Raptor Ticket Price Hike Is Tough To Justfy Based On The Numbers
By Walter DubowecBased on the feedback I've received, many Raptor season ticketholders don't understand the need or the justification for another ticket price hike. If the price hike was justifiable and not viewed as a cash grab, the fan reaction would be quite different and even accepting.
Over the past few days a number of valid questions, facts and statistics have been raised regarding MLSE's ticket pricing policy. Let's have a look at the numbers behind the numbers.
It seems that over the past two years, Raptor season ticketholders have been faced with increases ranging from 12% to 20%. MLSE can debate actual percentages, but most fans are reporting numbers in that range.
I can find no one who has experienced a two year increase of less than 10%. MLSE admits the minumum increase this season is 6%. The bottomline is that hoops ticket increases are certainly well beyond inflation rates.
MLSE claims that part of the reasoning which supports these increases is to make up for a period during the Babcock era where ticket prices remained unchanged. However, the evidence suggests the Raptors remained profitable during that time and that economic forces have shifted in favour of MLSE over the past few years - facts which run counter to the reasoning put forth by MLSE.
The real cost of rising tickets
I decided to look at my own ticket cost history and discovered that since the Air Canada Centre has opened, my seat costs have far surpassed the inflation rate.
Beginning with the first games played at the ACC in 1999, my ticket costs have risen an average of 6.4% annually. I factored in a 2% reduction in GST over that time. In a statement to the Toronto Sun, MLSE almost seemed to take credit for the drop in GST, which is proposterous - but I digress.
According to the Bank of Canada, the annual inflation rate has averaged in the range of 2% to 3% per annum over that same period. That means that ticket prices have risen by a factor of two to three times the rate of inflation.
Assuming these ticket prices increase at the same rate as they have over past years, my seat which cost $89 when the Air Canada Centre opened is projected to cost $268 a decade from now. Ouch!
I recall questioning a hefty price increase during the Vince Carter era and was told by my Raptors ticket rep that the weak Canadian dollar played a role in the price hike. In the period between 1998 and 2002, that was an undeniable fact.
Over that period, MLSE was required to spend $1.60 in Canadian dollars to buy $1 US dollar. With players' salaries and road travel costs being paid in US currency, that was a fair concern.
However, during the past year both the US and Canadian dollar remain virtually at par. Some financial analysts are predicting the Canadian dollar will rise to 1.10 within five years as compared to the American greenback - which is good news for MLSE.
Its interesting to note that during the Babcock year during which ticket prices remained flat and there was low attendance and no play-off revenue, Forbes reported the Raptors generated an operating profit of $8.4 million on revenues of $105 million and the franchise was valued at $315 million (all figures USD).
So even during that depressed revenue period, MLSE still managed to turn a profit and increase the overall value of the franchise. Imagine what the numbers are like with 32 sell-outs and increased overall revenue!
The Raptors' single biggest expense item is player salaries. However, salaries have remained relatively consistent due to the salary cap. In fact, salaries were higher for a time at the end of the Grunwald era. Based on the strength of the Canadian dollar, the Raptors' salary costs have actually dropped.
Based on these facts it is clear that neither inflation, the Canadian dollar or rising salaries play a role in the justification of a ticket price hike.
The oncourt product is worse, not better
And one can't use an 'improved on-court product' as means to justify a price hike. All indications are that the Raptors win total will fall short of last year's club record of 47 wins.
To date, the Raptors have 34 wins. The team has tough upcoming games against the likes of Utah, Cleveland, Denver, New Orleans and Detroit twice. They also face Chicago, Atlanta and New Jersey twice, who are all fighting for the final EC play-off spot. None of these games are easy.
Assuming a 9-9 record down the stretch, this edition of the Raptors will likely finish with 43 victories. Maybe they go 10-8 and end up at 44 wins, but that's tops. To match the 47 win total of a year ago, the Raptors must catch lightning in a bottle and close out on a 13-5 run. Folks, it ain't happening.
MLSE can spin it anyway they want, but they cannot deny that the oncourt product is worse not better.
So how can a ticket hike be logically justified? The answer is "it can't".
MLSE is betting that Raptors fans will willingly pay whatever price they arbitrarily place on tickets - which is their right in a free enterprise system. The unknown is whether fans will continue to pay higher ticket prices next season or if some will decline to pay more.
Time will tell.
Will researched !!
Any time I've looked into coming to Toronto for a game the ticket prices have always been too high. Maybe I'll try to catch a game in someplace warm like Miami )
Maybe the biggest factor is the Leafs not making the playoffs.
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