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If my suggestion doesn't work, I've got another one: Cito Gaston mustache rides, $.05. (AP Photo/Tony Gutierrez)

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There have been a number of suggestions about increasing ballpark attendance, including "field a winning baseball team" and "move the team to downtown Dallas."

I'd been thinking about possible alternatives, and you can read my thoughts below the jump.

You know, the Laffer Curve gets a lot of hate, but I don't think it's really such a controversial proposition.  At a 0% tax rate, revenues are $0, and at a 100% tax rate, revenues would be approaching $0.  There would be an optimal rate between the two which would maximize revenues.  If you're to the high side of that optimum, decreasing tax rates would increase tax revenues, as happened with the Kennedy tax cuts in the 60's.  But this is something we see in market economics, too, since as the price of a product increases, demand will go down, so we can see how a similar curve could be described for revenues on a product as the price goes up.

Concessions are an interesting area of ballpark economics to me.  When I was 16, I worked at a movie theater.  The very first thing you learn about the movie theater business is that your managers want you hawking concessions, and upselling concessions, at every possible opportunity.  When working behind the concession counter, you are trained to start the popcorn poppers at a specific time, about 15 minutes before the first movie started in a group of movie times.  You would place a product called Savor-All in the popper, which was a MSG salting product.  You would try to upsell the popcorn and/or drinks.  You would suggest complements to whatever product the person was buying.  And, as most people know, the reason for this is because movie theaters make next to nothing on ticket sales.  They have to make their money on the popcorn and candy and drinks, so you have to pay $5.00 for a hotdog and $4.00 for a drink to keep the theater owners in silk pajamas.

But what of the ballpark experience?  Buying a ticket to a ballgame has many complements, i.e., products that you generally buy along with the ticket, either because you have to or it enhances the experience for you.  Parking, hotdogs, beer, a coke, some cotton candy.  To a greater or lesser degree, all those things are complements of the ballpark experience.  But, so far as I know, MLB team owners don't face the same constraints on concession sales as movie theater owners.  That is, Tom Hicks isn't buying a product from a distributor to sell to the public that he is contractually obligated to make a nominal profit on, he owns the entire production.  Looking at the ticket prices and attendance on the year, an average ticket sold of $25.00 would result in $51,425,000 on a team payroll of $67,000,000.

Generally speaking, as the price of a complement of a product goes down, the demand for the product goes up.  I read an interesting post a while back about how this concept is used in the technology sector.

"When IBM designed the PC architecture, they used off-the-shelf parts instead of custom parts, and they carefully documented the interfaces between the parts in the (revolutionary) IBM-PC Technical Reference Manual. Why? So that other manufacturers could join the party. As long as you match the interface, you can be used in PCs. IBM's goal was to commoditize the add-in market, which is a complement of the PC market, and they did this quite successfully. Within a short time scrillions of companies sprung up offering memory cards, hard drives, graphics cards, printers, etc. Cheap add-ins meant more demand for PCs.

When IBM licensed the operating system PC-DOS from Microsoft, Microsoft was very careful not to sell an exclusive license. This made it possible for Microsoft to license the same thing to Compaq and the other hundreds of OEMs who had legally cloned the IBM PC using IBM's own documentation. Microsoft's goal was to commoditize the PC market. Very soon the PC itself was basically a commodity, with ever decreasing prices, consistently increasing power, and fierce margins that make it extremely hard to make a profit. The low prices, of course, increase demand. Increased demand for PCs meant increased demand for their complement, MS-DOS. All else being equal, the greater the demand for a product, the more money it makes for you. And that's why Bill Gates can buy Sweden and you can't."

The beauty of owning a major league baseball team is that you own a product with no direct equivalents, and likewise own the vendors of all the complements.  The problem, though, is that I think owners have a tendency to price their complements on the high side of the curve, decreasing the demand for their core product.  Just because the Texas Rangers have no direct equivalents does not mean that the principle of substitution does not apply.  If you and your girlfriend have the choice of spending $10 apiece on tickets and $5 apiece on drinks, you might just elect to do it at your air conditioned local movie theater and not at hot as Jessica Alba's ass Ballpark in Arlington, especially considering you can park less than 100 feet from the movie theater door and get there in less than 20 minutes.  So, it would seem that a wise plan would commoditize all of the complements to the ballpark experience except the tickets, which would be your core product.

Average attendance at RBiA was 26,372 in 2009.  Average attendance on Tuesdays was 21,348, Wednesdays was 30,615, and Thursdays was 21,668.  Why the big spike in attendance on Wednesday nights?  Well, Wednesday is dollar hot dog night.  And it's popular.


As could be expected, average attendance for Wednesday night is almost half again the average attendance for Tuesday and Thursday night games.  A whopping 0% of the Tuesday and Thursday games were above the season's average attendance.  So lowering the price of a complement (hot dogs) obviously increases demand for the core product.  There are a lot of variables to consider in this equation, since we don't know the fixed costs associated with running the concessions, and I don't know the specific marginal value of a dollar of concession sales vs. a dollar of ticket sales.  But instinct would tell you that the marginal value of a dollar of ticket sales is greater, because it's the only obligatory expense if you're going to the ballpark, and, in addition, larger attendance numbers garner attention in the league, among knuckleheads like Josey Wales, in the metroplex fan base, and, apparently, with Ian Kinsler's pop-up hitting, Bob-Sturm-complaining ass. 

Let's say that you started steeply discounting concessions on Tuesday - Thursday nights.  How much of a rise in ticket sales do you think would be needed to offset the loss in concession profits?  And, let's say you sell sponsorship of discounted food night ("Welcome to Low Cost Munchies Night at the Ballpark, brought to you by Josey Wales Brand Tampons"), where would that put the price point?  Obviously, the Rangers are experimenting with a similar concept with the all-you-can-eat-seats, and I hope it's something they expand.  

I'll close with something else to illustrate the idea of complements.  Google's primary revenue source is web advertising.  Anything they can do to lower the cost of web browsing will translate to increased ad revenues for them.  As netbooks have become more common, the license for the operating system has become a larger and larger share of the total cost of a web-capable machine.  So what is Google doing?  They're releasing Google Chrome, thereby commoditizing a cost barrier to extremely cheap web-capable computers.  Whence Google Chrome, whither ballpark nachos?