Monday, September 10, 2007

Bringing Food Into Camden Yards

Public Service Announcement: According to the Baltimore Orioles website (see "Articles Not Permitted Into Ballpark") and my own experience, you can bring food and non-alcoholic beverages into the ballpark (but no glass bottles or coolers). Given the very high prices for food inside the park and the length of baseball games, bringing your own food is a wise move.

Tickets to see the Orioles at Camden Yards were cheaper than I expected (we had excellent $15 seats at games against the Red Sox). Clearly, ticket sales are the loss leader that gets people into the stadium to buy food, alcohol and souvenirs. Note that there are many many businesses with this model. Many motels break even or lose money on low room rates in order to make it up on telephone use charges, expensive mini-bar drinks and snacks, and (pay-per-view) porn. Movie theaters break even or lose money on ticket sales but then make money on concessions. Firms sell printers at artificially low prices to make money on toner cartridges. In each of these cases, the visible and expected fee is kept low to get people to the point where they will choose to buy the (perhaps unanticipated or unconsidered) add-on good at an extremely high markup. Note that in all of these cases, it is possible to enjoy cheap initial fees without paying the high markup for secondary services. If you know about these fees, you can use your cell phone in the hotel room, eat before you go the movies, or do your large printing jobs on economy mode (or at work). People who do this get a great deal, as they enjoy the artificially low initial fee (cheap hotel room) but can avoid or minimize the artificially high secondary fee (room telephone charges). Many firms exploit the fact that we don't think about doing these things until it is too late (e.g., we've already arrived at the movie theater or our printer is out of toner). Given this odd pricing by some firms, you might think that other firms would have an incentive to advertise that they don't have annoying pricing schemes. I'd be willing to pay an extra $1 to go to a movie theater that had reasonably priced popcorn and soda. Xavier Gabaix and David Laibson have an interesting paper in which they show why this doesn't happen. In a nutshell, educated consumers (those who know and plan for the fact that movie popcorn is expensive by eating beforehand) don't want to go to a theater with cheap popcorn (because it costs more since they are no longer being subsides by dupes who buy expensive popcorn); uneducated consumers are no longer profitable once they become educated to the popcorn scam so it doesn't make sense to remind them of it.

Camden Yards is a bit unusual in allowing food from the outside. I suppose their reasoning is that many people simply wouldn't go to the game if they were told they couldn't bring in outside food. It is worth noting that most people don't bring food to the game even though they are permitted to. I suspect people don't know they can bring in food, or they forget that they can bring in food. The Orioles don't publicize the fact that outside food is permitted. You have to infer it from the cryptic passage I linked to above.

You see some effort by other firms to educate fans about this fact as they approach the ballpark. I heard a guy with a megaphone exhorting me to buy his peanuts outside the stadium and telling me how much cheaper they were than the ones inside. However, such advertising was limited and for good reason. An educated consumer is by definition not going to be too profitable because you are educating them to the fact that they can bring in cheap outside food. Why spend money to educate a consumer to buy your low-margin product? (Cheap peanuts are barely profitable to sell even if you don't spend on advertising.) The result of all this is that most people don't plan ahead by packing dinner when they come to the game; many probably don't think about the possibility until they get to the park and notice a few people who have done it.

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