Thanks to evidence from the secondary ticket market, the prime-time tickets for Super

Bowl XLVIII will be super-sized.

As Matthew Futterman of the Wall Street Journal reported Tuesday, club-level seats in

the mezzanine of MetLife Stadium are likely to cost about $2,600, as compared to the
$1,250 charged for the top tickets at last year’s Super Bowl in New Orleans. 
Additionally, Futterman reported that the next-cheapest set of tickets in the lower bowl
of MetLife would cost about $1,500, up from the $950 charged for second-tier seats sold
in New Orleans.

Generally speaking, academic investigations of sports ticket pricing have found that

professional sports teams typically price their inventory in the inelastic portion of their
demand functions.

Say what, Willis?

It’s just a fancy way of saying that, in general, teams charge too low a price to maximize
ticket revenues.  Part of the strategy in doing this is to ensure maximum attendance so
as to ensure greater revenue streaming from complementary purchases associated with
sporting attendance…such as concessions, parking, merchandise.

In other words, teams are more concerned about maximizing ‘revenue per seat’ as
opposed to just gate revenues.

Further evidence that teams leave gate revenue on the table (or in economic parlance,
create consumer surplus for fans) from charging lower face prices than they otherwise
could command can be found by looking at secondary ticket pricing.  Especially in the
NFL which has the greatest scarcity of inventory among all the sports, almost every team
averages a positive secondary price mark-up over face.

Focusing on the Super Bowl, prior articles I’ve written (from 2011 and 2013)

demonstrate the considerable mark-ups for Super Bowl tickets.  The willingness to
spend thousands of dollars above face in some cases merely reflects the uniqueness of
the event.  Within the sporting world, perhaps the only singular match that can surpass
the Super Bowl in stature is the World Cup finals held every 4 years.
Looking ahead to 2014′s big game in the Big Apple, local market dynamics coupled with
recent evidence from the secondary market explain the sharp price increases for
premium seats.

Regarding socioeconomic and geographic factors, Futterman writes:

Not only is NYC more densely populated than other Super Bowl venues, it has a high
concentration of wealthy corporations and individuals. There is also a well-
established tradition in the city of paying out the nose for marquee events.

Since roughly 50 million people live within 200 miles of MetLife Stadium (compared
with 6 million in New Orleans) NFL officials argue that many people won’t mind
paying more, since they’re likely to save money on flights and hotels.

Regarding evidence of consumer surplus at last year’s game:

Research on the secondary market during the 2013 Super Bowl shows many $600
tickets sold for $2,000 while seats near midfield went for up to $6,100 and premium
club seats changed hands for $6,400—both multiples of their face value.

As a result, we should not be surprised at the NFL’s announcement of considerably

higher face prices for marquee seating at this year’s Super Bowl in the Meadowlands.