By Daniel Gettinger

Padres COO Tom Garfinkel recently hinted at a decrease in beer prices for the 2010 season.

Two years ago, when the Padres raised ticket prices, the team cited the need to “promote a family atmosphere” as the rationale for the increased prices.  As I wrote at the time, that excuse was utter baloney. Either that, or Moorad and company care less about promoting a family atmosphere than Alderson and friends…

2 July 2008: There Are Better Deals in August
I applaud profit maximizing behavior. After all, everyone deserves the opportunity to make a buck. What irritates me are people/firms that pretend to have altruistic motives, when in fact they are merely profit maximizing.

In late March, the San Diego Union Tribune reported that for the fourth consecutive season, the Padres would be raising the price of beer sold at Petco Park. The price of “A 16 ounce domestic draft”-the cheapest beer sold at the park-rose 75 cents to $6.50. Clearly the Padres determined that they were still in the inelastic portion of the demand curve for beer at Petco Park, and that a price increase would in fact cause profits to rise.

As a fan that does not drink much beer at the ballpark, I could not have been happier upon hearing about the price increase. The price increase would presumably allow the Padres to generate more profits. While it is naïve to believe that 100% of the marginal profits would be invested in baseball operations (ie. Players, scouts, training staff, etc…), so long as a positive percentage of the marginal profits went to baseball operations, I, as a fan who cares mostly about seeing the Padres win ballgames, would be better off.

Oddly, the Padres elected to present their price increase not as a way to generate additional revenue, and hence allow them to improve the on-field product, but instead as a paternalistic policy intended to promote a “family atmosphere” at the game. Said Richard Anderson, Padres Executive VP of Ballpark Management: “We don’t want to do anything to encourage excessive alcohol consumption…We want people to have a beer or two if they like. We’re not interested in attracting people who want six or eight beers.”

This rationale for the price increase actually does make some theoretical sense IF it is true that beers that cost 75 cents more make a noticeable impact on the atmosphere. After all, the potential revenue generated by the typical family-even if none of the four drinks beer-is probably greater than that of the typical beer drinker and his buddy or date. Of course, the Padres only care about this because they know that if they appeal to families they will make more money than if they do not. I doubt they believe that families have some intrinsic qualities that make them better customers than consumers of alcoholic beverages-aside from any increased expense, or decreased revenue.

Unfortunately for the Padres, their argument for higher beer prices is conditional upon the marginal price increase actually decreasing rowdy and disruptive behavior. The same Union Tribune article states the price of beer at Angel Stadium in Anaheim has not increased for 5 years. Beer at Angel Stadium still sells for $4.50 per 14 ounce receptacle. Chances are the Angels have not experienced any problems with a rowdier crowd. If they had, then family attendance at games would surely decrease, but there is no indication that has been the result. Now, if Beer were priced at 10 cents like the Cleveland Indians tried for one disastrous promotion in the summer of 1974, then the probability of bedlam breaking out would be high (and bedlam did in fact break out). In that case, it is likely that an increase to at least a market-level price would make the atmosphere better for families. However, beer at Petco Park already sells for well above prices found at liquor stores, or even bars. We are not talking about a price increase from $0.10 to $6.50, we are talking about a price increase from $5.75 to $6.50. Most fans do not go to the game with the intention of getting drunk. In fact, purchasing enough ballpark beer to get drunk is probably unaffordable for most fans already. Increasing the price by 75 cents does nothing to change this.

I have no problem with the Padres squeezing every possible dime out of their customer’s pockets. The team is a business, and businesses are designed to make money. As a fan who minimizes his consumption of concessions and souvenirs, I actually smile when I hear of such price increases, as it indicates that the Padres may be able to supply a better on-field product. My only complaint about the price increase for beer is the Padres try to convince the public that they care about maintaining a family atmosphere solely because they value families. That is clearly not the case. Next year, I hope to hear no explanations by the Padres for any price increases. No excuses are needed.

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