Paging Ken Elzinga. Mr. Elzinga, Please.

Kenneth Elzinga

by James A. Bacon

Kenneth Elzinga is an institution at the University of Virginia, less renowned, perhaps, than that poobah of political punditry Larry Sabato, but no less beloved. Some 40 years ago I learned much of what I know about economics from Elzinga’s Economics 101 and 102 classes (macro economic and micro economics). He taught an incredibly dry topic with great panache and humor. Four decades later, he still teaches economics at UVa. Among other interests, he pursues research in a topic that is undoubtedly an undergraduate crowd pleaser, the economics of the brewing industry.

While Elzinga has shaped the thinking of two or more generations of UVa students, it is questionable whether his intellectual influence extends to the university administration. In particular, economic logic appears to elude Athletic Director Craig Littlepage.

Craig Littlepage. (Photo credit: Daily Progress.)

Littlepage, according to the Daily Progress, is distressed by declining sales of UVa football tickets. Ticket revenues, budgeted at $9.49 million in the season just ended, wound up at only $9.17 million. Football attendance is down nationally, in part due to the appeal of watching games on television at home. His solution? Raise ticket prices.

But wouldn’t higher ticket prices depress football ticket sales, queried a UVa Board of Visitors member last week when the subject came up. Writes reporter Ted Strong: “Littlepage said officials wanted to keep prices comparable to those of competitor schools. At the moment, the only ACC institution with cheaper  football tickets, he said, is Duke.”

The logic of that statement escapes me. The price charged by other institutions is irrelevant to UVa, which has unique supply and demand considerations. The best argument that can be made for Littlepage’s logic is that other athletic departments have done a better job of optimizing ticket prices than UVa has. But without a highly detailed analysis, that argument is purely conjecture.

Admittedly, the Board of Visitors member’s question was economically challenged as well. While it is overwhelmingly probably that increasing the price of tickets will reduce ticket sales, it is not necessarily true that boosting ticket prices will hurt revenues. It all depends upon a concept that Mr. Elzinga taught us, the “elasticity of demand.” If elasticity is low — in other words, if ticket holders are such dedicated fans that they will pay the higher price — then the higher prices will more than offset the loss of a few fans, and revenues will climb. But if elasticity is high — in other words, if people say, bite me, I ain’t paying higher prices for your stinkin’ tickets, I’ll just watch the game at home — the revenue gain from higher prices could be swamped by a loss in ticket sales.

What we don’t know is the level of economic literacy in the University of Virginia athletic department. Is Craig Littlepage conversant with the concept of elasticity of demand? Based upon the reporting, I suspect that he is not. My hunch is that someone on his staff simply surveyed ticket prices at other universities. (Of course, it is entirely possible that the reporter is unacquainted with the concept and missed subtleties in Littepage’s presentation, so I may be under-estimating Littlepage. If that’s so, I apologize and redirect my criticism to the Daily Progress.)

The fact that UVa’s ticket prices are lower than those of other ACC teams is meaningless by itself. It would be somewhat more helpful to know how prices compare to attendance. But even those numbers would not settle the case because so many other factors affect attendance, such as the success of the football program, the size of the school, number of alumi, the number of fans within easy driving distance, etc. It would be far more useful to track the history of ticket prices and attendance at ACC teams to determine the relationship between the two.

My bet is that demand for UVa tickets is increasingly elastic for precisely the reason Littlepage cited. The greater the number of games that are shown on TV, the less incentive there is to buy tickets and dedicate the better part of a day to driving to Charlottesville, fighting crowds, eating overpriced stadium food and watching the game in person. Barring a Top 20 ranking for the football team, which could scramble all calculations, I’m betting that  the stands will appear emptier next year and revenues will be flat or lower.

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9 responses to “Paging Ken Elzinga. Mr. Elzinga, Please.”

  1. Peter Galuszka Avatar
    Peter Galuszka

    I don’t know Prof. Elzinga and don’t mean to be derogatory but it your case, it doesn’t appear he’s done a whole lot of good.

    1. I had a Marxist professor, too, and I took two courses in economic history from him as well as an independent study. I guess he didn’t do me any good either.

  2. shepherdess Avatar

    Yes of course! The solution is to lower ticket prices, lower coaches’ and athletic director’s salaries, which if “comparable to prices at competitor schools” are also hugely exhorbitant. More tickets sold, more revenue. Use the surplus to lower tuition and boost the pathetic fees paid to those adjunct professors, stop building over the top fancy business schools, and boost the scholarship fund.
    Thank you, class. See you next time.

  3. the best way to increase revenues is to let the price “float” according to demand. A dynamic market, in other words.

    where things come unglued is when someone is looking for a static price but just cannot predict it ahead of time so they take their best shot at it and whatever happens after that – just happens.

    do to College Sports what has happened to Airline Ticket sales. Put them online… and let the price vary with demand. might end up selling some tickets for 1/10 what you hoped for but 1/10th is way better than zero.

  4. Peter Galuszka Avatar
    Peter Galuszka

    Was thinking more in terms of John Maynard Keynes than Marx, Engels and Lenin. Did they teach him at UVa?

    1. Paul Samuelson wrote the Economics 101-102 textbook. Does that count?

  5. Peter Galuszka Avatar
    Peter Galuszka

    Yep, still have my copy of Samuelson in the garage.

    Not the answer I was looking for. Did they teach Keynes at UVa (besides George Washington)?

    1. I only took four econ courses so I don’t know.

    2. DJRippert Avatar

      Yes, they taught Keynes. In fact, Prof Elzinga covered Keynes in his introductory classes. They also taught the purchasing power parity theory of international prices. Like Keynes, it makes good sense in the sterile vacuum of a college classroom. Also like Keynes, it has been largely discredited outside the classroom.

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