Maple Leafs ticket prices aren’t part of a grand conspiracy, except for the usual ones

A headline like “Why are NHL tickets expensive in Toronto? Because they’re cheap in Phoenix” has got to be pretty much irresistable if you’re an editor at the Globe and Mail. But does columnist Tony Keller actually make that case? Let’s follow the bouncing argument:

  • The Toronto Maple Leafs can charge through the nose for tickets because demand for hockey in Ontario exceeds the supply.
  • The Arizona Coyotes can’t charge squat for tickets because demand for hockey in Arizona is a sad joke.
  • If the Coyotes moved to Toronto or even Hamilton, it would cut into the Leafs’ market, and they’d be forced to lower ticket prices.
  • Since the Coyotes don’t make money, they have to be subsidized by revenue sharing from teams like the Leafs.
  • “The MLSE golden goose helps subsidize a squad of American lame duck franchises; those lame ducks, stuck in dry ponds, make necessary a golden goose in Toronto.”

All of this is technically true, but there are some leaps of logic here: There’s no reason to think that the NHL would allow the Coyotes to move to within spitting distance of Toronto if they left Arizona, and that Toronto “golden goose” is something the league presumably would want to keep around (and the Leafs owners would absolutely want to keep around) with or without the Coyotes’ revenue issues. There’s a difference between “the Maple Leafs owners are willing to send some money to the Coyotes’ owners to maintain their monopoly” and “this is all part of a grand conspiracy to screw hockey fans both coming and going.” (Except inasmuch as trying to use your monopoly power as the only major pro league to jack up ticket prices is the plan for pretty much every sports league that doesn’t have open promotion and relegation.)

That said, it is undeniably true that if territorial rights were eliminated and teams could move wherever they wanted, it would be arguably good for hockey fans (except those in lousy hockey markets like Phoenix) and maybe even good for the league as a whole — just the same as it would be for MLB if the Steinbrenners and Wilpons didn’t have monopoly rights to New York City. But then, sports leagues aren’t really monolithic corporations, but rather cartels of individual business owners, each in it for themselves. The only conspiracy at work here is the profit motive combined with the failure to enforce antitrust laws, which is a bigger problem than just for hockey.


24 comments on “Maple Leafs ticket prices aren’t part of a grand conspiracy, except for the usual ones

  1. “…the failure to enforce antitrust laws…”

    Are sports leagues really engaging in activities that prevent somebody from creating competing leagues?

    • Both the United Baseball League and the American Basketball League failed in large part because their more established competitors (MLB and the WNBA, which was bankrolled by the NBA) froze them out of TV contracts:

      https://en.wikipedia.org/wiki/United_Baseball_League_(proposed)
      http://articles.baltimoresun.com/1997-08-12/sports/1997224066_1_wnba-fox-sports-prime-sports

      • And don’t forget the biggest such instance — the USFL. That league sued the NFL, and the NFL was found guilty of violating antitrust laws for its acts of monopolising pro football. (People like to joke about the $1 damages award. But that was the result of the jury’s misunderstanding of the damages. The jury believed that the judge could adjust the award; so they set it as $1 as a placeholder.)

        • Not to get too political, but the failure of the USFL rests primarily on Donald Trump. The lawsuit and switch from
          Spring to Fall seasons were his doing.

          • Oh, that’s true. Trump’s strategy was to use the move to the fall and the lawsuit as pressure to get the NFL to accept a few USFL owners (including him, of course) into the NFL, similar to how the NBA absorbed four ABA teams. He essentially wrecked the league in pursuit of that goal. The other USFL owners were fools for following him down that path, instead of staying in the spring where the league had been enjoying some success.

            But the fact remains that the NFL was found to have been engaging in illegal acts, and they got away with it.

          • The other owners were just as, if not more, hawkish than Trump on the issue. He was just the most visible owner on side.

          • I don’t think that that is true.

            Before Trump asserted himself, the Tampa Bay Bandits’ John Bassett was the most influential owner. He was firmly against the move to the fall; but his health was failing (he would die during the trial), and he could not counter Trump’s courting of the other owners to the fall plan.

            Of course, all the USFL owners were big boys; so they were all responsible for that disastrous strategy that they embarked on. But Trump was its originator and the ringleader; and he used the other owners (whom he fully intended to abandon) as patsies.

          • Fair point Ferdinand, but being ‘abandoned’ by their league partners worked very, very well for the Silnas when the ABA wound up three teams (it worked far less well for the other two owners) and had the remaining four absorbed into the NBA.

            It is well known that Trump’s plan was to try and force a merger (and that he was not alone), as the AFL had done years earlier. What we don’t know is what might have been the outcome if that had worked, or if the other owners (who could easily have outvoted their alleged partner) had stood firm and continued to build spring football into a viable entity. I would argue that, excessive expansion aside, the league was well on it’s way to doing that. The bloated league footprint caused by expansion and relocation was also in the process of correcting itself, as true capitalism requires.

            It’s absolutely true IMO that it was his aggressive and stupid actions that killed the league, but we can’t know whether things might have turned out better or worse otherwise. For every AFL there is an NASL (the first one) or WFL.

            The first requirement for any new sports league is very wealthy owners in each market who are committed to funding their businesses for at least 10 years. If you don’t have that, you don’t have a chance.

          • “The first requirement for any new sports league is very wealthy owners in each market who are committed to funding their businesses for at least 10 years. If you don’t have that, you don’t have a chance.”

            Excellent point. This is the only way for a league to avoid becoming dependent upon expansion fees (as the NASL was) or upon TV contracts (as the USFL was). If a new leagues’ owners cannot support their teams’ inevitable losses out of their own wealth for an extended period, then the best thing to do is to just keep dreaming and save everyone the trouble.

    • A) Yes.

      B) There is the real problem where the leagues operate as single entities when it suits their purpose, and separate entities where ti suits their purpose. They have the best of both worlds from a corporate structure perspective, and one that only makes a lick of legal sense if they have a anti-trust exemption. Otherwise the colluding against the fans, future and current players, and media partners would be illegal.

      This is all hidden behind the fig leaf that this is all one big happy enterprise. until of course one of them is going bankrupt or needs money for a new palace or whatever. then they are totally separate entities with nothing to do with each other.

      Kind of has a whole catholic church/catholic diocese thing going for it.

      • “… Otherwise the colluding against the fans, future and current players, and media partners would be illegal…”

        Perhaps, but it’s hard to say. Do fans have other options for general sports viewing? Yes. Do they have other hockey viewing options? Yes.

        Do players have other leagues to play in? Yes. The fact that they might make significantly less money doing so is irrelevant. I am not entitled to make my living as a professional golfer, whether I play to scratch or (sadly, as is the case) still have a double digit handicap.

        The media partner argument I disagree with completely. All media partners have unlimited options as to other properties to air (including starting their own leagues, btw, and many have the money and corporate connections to do so). Absolutely no-one is forcing them to deal with the NHL, the NFL or any other professional league. They choose to do so because they believe it is their best option, not because it is their only option.

        Why are we all so willing and able to accept the ‘artificial scarcity’ argument so completely?

        The auto sales profession is based entirely on the false belief that “you’ll never find another one just like this” when, demonstrably, you can and will.

  2. Happens in the carnival world of pro wrestling too. No other company stands a chance against Vince McMahon. To call it a monopoly is putting it lightly.

  3. With so many hockey fans in southern Ontario, the NHL is under harvesting the Toronto market. Instead of imposing a one size fits all salary cap on all the teams, I’d wished they’d gone to a luxury tax system, where free spending teams would support the weaker teams. Let the Leafs spend what they want. Their market will support it. Then funnel the luxury tax money down the line. Pretending Phoenix and Toronto are hockey equals is foolish.

    • I prefer luxury tax systems too. Although the hard cap can and does operate in the more or less the same manner when paired with large scale revenue sharing (and the trading/selling of expiring contracts to put a team that wants to operate under the salary floor in a position to do so).

      I’m not sure I agree that the NHL is limiting it’s revenue opportunity in the GTA, though. I think the Leafs set their ticket and merch prices precisely at the maximum point the market will bear. If they believed there was a way to generate another $10m a year from the Toronto market, they would find a way to do that.

      Adding a second team somewhere in the market might allow the NHL to capture a modest amount of corporate money that is presently shut out of Leaf marketing opportunities, but I’m not sure that the Toronto Toros II would be anything like as big a money spinner as the Leafs are. Nor would major corporate sponsors be fighting over suites and partnerships for the Toros the way they do over the Leafs. One could even argue that the presence of a second NHL advertising/marketing option in the Toronto market would dilute the Leafs earnings, making it a zero sum game from the NHL point of view.

      I’m not saying that a second team in the GTA would be a basket case, far from it. But would they be significantly bigger money spinners than the Devils, Jets or Blues?

  4. So if I own the corner McDonald’s, I should have no beef if another Mcd franchisee moves his buns in down the street?

  5. New York Rangers tickets are not cheap despite having competition from two teams just a few miles away. Most fans just do not change allegiance because a new team enters the market (and the Yankee’s attendance did not improve in the late 1950s when the Dodgers and Giants left).

    • New York is ridiculously huge, though. Most of the analyses I’ve seen have shown that it could support a couple more teams in each sport before you started to saturate the market. (Look a how many soccer teams there are in London, for example.)

      • London is in another country thousands of miles away. What it does with soccer may not be apply to Fun City. As far as studies go, well, I’d rather see how real life does compared to what the Brightest and Best comes out with.
        My point is both the Devils and Islanders had periods where they were far more successful than the Rangers have been since the Germans bombed Pearl Harbor. And both teams never built a real strong fan base or corporate support. Granted they both. Have survived for 45 and 35 years respectively.
        Look, if MLB and other leagues got rid of territorial rights, I wouldn’t object. Might be kind of fun. But even if you had 40,000 stadiums built in Brooklyn, Manhattan, Staten Island and brought in the Rays, Pirates and Twins, I still think they’d be after thoughts to New York fans, media and corporations

  6. Discussions surrounding monopolies and conspiracy abound in today’s society. Some not without merit, of course.

    One of the things (we) laypersons often miss when considering same is whether the product on offer is a bona fide basic “need” for humanity or whether it is an elective spending decision. Shelter, food and in this enlightened age fuels, electricity and the internet are basic needs. Professional hockey is not.

    For example, I own the only cod liver oil flavoured french fry outlet in North America. I categorically refuse to sell franchises to anyone else no matter how qualified they are or how much they offer to pay me to split my business. You want cod liver oil flavoured fries? You deal with me.

    Am I a monopoly? Yes. Am I engaging in a conspiracy? No. Render unto Caesar what is Caesar’s.

    Would anyone take me to court under monopoly or antitrust statutes for operating this way? If so, what would they win other than the right to purchase a franchise no-one in their right mind would operate at whatever price I choose to set?

    No-one “needs” professional sports, except perhaps the athletes and owners. It is likely they could not hope to make the kind of living they do without the artificial marketplace they have created for their skills via the lure of professional sports.

    Fans do not need to watch professional sports. If they make an elective spending decision to commit several thousand dollars to purchase Leafs tickets, Yankees tickets, or even the $300 or so it might cost to get a Coyotes season ticket, they are free to do so.

    But they are in no way being deprived of the necessities of life by virtue of not having the option/ability to purchase tickets to a sporting event.

    Like purchasing some delicious cod liver oil flavoured french fries from me, this is by definition an elective spending decision on the part of the fan. That is not true of buying food from Con Agra, ADM or Monsanto (though the fact that there are still multiple agrigiants does strike at any monopoly claim), gas from Standard Oil, or telephone service (once upon a time) from Ma Bell.

  7. The @ArizonaCoyotes are planning on tarping off the 4 corner upper ends sections at @GilaRivArena next season. #Coyotes

    – Ben Shroyer‏ @BenShroyer, via Twitter

  8. @ArizonaCoyotes shut 4 sections next yr. Removes 1,256 seats in 17,125-seat arena. Attendance 2nd-to-last in @NHL https://t.co/9XRMaJXW10

    – Brahm Resnik @brahmresnik, via Twitter

  9. Arizona Coyotes arena bill nearly dead at Arizona Legislature

    http://www.azcentral.com/story/news/politics/legislature/2017/03/23/arizona-coyotes-arena-funding-bill-nearly-dead-at-arizona-legislature/99544348/

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