into your school that could potentially end up benefiting yourself. So, thank goodness that my biology lab partner was willing to take away time from biology and engage in a conversation of economics that allowed me to apply everything Kyle has taught me!
Wednesday, March 4, 2009
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I agree that you miss out on the overall experience when you stay home and watch the game on tv. However, when you talk about putting money into your school, you are also achieving this by sitting at home. Most of the time that Ohio State sports are on tv, they are visible on the new Big Ten Network. The BTN of course gains money from us because the abundance of us viewers help them stay on the air. In turn, a portion of the money they make goes to advertising. The places they advertise the most are on the Big Ten campuses. The BTN has to pay Ohio State to run ads at certain sporting events and such. Though it may seem the only way to give back to the school is to actually attend the sporting events, in the long chain of events you are still doing them a favor by watching the game on tv.
ReplyDeleteGood thing that the price of football tickets are going up next year! I agree that the price for athletic events are elastic, but i think that some people would rather ditch the implicit costs or school spirit thing and just slam the case of natty ice at home and watch the game. Most college students would consider the natty ice as a higher implicit cost than the school spirit.
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