Few things go together as well as a baseball game and an ice-cold beer. But as sports fans across North America know, that drink doesn’t come cheap.
The cost of a beer at a Toronto Blue Jays game is among the highest in baseball. Take a 473-millilitre “tall” can that would retail for anywhere between $2.50 and $3.50 at your local Beer Store. The same beer at a Blue Jays game will cost you upward of $12, depending on the brand you choose. If you do the math, that represents about a 400 per cent markup from the retail price.
That kind of markup is common for concessions at sports stadiums and arenas. We all know a bag of peanuts is no bargain at $6 or $7. You don’t need to be a shrewd consumer to know that you could buy many hot dogs at the supermarket for the cost of a single one at a game.
So why do fans fork over hundreds of millions of dollars every year for overpriced concessions?
And how do teams find a sweet spot, where the inflated price they are charging is still palatable to their fans?
Put another way, how did the Blue Jays decide fans would pay more than $12 for a beer?
Part of the game
Scott Francis helps teams make these kinds of decisions. He’s a consultant at Florida-based Strategic Pricing Solutions.
“People in [a pro team’s] front office have theories about how far is too far, but they really don’t know until they introduce those prices and find out,” he says. “So teams will monitor a price over the course of a season, see how the sales go, and if they find they are selling as many or more than before, they may hike it again, typically a small increase like 50 cents or a dollar, always gauging what the reaction is.”
The Blue Jays declined to provide information on how they settled on their beer prices.
Vijay Setlur, a sports marketing instructor at York University’s Schulich School of Business, says consumers have grown accustomed to paying more for concessions in certain settings.
“If these kinds of prices were only in sports stadiums, it would really raise people’s ire, but they see it elsewhere, at concerts, at movies theatres.”
For some fans, a beer is such an integral part of enjoying a baseball game that the inflated cost is justified.
“They know it’s a substantially higher price than they would pay in a liquor store or a grocery store,” Francis says. “The bigger thing is that they are at this venue for the experience of seeing the game, and a part of that experience is enjoying something to drink.”
Falcons give fans a break
That doesn’t mean fans will simply pay anything. Teams need to temper exorbitant concession prices by offering fans options.
In Toronto, fans are allowed to bring in food and water. For years, this wasn’t the case, and if fans wanted to eat they had to purchase their food inside the stadium. Today in Toronto, nobody is being forced to buy anything other than alcohol, Setlur points out.
“That’s why you haven’t seen that consumer backlash. As long as fans know they have a choice, they are fine.”
Still, in survey after survey, high concession prices top the list of fan grievances.
One NFL team is responding in a way that makes it unique on the modern sports landscape. In its new stadium, slated to open this season, the Atlanta Falcons will offer fans what they are calling “fan first” pricing. Hot dogs, pop and water will each cost $2. A 355-millilitre beer is $5. Fries and nachos are $3.
“We took the traditional food and beverage model and threw it out of the window,” Falcons owner Arthur Blank told reporters. “And I think what you will see is variety and value and pricing that will make it easy for a family of two or four or six to come to the stadium and have a great day and actually be able to eat here. And not have to plan to eat before or after because everything is so expensive.”
The breaking point?
Sure, it’s likely the Falcons will make up for the lost revenue elsewhere, possibly through increases to parking, tickets or merchandise, but the approach is refreshing.
Just don’t expect an avalanche of teams to follow. For many, the concessions cash cow is simply too dependable a revenue stream to be tinkered with.
Instead, Setlur says, teams like the Blue Jays will continue to push and probe the limits of what fans will pay for food and drink.
“The breaking point is if a boycott begins, and that I don’t see happening any time soon,” Setlur says. “If there was a mass protest of beer prices, then they would know they have hit the ceiling.
“But at this point they could probably raise it even higher to test what that threshold is.”