Shock Section - Do SPFL Clubs really offer fans value for money?

This weekend saw fans across England protest at ticket prices and at some of the extortionate costs they are expected to bear to attend games. While I rarely look down south for inspiration, it is an issue that matters in Scotland as well. If we take last season, each and every single SPFL Premiership clubs sold the cheapest adult tickets at a price higher than the lowest EPL club (Newcastle at £15, if you’re wondering).

Just let that sink in for a second. The SPFL Premiership, about whom most corners of the UK media pour derision, charges more than every club in the “Greatest League in the World”. Every shirt costs more. If you’re reading this as the sort who doesn’t like the SPFL, then you may well think the league is charging for chicken salad and serving up chicken shit.

This will obviously be justified by clubs as protecting their profit margins. Yet, does that really explain why if I was to spend the money that I’d spend on the cheapest season ticket in the SPFL Premiership somewhere else, I’d have two season tickets to Barca or Bayern, two clubs who could pretty much charge whatever the hell they like and still have a near full house.

But comparing the SPFL to the EPL is unfair. The EPL can, and does, charge over the odds regularly because last season’s average attendance percentage throughout the league was 96%, second only to the Bundesliga. Scotland’s was 56%, the eighth best in Europe.

So we can look at a league comparable - Italy. Serie A has 53% attendance but charges far less for tickets. Both Milan clubs charge under £160 for season tickets - clubs who are two of the biggest in world football.

Some may stop and say “Well, wait, they’re charging less but aren’t getting full houses so surely they aren’t a good example”. But that would ignore a couple of key issues which probably need someone with an Economics PhD to comprehend them.

The first of these issues is that, somewhat bizarrely, there aren’t much in the ways of economic studies of price elasticity in sports ticketing (at least not on google, and those that are are American). As such, to present any argument, one has to appreciate that I’m doing it based on my AS Level understanding of Economics.

Elasticity, to give it the very briefest of explanations, is how demand reacts to price. How many people would buy an amount of any given product at a cost of £1 as opposed to £10? If the amount is the same or very similar, then we would describe the product as inelastic. As you can guess, understanding elasticity is crucial in understanding how your product will sell. Consumers don’t want to pay over the odds but you don’t make much profit from charging too little.

So, if we were talking about tickets to watch football in economic terms, we can base it on one key fact and one key assumption. The key fact is that the supply curve is completely flat. The number of seats available is always finite. The key assumption is that football clubs are assuming that demand is highly inelastic - in short, that fans are so loyal that they will pay the price no matter what.

There is reason to believe this. A study of the SFL in 1984 showed demand to be nearly perfectly inelastic (if you want to read this, as it’s not freely available online, it’s in Vol 31, Iss 2 of the Scottish Journal of Political Economy). Worse still (for fans) is that a study of Rugby League showed a positive relationship between price and demand - which means that people were more likely to attend as prices rose.

But there is a trade off. Football clubs are NOT single product offerings. They sell programmes, food, etc - if a club could guarantee making up a loss in ticketing revenue with residual spend on concessions, etc, would they take that risk. But there is an issue that should make the SPFL more price inelastic than most - there are three major clubs in Glasgow, two in Edinburgh and Dundee. Unlike the US, where most of the publicly available studies take place, SPFL clubs don’t have a local monopoly. Taking the NFL for a moment, if one wants to go see NFL in the Pacific Northwest, they have to go to Seattle and the same applies across the country. SPFL clubs don’t have that so one would expect pricing to be more elastic, not less, as clubs try to compete for fans. If there is spare space at Tannadice and Dens Park week in, week out, why isn’t one club trying to undercut the other and attract more fans through the gates? Is it because clubs are assuming price is inelastic or is it because they feel that if one did it, everyone else would follow and end up acting like some sort of unofficial cartel.

This assumption that pricing is inelastic is silly. If one filled up Ibrox, Celtic Park and Firhill with fans, there would still be football fans left over in Glasgow. They might support an English club or might support, say, Inverness - where they can’t make trips that often. What is being done to attract that market. If you have 3,000 fans in your ground, with 6,000 seats left over but there are 30,000 football fans in the local area sat on their hands, then demand cannot be inelastic. The person setting the price is simply ignorant.

Are clubs even making an effort to tap into that population? That itself is debatable. Having been at Glasgow’s Fresher’s fair, there was only one club officially there - Thistle. Of all the clubs in Glasgow, only one bothered to go to an event at which there were thousands of people who have just come to the area who will all be active on social media and who will all have Saturdays completely free. Did Celtic not think that might be a demographic worth targeting?

In case you’re wondering, Thistle crowd for the first home game after that bit of out reach was 700 higher than the one before it. While one cannot read a single thing into that, some surely went along that otherwise wouldn’t have.

Even at this early stage of this piece, before I get on to suggesting anything, one can already see that, if we go back to our assumption, clubs act as if price is inelastic but a lack of outreach suggests that it is also based on a collective comfort with taking that assumption as fact. It is not a “We don’t want to try new things”, it is a “We don’t see the point in trying new things”.

So, to take a look at a large available study, we have to look to baseball which shows a couple of startling findings. Ticket price and attendance data was collated for over 2 decades for each team who was in the league throughout. It showed that, for all but two sides, there was a significant relationship between current side winning percentage and attendance (fans turn out more when the team is winning) but that there is a residual impact for only 9 teams (so last season’s achievements aren’t that important). Without getting too technical, what was found was that teams were pricing in the inelastic portion of their demand curve.

This gives us what you see in the table below (Yes, I’ve actually gone and made a Supply and Demand chart…). This needs some explanation.

Our yellow line is the supply of seats. Unless a ground is updated, expanded or replaced, this is always going to be a flat amount. The Red Line (Demand 1), is the demand seen in MLB but, more essentially, in the EPL. What we see from this demand curve is that there is a certain price point where attendances will drop sharply but then the curve will flatten out, which backs up this concept of the price being inelastic. The two red vertical lines reflect the two extremities of this price point, which, for brevity’s sake, I’m going to refer to as the Shock Section.

The Pink Line is the exact same line but for the SPFL. As you can see, it tracks well under the first line and also has a longer Shock Section. Demand is more elastic because, unlike MLB and also the EPL, demographics-wise, no club can lay claim to a local monopoly.

So, why is this the case and what is the result of it? It’s the two shock sections that we must pay most attention to. If we look at the Red Shock Section, then it’s key for the club in question with this curve to price tickets right at the very start of the Shock Section. This is because pricing higher would result in a large attendance drop and, therefore, a large revenue drop. The gentler slope of the Shock Section of the pink SPFL curve would suggest that clubs are more able to make changes to their pricing without sacrificing income yet are choosing to price up at a price point that would correspond with the start of the Red Shock Section. This is because the “Casual” fanbase (as in people who turn out for only big games or when the club is playing well) is smaller in the SPFL than in the EPL. The EPL curve is how it is because the “Casual” fanbase would more or less be eliminated all in one at a particular fanbase. This isn’t the case in the SPFL because the price point is putting off the “hardcore” support with the “Casuals” stopping going much lower in the price scale. The EPL prices where it does because that is the point at which it makes the most profit by far. The SPFL prices at the same point in spite of the fact that attendances are more prone to fluctuation and the fans are more price sensitive. The SPFL’s Shock Section is more inelastic than the EPL’s but the curve as a whole is more elastic.

Basically, it means that clubs are taking fans for a ride based on the assumption that they cannot get in Casual fans and, as such, must monetise the hardcore support as much as possible. This is reflected in the differences in ticket pricing - on average, the difference between the cheapest and most expensive matchday tickets in the SPFL Premiership is just under £7. In the EPL, that figure is just over £27. Where the EPL is pricing to get casual fans in under the Shock Section and hardcore fans in above the Shock Section, thereby treating different demographics differently so as to maximise profit the SPFL is working solely within the Shock Section. The leagues approach ticketing in a completely different manner because of how each division’s Shock Section works. The EPL are using a smart revenue management strategy that prices to the casual fans so as to maximise attendance and also prices to the hardcore fans to make sure that those who are prepared to pay through the nose for football do so. The SPFL’s revenue management strategy purposefully limits itself to a very small section of the demand curve because the Shock Section is less elastic.

If we go back to Partick Thistle as our example, they currently charge £22 for everyone, no matter where they sit, home or away. That is quite a ridiculous strategy for a club which have actually done the outreach to casual demographics. They should be pricing around the Shock Section, not within it. This is for a few reasons - firstly, they are in a competitive market so should have cheaper options to attract fans. Secondly, they have large casual awareness thanks not only to boots on the ground but also thanks to their entirely accidental happening of the mascot Kingsley going viral - quite simply, more people are aware of the club for non-footballing factors, yet the club isn’t pricing to actually try to get those fans in. If we take a look at the season ticketing structure, new STs were £340 for full adult tickets based on 19 games (or £17.89 a game).

So, if we accept that that is what their revenue management is now, what should it be?

Looking at this with very much my work hat on (as, it’s basically exactly this!) we have to firstly look at what Firhill is. Firhill is a ground with three sides - the main stand and Jackie Husband stand, which both run the length of the pitch, and the North Stand. Away fans go in the main stand (where the hard camera is). Question 1 must, therefore, be why are fans in the main stand. While Celtic may well fill it out, no other club is going to so it would surely be better for atmosphere, without losing much in the way of revenue, to place them in the smaller North Stand and then also tier the pricing, grouping away teams into three categories - Group A would be Celtic and Rangers, whose fans would be charged £28 for entry as the amount of fans in the local area would place their price point after the Shock Section. Group B would be the other fairly local clubs which would be at £20, therefore being at the very start of the Shock Section so as to entice as many fans as possible to come. Finally would be the Group C clubs, which would be Inverness, Ross County and Aberdeen - as the fans are travelling a long way, their price would be £15 so as to offer them a cheap rate to bring as many fans out as possible as we have to factor travelling costs into the amount fans pay but, even more than that, we have to factor in that it’s these fans who would be more likely to grab a bite to eat or a drink while at the ground because of the travel time put in they will need to. If I was feeling more cynical, I’d even go as far as suggesting that a system be put in place to get away fans to pay 20p or something similar to that for the privilege of using the toilet on the same basis that they are a captive audience and people aren’t going to want to do their business on the coach.

For home fans, ticketing is currently £22 for adults, £15 for concessions (OAPs, Students, disabled/Carer) and Free for under 16s. In my model, the Adult price would stay the same, Concessions would drop to £10 and include the unemployed and the Free price would remain the same albeit with a new “Family Ticket” brought in of £45 which would cover 2 adults and 2 kids along with a free programme for the kids to remember the game by. If we say that concessions currently make up around 10% of the gate, then this would cost the club £1500 a game and would, of course have to entice 150 new fans into the club to compensate for it but that lower price point and inclusion of the unemployed will immediately bring in a new demographic of fans who otherwise couldn’t afford it - for example, JSA is under £75 a week so what sort of person would spend a third of their entire weekly income on going to see Thistle? It goes without saying that, backed up with the right level of promotion to raise awareness, this would get an extra 150 people into Firhill on a regular basis. If this results in more pies and programmes sold, then it is all extra income.

Then we can look at merchandise pricing. For example, why are the club charging £35 for children’s strips (even for toddlers) and £40 for adults? I’ll be honest and admit that I was dumb enough to buy my son a Celtic strip for that sort of price when in Glasgow for a 2-3 size but I will also admit that I resented it a bit. That sort of pricing is completely disconnected from financial reality. Reality is that I go to H&M and get 3 tops and 3 trousers for less than that as I know he’ll have grown out of it or worn it out soon enough. What clubs are saying with that sort of pricing is that they have a licence to rip fans off for liking the club. More units will be sold and more kids will get into the club if strips for under 5s were capped at £20 and under 16s capped at £30. Even something as simple as having a Kingsley plush will sell, something which I’m quite astounded Thistle don’t sell.

These are all marginal gains and I’m in no way picking on Thistle here as all the clubs are at it but the entire point is simple - that clubs can earn more money with intelligent revenue management techniques. As it stands, I would rather go with my earlier assertion that Scottish football is almost acting like an unofficial cartel, unwilling to do anything different from anyone else due to not seeing the merit in trying new things. Ultimately, we are aiming towards trying to get the EPL’s demand curve, reducing overall elasticity by squishing all the elasticity into a very narrow Shock Section. This gives clubs more flexibility to charge around the Shock Section rather than within it. The only way to do this is to get more casual fans into grounds as this creates inelasticity at the very start of the curve, pushing the Shock Section’s start to a higher price point.

Ticketing is the key revenue on which to focus. If you can increase your crowd from 3500 to 4000, then that is 500 more people who can potentially buy programmes, food, drink, etc and any reduction in ticket price should be co-ordinated with an increase price of these elements so as to maximise the revenue made once fans are actually in the ground. The key is making the most of what we have while also appealing to those we don’t. Certain clubs won’t be happy about others doing it as we have to appreciate that clubs will always operate in their own self interests to the extent where they will even scupper things that would benefit the league as a whole. To use a theoretical example, if a marketing company came to the SPFL and said that they could run a campaign that would succeed based on the league being about all clubs and not just Celtic, then Celtic would veto it because it would serve them no benefit. The clubs at the top, if not entirely satisfied with, can more than tolerate the status quo as the SPFL’s voting system (in that commercial resolutions need a 66% vote to pass and ordinary resolutions 75%) allows them to maintain it without having to rally votes.

This probably leaves you with an unsatisfactory conclusion - there are ways for clubs to both make more money and offer more value but the issue preventing them is willingness that can be backed up with a concept of inelasticity that the most profitable leagues work around rather than work within. SPFL Clubs can make more money - just by taking a look at Thistle, that’s been shown without having to delve through their entire financial set up - it’s about asking clubs to take a risk, break from the pack and actually do it. We can sit here and say that our stadia are 56% full and that, as we’ve got about 2% of the population regularly attending ames, that’s pretty good. But as every CEO and Chairman should be asking - what about the other 98% of the population? Why aren’t they coming through the gate? Because the more things are allowed to carry on as they are and clubs work within the shock section, the more that shock section will widen.

Quite simply, SPFL clubs aren’t offering fans value for money to an extent where it is arguably worse than the EPL. The EPL are working with the advantages of their market to have a price structure which appeals to casual fans and monetises the hardcore. The SPFL works with the disadvantages of their market to exclude the casuals and milk the fans even in spite of the methodology throughout this entire piece which shows that the EPL have it right and that there is more profit to be made by working around the Shock Section than working within it.

SPFL clubs have it wrong. But by correcting their pricing mistakes, they can make changes that benefit everyone - more profit, more fans, better atmosphere, better product. That is worth breaking from the pack for.

