Friday, January 30, 2015

No. 000088 Why Exclusivity Means the Ram's (and NFL's) Business Model is Flawed and Hence the need for a public subsidy for a #STLNFL Stadium

The human drama of people watching athletic competitions:

Not to an economist who sees what you do not see. This is stunning evidence of the contradiction that lies at the heart of the NFL's flawed business model and which compels it to seek public subsidies.
What you see is that the NFL wants to sell exclusivity, an experience that you are special, to the .5% that can network among themselves in their exclusive "box, just like the owners."
What you may feel uncomfortable about discussing is that, due to the psychology of human misjudgment, the rest of us, the lower 99.5% are involved in watching the .5% in their exclusivity. Think not. Why does every TV telecast feature the obligatory cutaway to the owner's box, with or without notable visitors?
Consider Chris Christie. If he could buy a ticket to give the hug, what would he be willing to pay? A lot.

Due to the desire for status, exclusivity has immense value. Saint Louis blessed the World by giving it two extraordinary observers of life and the human personality, Jack Buck and Yoggi Berra. Here is Mr. Berra explaining the conundrum facing NFL owners.

"Nobody goes there anymore. It's too crowded."
There is the rub. The average fan in the seats would pay dearly to rub shoulders with the elite in the sky boxes but the elite in the sky boxes are not about to rub shoulders with the average fan.
Thus, simply put, the owners cannot capture the value that would be created if Average Joe would network with an elite of his or her choice.
And so we have had public financing of stadiums for thousands of years for, as Harry Truman always reminded us, "The only thing new in the World is history you don't know," because human nature never changes.
The Average Joe want's to tell his co-workers, I was at the game yesterday for exactly same reasons the elite want to tell their co-workers, I was in the company box yesterday.
This is but the open marketing of purchased status, of Saint Louis being an "NFL City."
Rome has, today, a magnificent Colosseum only because Emperors Vespasian and Titus didn't have to ask the Roman Senate to issue bonds.
This leads to my last observation. Why were all our regional politicians so fast to support the new stadium. Having lived the miserable life of searching for campaign cash they truly know the value of both access to those boxes and the ego boast evidenced by the Chris Christie hug.
Why the Missouri GOP is psychology hell bent against an NFL stadium is for another day.