GOAL: Jim, to take it from the top, why are World Cup tickets too expensive?
MCCARTHY: Because FIFA, who sets the prices for the World Cup, made a decision at some point that there was a gigantic opportunity to make a lot of money from tickets in this particular World Cup. And that’s in part because in the United States, tickets for sports events can be quite expensive on a regular basis. It’s worth saying in the United States that there are many, many opportunities to go to sports events for very affordable prices, alongside those expensive events. So it is a very big and very complex live events marketplace with every price point.
So I think that the prices got set because, even more than in Qatar and in previous World Cups, the organizers saw an opportunity to position this as a premium event that had extremely high demand in a market where they know prices are significantly higher in many cases than in Europe and other places around the world. And so that was the decision that was very clearly made.
GOAL: So is that exploitative or logical?
MCCARTHY: You know what I always say about tickets, and have said for forever, is “no one needs a ticket.” When people feel pain about having to pay more for gasoline or petrol, it’s because you sort of have to pay for it, and so there’s an element of resentment there. Typically, with a live event ticket, it is very easy to say “no.” So when any event organizer prices something too high, it isn’t necessarily a smart move, because people can walk away.
It’s really worth sticking a pin in the fact that this is a very, very high-demand event. But let’s say you want to maximize the revenue of an event, the game is to find that absolutely optimal price point where the demand and the supply meet. That’s the best you can do. Because if you go past that, then people begin to drop out of the market. If I say to you, look, there’s some match that you really, really want to see, and I say, “Will you pay $100?” It’s a yes, “will you pay $200?” It’s a yes. “Will you pay $300?”. And at some point, you say, “no.” So if I set my starting price at a point where your answer is, “no”, it’s not smart. The game is to match the prices with the levels of demand.
Now, have they gotten this right? I think over the overall texture of the event, they have in many places, I think that the prices in the finals and semifinals are probably the round of eight will stick, and they’re very high, just because of the sheer amount of demand for this event. But I think in a lot of other matches, it does not appear as though those are matching – the prices and the demand level. It’s easy to say no.
The one thing that I would, I would say FIFA should have done differently is experiment more to find the true demand level for tickets. You know, experiment with small releases of tickets to small, discrete groups, find out what the demand level really was, and then build their price table around that, as opposed to what they did, which was start with actually quite aggressive prices across the board, and then very publicly, in relatively large numbers, basically laying all the cards on the table and saying, “Here’s how expensive all these games are going to be.” And then they learned what the demand level was for many of these games from an event pricing strategy point of view. That’s not the way to do it, unless you are very confident.
