Soccer is the world’s most favorite sport played in the majority of countries. The phenomenon is that soccer brings people together of all nations, languages, races, religions, political creeds. It is even more popular countries like the United Kingdom, Brazil, Germany, and Spain. The Total aggregate attendance of the English Premier League games reached 13,165,416 in season 2011/2012. As the most popular sport in Brazil, 6.7 million fans attended soccer games in Brazil’s stadiums during the 2009 season. Soccer is also one of the most revenue-making entertainment industries around the world. In season 2011/12, the European football market grew to 19.4 billion euros and its revenue was 1 billion euros over the second placed Bundesliga of Germany in 2011/12.
The purpose of this report is to analyze the demand which soccer clubs are facing and the strategies and determinants of ticket pricing. In order to clarify this issue, I will divide the article into three major parts.
The problems of the first section will attempt to answer are what the Market structure is in the Soccer industry and how the stochastic demand changes.
The second section explains the method to solve the timing problem of selling seasonal tickets and single tickets.
The last section explores what the strategies and determinants of ticket pricing are.
There have been many studies in the economics literature on factors that influence the consumption of sports. It is generally represented by the attendance at sporting events. Economic models have been widely applied to analyze the factors that determine spectator attendance, and this method has been applied to various sports.
Demand for Soccer
Sport clubs as Monopolists
In short run, the supply curve for tickets is vertical since the total capacity of the stadium is fixed. Thus, only shifting in demand leads to change in price. As showed in figure 1，the ticket price is P0 when the initial demand is D0. If demand increases and the demand curve shifts to D1, ticket price goes up to P1. If the demand falls and the demand curve shifts to D2, ticket price drops down to P2.
Figure 1: Demand and Supply Curve in short run
A number of researches in the economics literature have been conducted on factors that have an impact on the demand. The consumption of sports usually can be generally represented by attendance in sport events.
According to Falter and Pérignon’s study, factors influencing the demand are classified into three groups, socioeconomic factors, football factors and incentive factors. Two variables are incorporated into the first group: the income level in the city where the game occurs and the population in the city where the stadium is.
A consumption of the tickets affects the consumer’s budget and the consumer’s budget is based on the income level. Thus, the income level is supposed to be a variable that influences the attendance. People who leave in High-level income regions are likely...