Football Tickets from a Hedonic Perspective
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Received: 01 Oct. 2019/ Approved: 16 Mar. 2021 Responsible editors: Julio Araujo Carneiro da Cunha & André Torres Urdan Evaluation Process: Double Blind Review e-ISSN: 2177-5184 https://doi.org/10.5585/remark.v20i3.15802 HOW MUCH FOR THE SHOW? FOOTBALL TICKETS FROM A HEDONIC PERSPECTIVE Pedro Forti Master in Business Administration - emphasis in Marketing Strategy and Consumer Behavior. Federal University of Paraná - UFPR. Curitiba, Paraná - Brazil. [email protected] Lilian Maluf de Lima Professor Ph.D. - Department of Economics, Administration and Sociology Luiz de Queiroz College of Agriculture, University of São Paulo Piracicaba, São Paulo – Brazil. [email protected] Objective: This article aims to attribute value to the influence of some characteristic aspects of football in the pricing process on game tickets, focusing on the fan. Method: According to the quantitative approach, a regressive model is used from the perspective of the hedonic methodology applied to a primary database, collected in the State of São Paulo, Brazil, in order to obtain the implicit prices of each factor in the actual price of tickets. Originality / Relevance: A study is presented that uses an unprecedented modelling proposal in the context of sports marketing to try to understand how much, in monetary terms, structural or individual aspects affect the actual price of sports game tickets. Results: Some characteristics related to the game proved to be relevant and their implicit prices were estimated in relation to a base price, such as the home club (increased ticket price in a range from 31.31 to 163.10%), form of acquisition (increased the price by 14.74% for box office and 166.28% for ticket scalping in relation to membership programs, respectively) and quality of the stadium (increased price by 61.75% for the best ranked stadiums in this regard). Theoretical/Methodological contributions: The main theoretical contribution is the application of hedonic theory on pricing strategies in the context of football fans and their sensitivity to this construct. As such, it was used as a methodological proposal for the hedonic modelling, which allowed to determine some of the main segmentation attributes of these consumers and the impact they had on ticket pricing by clubs and organizers. Managerial Contributions: In view of the initiative to professionalize sports management in Brazil, with the recent occurrence of large investments, both public and private (such as the World Cup stadiums), it is expected that such knowledge may be relevant in order to align the preferences of fans as consumers with the action of clubs and sports management entities (confederations, consortia and sponsors). Keywords: Hedonic prices. Tickets. Football. Valuation. Consumer. How to cite the article American Psychological Association (APA) Forti, P., & Lima., L. M. de. (2021, July/Sept.) How much for the show? football tickets from a hedonic perspective. Brazilian Journal of Marketing, 20(3), 105-134. https://doi.org/10.5585/remark.v20i3.15802. 105 Braz. Jour. Mark. – BJM Rev. Bras. Mark – ReMark, São Paulo, 20(3), p. 105-134, July./Sept. 2021 Forti, P., & Lima., L. M. de. (2021, July/Sept.) How much for the show? football tickets from a hedonic perspective 1 Introduction As a whole, the football market is a global industry that moves resources among its controllers on and off the field. To illustrate this, consider that entities linked to football as an entertainment industry earned around € 28.9 billion in the 2018/19 European season, higher than the GDP of more than half of the world's nations according to Deloitte (2019). Individually, the 2018 FIFA World Cup in Russia generated € 5.57 billion, not to mention the economic impacts felt over the years in the host country (Guivernau, 2019). In the Brazilian 2019 football season, entities generated around R$ 52.9 billion, representing 0.72% of the country’s GDP, of which only 1.4% were retained in taxes (CBF, 2019). Individually, the World Cup hosted by Brazil in 2014 had an impact of R$ 18 billion among several sectors of the economy, such as food, commerce, transportation, hospitality, media, services, etc., which caused a 50% increase in this sport's share in GDP and created a legacy that is the target of a necessary debate about the social benefits and value provided by the event (Cardoso et al, 2013; Reis & Cabral, 2015), including the gains for supporters from a hedonic perspective (Biscaia et al, 2017). However, in the present case we focus on the agents that constitute the regular football market: The clubs and associations, which raised around R$ 5.888 billion in 2019 according to a report from Itaú-BBA (2020). In this research, we highlight the clubs from São Paulo (Corinthians, Palmeiras, Ponte Preta, Red Bull Bragantino, Santos and São Paulo), which were responsible for 31% of that amount, i.e. R$ 1.83 billion. In this context, it should be noted that box office revenues are still a relevant component of this value, representing R$ 856 million (14% of the total) of total revenue among the main Brazilian clubs, which explains the interest in stipulating the price of these tickets by the clubs and stadium concessionaires, but also by the federations and confederations that organize the games, which in many cases are also responsible for determining ticket prices. However, it should be emphasized that the management of these institutions in general faces great challenges, such as the recent professionalization of these clubs’ departments, historically subordinated to the internal politics of these associations. Thus, we see a tendency to bring up-to-date marketing practices to these high-value entities, seeking resources to understand the behaviour of the clubs’ consumers or supporters. With the arbitrary stipulation of the ticket price, for example, it is difficult to achieve a desired balance between the presence and well-being of fans in the stadium and the game costs. When we put this 106 Braz. Jour. Mark. – BJM Rev. Bras. Mark – ReMark, São Paulo, 20(3), p. 105-134, July/Sept. 2021 Forti, P., & Lima., L. M. de. (2021, July/Sept.) How much for the show? football tickets from a hedonic perspective recurrent phenomenon in Brazilian football in perspective with this country’s loss of competitiveness in the sport industry context, it gets easier to understand effects like the distancing of consumers from stadiums or the lack of knowledge about the conditions of decisions taken in the country’s sports industry (Wieser, 2016). In this sense, the article covers the scope of both private administration and academic research, investigating the price formation for the consumers, or football fans in this case. The construction of a real database observed in a series of games is an opportunity to address the theme, still little explored in Brazil with a focus on fans. This is a promising path also for clubs, as its potential for financial mobilization of the crowd stands out. But it also may have a social impact, translating psychological relationships and expressing characteristics that are part of a cultural phenomenon with all the challenges it represents. Therefore, the main objective of this study is to identify certain influencing attributes on ticket pricing for football matches that have been observed in the State of São Paulo in relation to their implicit values. To address this goal, we opted for a hedonic approach using a General Linear Model built on the Ordinary Least Squares method. Specifically, percentages of the characteristics that compose these prices are obtained, allowing for the identification of relations of these attributes with the game, the quality of the product in question, and factors external to the sport itself, so that they can contribute to this discussion. This valuation proposal is also expected to enable consumers to improve their buying decision as it was presented in comparison to their own observable universe, in addition to allowing the organizing agents to get closer to this relevant segment. 2 Theoretical Foundations 2.1 Recent economic performance of Brazilian football and clubs in São Paulo In the last five years, Brazilian football in general has undergone several transformations with emphasis on those related to the sport’s income generation, especially in the São Paulo clubs. According to the annual Itaú-BBA report (2020), which covers the main 24 Brazilian clubs, the real revenue of the six paulista clubs (S.C. Corinthians Paulista, S.E. Palmeiras, A.A. Ponte Preta, Red Bull Bragantino, Santos F.C. and São Paulo F.C.) grew in the period following a sharp drop in 2014, associated with the national decline in consumer purchasing power with rising inflation and economic stagnation, which coincided with Brazil’s hosting of the World Cup. 107 Braz. Jour. Mark. – BJM Rev. Bras. Mark – ReMark, São Paulo, 20(3), p. 105-134, July/Sept. 2021 Forti, P., & Lima., L. M. de. (2021, July/Sept.) How much for the show? football tickets from a hedonic perspective Figure 1 – Total real revenue, in R$ billions, of the 24 top Brazilian clubs in 2015 a 2019, according to its composition Source: Itaú-BBA (2020). Elaborated by the authors. It should be noted that the clubs’ revenues depend mainly on television broadcasting rights, the majority of which have undergone readjustments in recent years with the entry of new agents in the market (such as Turner, SBT and streaming platforms). Nevertheless, these rights remains concentrated in a few agents, especially Grupo Globo. Athlete transactions, in turn, oscillated positively, assuming a preponderant role as the clubs’ second largest revenue source as a result of the transactions by agents and club representatives in this international market (Itaú-BBA, 2020). In contrast, with regard to revenues coming from the box office and associated supporters (“sócio-torcedores”, henceforth referred as STs), it is clear that they remained constant as a result of the stability caused by the consumer loyalty.