Salary Cap will NOT bring lower ticket prices
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12-17-2004, 10:40 AM
fan mao rong
Join Date: Feb 2003
Location: port royal , pa
Originally Posted by
For those who still believe it will, i'm telling you it wont.
The owners want a certain percentage of revenue paid to the players. They aren't saying a cap will be 35 million regardless of revenue, those numbers are based on the league revenues in 2003-2004.
The owners would like roughly 55% of revenue going to the players and the rest going to the owners to pay non payroll expenses. So basically they get 45% of the revenues to do with what they want. If revenues average 70 million a team would it would break down 31.5 million to the owners and 38.5 million to the players. Now if the revenues averaged 80 million per teams thats same breakdown would result in 36 million to the owners and 44 million to the players.
The bigger the pie the bigger the cut for both parties. Who's pays for the pie? The vast majority of it comes from ticket sales. So why would BOTH the owners and players want lower ticket prices when it cost both parties money?
People who are not economic illiterates know that lowering the price of an item does not necessarily result in lower revenues or lower profits. If someone sells apples he might be able to sell some for $3 dollars each for so many units but if the price was lowered he could increase the units sold and increase both revenues and profits. That is basic economics and applicable across the board. You will say in a hockey example that price (of a ticket) is set by supply and demand. It is a prime factor, but not the only factor. If replacement players are used, most would agree it would decrease demand for tickets. If it decreases demand for tickets, then in order to sell more tickets and increase revenues and total profits, the price of an individual ticket would be lowered. If it does not decrease demand for tickets, there is absolutely no reason to play the better players more money. These same rules apply regardless of the level of player available when or if play resumes.
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