Chargers lower tickets prices at new stadium in hopes anybody might turn up to root for them

ESPN reported yesterday that the owners of the Los Angeles Chargers, noticing the distinct lack of enthusiasm with which they’ve been met in their new home, were downgrading their initial revenue goals at the Inglewood stadium set to open in 2020 from $400 million to $150 million. And on cue, the Chargers announced yesterday that they were setting ticket prices and seat license fees at the new stadium significantly lower than the rival Rams:

The least-expensive general seating season ticket in the new Inglewood stadium will cost $50 per game and require a one-time personal seat license fee of $100…

The Chargers will share the new facility with the Rams, who last month announced their season tickets will start at $60 a game, with personal seat licenses beginning at $1,000.

I’m not actually sure what “initial revenue” means in that ESPN report, and the site didn’t specify — each NFL team gets $250 million just in TV revenue, so maybe it means first-year stadium revenue, or maybe it means the initial take from PSL sales. If the latter, that would make sense, since the biggest discounts appear to be on the seat-license side, where allowing cut-rate prices is going to seriously cut into the team’s cash flow, especially once fans realize they can get in for a $100 one-time fee and then balk at paying higher PSLs for better seats.

Team execs are spinning this as a way to make Chargers fans more likely to use their tickets themselves instead of selling them to out-of-town fans to recoup their costs, but I’m not sure that microeconomics works that way: It seems just as likely that this will goose sales to ticket speculators who will now figure, “Hey, for only a $100 fee I can get a steady supply of tickets to sell to visiting fans who actually want to see Chargers games, unlike people around here!”

All of which is only likely to stir more murmurings that maybe the Chargers picked the wrong city to move to — or, you know, shouldn’t have moved at all. Turns out that sometimes shooting the hostages doesn’t work out that well.

12 comments on “Chargers lower tickets prices at new stadium in hopes anybody might turn up to root for them

  1. So the upper level gets mostly filled with gaping holes on the lower. Where have we seen this before?

  2. Neil, were the negotiations between the Spanos and the city as one-sided as the San Diego fans say? The comments I’m reading say that Spanos decided to leave five years ago and rejected every offer the city made.

    • I mean, decide for yourself:

      Clearly Spanos decided he wanted somebody else to build him a stadium, under threat of moving to L.A. And then when voters decided he was too rich for their blood, he was stuck with his bluff called.

  3. Why do they care if they sell tickets to their own fans? Can’t they just rely on the away fans in LA. This will work for the Las Vegas Raiders presumably. And it works OK for the Washington Generals. Yeah, sure, you’d rather be the Harlem Globetrotters, but somebody has to be the Washington Generals; and it is a living.

    • It is, but I think the question is “is it a better living than being the San Diego Chargers was?”

      This is the one that only Spanos can answer. Many of us laughed at Don Sterling moving the moribund San Diego Clippers to LA, where he would have to compete with the Lakers (who were then, you know, pretty good).

      His team remained a laughing stock for many years. Then he got himself in a spot of trouble (real or contrived for publicity, I’m honestly not sure) and ended up selling for $2bn.

      Granted, $2bn bears no relation to the actual value of the team, but still…the actual predicted market value of the Clippers when dirty don put them up for sale was somewhere in the $600m range as I recall. What would the value of the San Diego Clippers have been in 2014?

      The long term question for Spanos is, when he decides to sell/is forced out (which is a real possibility for both Davis and Spanos given the deals they have agreed) will he net more money for being Kroenke’s sharecropping tenant than he would have for being the primary in San Diego.

  4. Hmmm.

    Thankfully I can affirm that I am not conversant with hostage treatment strategies.

    However, I would point out that the ‘benefit’ of exterminating the hostages might seem dubious when one is considering only the individual cases of the current hostages.

    If the long term plan is to continue taking hostages, or (as is the case for most major sports leagues) to have an unlimited supply of hostages effectively created for you by virtue of your own restricted franchise supply, then your appalling treatment of the current group of hostages could prove exceedingly profitable down the road.

    Think of it like simple banking. The cost of providing printed statements to account holders used to be just part of the cost of banking. You know, like the electric bill and cleaning contract for the actual bank itself. Then, when e statements came along, it seemed likely that banks would offer a reduction in monthly fees to account holders if they opted not to receive printed statements… thus saving the bank money (savings which could then be passed along to e statement recipients).

    Instead, of course, what banks did is simply impose an additional fee for providing printed statements to the customers that still want them.

    I am eagerly awaiting the day when banks start itemizing the fees for many other business costs on my statement so I can see what my share of the cost of one of their employees’ dental or chiropractic appointments were, and how much my share of the CEO’s megayacht maintenance and moorage fees are.

    Transparency is, of course, the key to efficiency.

    • “Then, when e statements came along, it seemed likely that banks would offer a reduction in monthly fees to account holders if they opted not to receive printed statements…”

      Likely? No. The idea that any business would pass along cost savings to their customers (unless it provides a real competitive advantage that would offset the cost with additional business) is just wishful thinking. It’s a common misconception in SportsWorld: From “Our tickets wouldn’t cost so much if they weren’t paying the players so much!” to “Golf balls wouldn’t cost so much if they weren’t paying players to use them!”

      • It’s not wishful thinking at all. Cost savings to the manufacturer or service provider get passed on to customers to provide a competitive advantage. This is a fundamental underpinning of innovation in a capitalist economy. It is what differentiates “us” from a planned economy in which essentially the same car gets sold year after year.

        Henry Ford did not set the price point for his vehicles equivalent to those at Cord, Packard or Cadillac. He made a more cost effective model which ultimately revolutionized the industry.

        When we are dealing with cartels (be they sports, banking, telecom or other types), there is no legitimate reason for them to compete for customers as the limited group of service providers already have all the customers locked up (just like Autovaz, Moskovitch etc).

        The ‘golf ball’ argument made is really just an argument against advertising… and since advertising is a voluntary additional cost (whether through sponsorship, commercials or naming rights) that gets folded into the unit cost of the product itself, the individual method of advertising doesn’t matter.

        • There seems to be something else when we talk about price. After all, people willingly pay a lot more for Major League baseball than minor league. And people tend to pay more (in part because of demand) when a team is better than when it isn’t very good.

          It strikes me that, when it comes to sports, many fans have a “cost of doing business” mentality which excuses paying a lot for tickets, PSLs, beer, and many other things that shouldn’t be so expensive. They pay it because they think it helps the team win, perhaps.

          This of course transitions easily to the “cost of being a major league city” argument that all taxpayers can “benefit” from.

  5. The Rams are the only team that should’ve moved. They made their name in LA, they were stolen from LA, they belong in LA (and yes, I know they spent their first decade in Cleveland). The Raiders to Vegas and the Chargers to LA were absolutely ludicrous. Straight up rubber-room crazy. The Chargers moving, however, was the dumbest of all. What’s dumber than moving away from a rabid fanbase that loves you to a place where you have no footprint whatsoever? Moving to a place that already has a team that everyone likes better and playing in a soccer stadium.

    Anyone taking bets on how long it takes for the Chargers in LA experiment (/fiasco) to fail? Over or under 5 years?

    • Excellent points. The only thing I can add to make it marginally more insane for them to have moved back to LA is the fact that the Chargers started there and left because no-one cared about them in LA in 1960. It was already a Rams town – something it pretty much remains at this point (the much ballyhooed Raider takeover in the 80s was a thing… but it was very much a localized thing to a particular area. And, with all due respect to the fans who supported the Raiders strongly during the 13 years they were in LA, that demographic is not one the NFL even attempts to serve any more).

      With shared revenues of, what, $300m per team (tv, merch, sundry other league initiatives/partnerships), it is unlikely that the Chargers will actually fail as a business in LA. They can remain profitable with a high payroll and literally no fans in the stadium. The problem would be that Spanos will see his asset continuing to slide further and further behind not only his landlord’s in market value, but perhaps even behind most of the smaller market teams over time.

      We don’t absolutely ‘know’ this is going to happen, of course. As noted on another thread, Don Sterling made out like a bandit by having a team no-one really cares about in LA, and as a tenant in someone else’s building. It can be done, in other words.

      I think Spanos will ultimately decide to sell the team while it is in LA. I just don’t know if it will be in 2024 when he fully realizes what trouble he has created for himself or in 2038 just as the franchise is about to become portable…

      In both he and Davis’ case, they have taken short term moves from modest markets that loved and supported them to new ones with no history, questionable support and a shiny new stadium (eventually). This is a gamble and I have my doubts that either owner will still be in the NFLOC by 2030…

      And the last point might speak to one of the main reasons the rest of the owners voted to approve these moves. I don’t think the rest of the billionaire boys club would be sad to see these two voted off the island… and they don’t mind looking like “they” made a mistake in approving these moves to get that done. After all, they can always fall back on “the application was made by the franchise owner and all our prerequisites were met… so we had no real grounds to reject the move…”

      It’s a lie, of course, but it’s a believable one…