Friday, February 14, 2014
The Law of Supply and Demand and Derek Jetter
In an effort at full disclosure I must tell you that I am not a big sports 'fan'. Yes I do play tennis as often as I can and I watch the tennis channel a few times a week when possible. I played baseball when I was much younger and then moved over to softball later in life (slow pitch and I don't want to hear any wise cracks). Now that I have disclosed that I will get on to the point of my post today.
I saw the Derek Jeter announcement that he will retire from the game after this season. Now what makes this of interest to me is that as soon as this was announced ticket prices climbed like mad. Before the Jeter announcement you could get a ticket to the season ending series in Boston for $26. About an hour after the announcement the ticket site did not have a ticket for less than $200 and as of the last price check the tickets were $1,153.01. Wish I had about 10 of those $26 tickets so I could resell them on-line. Yes, I would scalp for profit.
What does this tell us? Did Jeter's value as a player jump over $1000 per seat in just a few hours? I don't think he improved his game any in that hour or two. What this tells us is just basic economic theory. If there is fixed 'supply' of something [tickets to Jeter's last game] then the 'price' of that fixed something will go up as 'consumers demand' increases. Simple Supply and Demand.
Now if I announced that my last game of tennis would be next fall I don't think I could get any more for a ticket than I am getting now, which is zero dollars and no cents. More economic theory. If you produce something people want then they will demand that product and the seller can then demand a higher price. I hate to admit it but I don't think anyone is demanding to see me play tennis. But then again I could be wrong.