Quote:
Originally Posted by taxbuster
That is an "opportunity cost" then. It's not "their money" - and they have no guarantee that the price they set is a price that fans will pay.
ie $200 for a ticket + $20 facility fee = happy fan
but $220 ticket = unhappy fan
Just like we're all grumpy to pay GST (try living in BC where you have to pay PST on a **used** vehicle as well) - we accept that is the cost of doing business. Does it stop us? Not much. But an absolute increase in price of a particular good or service might. (Cigarettes are an example - steep price rise has contributed to a decline in smoking.)
It's not Flames money - but it "might be" money they could otherwise charge. "Might be" is a long way from "is".
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Agreed that the wording KK used was poor, but it's a legitimate point.
To a diehard fan, maybe they look at the price as $200 plus $20 ticket tax for the new arena. To the general consumer, They're paying $220 for the ticket, simple as that.
If $200 is the tipping point for maximizing sales, the Flames have to drop their price down to $180 to accommodate the $20 cuz the fee won't change (unless it is a percentage based, but still a percentage that the Flames do not take, but need to account for when pricing).
One thing people are forgetting is that at the same time, the Flames will need to come up with their $185mil also, primarily from ticket revenue as well, requiring them to have to bump up their price. If the tipping point is still the $200 to sell the ticket, they will have to cut their share of the price, hence reducing their revenue.
This of it like this. Property tax goes up for a local downtown restaurant. Carbon tax get's implemented as well. The restaurant have two options to absorb this increase, either by reducing their revenue or by increasing the price of their food.
If their food gets too expensive and people decide they don't want to eat there anymore, they'll lose revenue. If they drop their price too much, they won't make money or even won't be able to cover their cost and make no margin on their business. The diehards may accept the extra charges because they really like the food the restaurant is spitting out, but unfortunately, the restaurant needs to plan to what the general consumer would pay for, not for the few that will pay the premium.