Why the Chicago Cubs Raised Ticket Prices

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CHICAGO - NOVEMBER 03: Hundreds of Chicago Cubs fans crowd under the marquee at Wrigley Field, home of the Chicago Cubs, to celebrate the Cubs' world series win against the Cleveland Indians in Chicago, Illinois on November 3, 2016. (Photo By Raymond Boyd/Getty Images)

The Chicago Cubs have raised their ticket prices nearly 20 percent for 2017. Outside of simply taking advantage of a historic demand for their product, the possible motivation behind the move involves a potentially transforming future endeavor.

Why the Chicago Cubs Raised Ticket Prices

The most obvious potential motivation is the fact that the waiting list for the chance to purchase season tickets has now swelled to over 100,000 individuals. Simple economics dictate for the possessor of a good or service that when demand is at its peak, you cash in by making those who are doing the demanding pay a premium. It’s not as simple as striking while the iron is hot for the Cubs, however.

What’s become obvious over the past few years – and has become even more important now that the competitive balance tax is more costly in the new collective bargaining agreement – is that diversification of assets is the key to being ranked among the most valuable franchises in Major League Baseball. The New York Yankees yearly sit at the top of the heap not only because of the power of their brand, but also their interests in the YES Network and Legends Hospitality, for example.

Not only does diversification bring in extra revenue, that revenue is not considered “baseball money” and thus is not subject to the computation of each franchise’s expenses as far as the competitive balance tax is concerned. In response to this trend, the Cubs are attempting to diversify.

The plan includes the Cubs version of the YES Network, which could be launched as soon as 2018. A potential space to record the broadcasts in is already under construction as part of the office building next to Wrigley Field, and Cubs president of business operations Crane Kenney says that conversations about the network are “ongoing.”

The Cubs currently have a television broadcast contract with Comcast SportsNet which runs through 2020, but that only gives Comcast the exclusive right to broadcast Cubs games. The Cubs are free to produce any and all other content in-house and broadcast it on their own network. In this way, the Cubs could use the two years from 2018 to when the contract expires to not only build the network’s group of sponsors, but work all the bugs out of the system before launching with live games in 2020 as well.

Launching the network will take capital, however. That’s where the season ticket price hike comes in. The Cubs sold 3,232,420 tickets in 2016 at varying prices depending on what seat in the stadium the tickets were connected to and which games on the schedule the tickets were for. An extra 19.5 percent on nearly 3.3 million tickets in 2017 and beyond represents a good chunk of that capital the Cubs need.

There are concerns for the Cubs in launching their own network, like cord-cutting and getting carriers to distribute it, but for now the ticket price hike is a potential way to enable the franchise to begin planning its launch. That could keep the Cubs fiscally healthy for years to come.

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