"Stanford Shrinking Football Stadium to Boost Ticket Sales"
by Jonathan D. Glater

Source: The New York Times, March 1, 2006.
http://www.nytimes.com/2006/03/01/education/01stanford.html

             "The rationale behind Stanford University's $95 million project to shrink the campus football stadium is not intuitively obvious," according to the opening sentence of this news story. Athletic administrators at Stanford expect that creating a shortage of seats—or at least the perception of a potential shortage for popular football games—will enable them to sell more tickets. Specifically, they hope to sell more season tickets, improving overall attendance.

             A simple lesson in the Elasticity of Supply explains their rationale. The supply of seats to a football game is completely inelastic in the short run, meaning there is a fixed number of seats and therefore a limit on the number of tickets that can be sold. This is represented by a vertical supply curve (see Figure 10 on p. 449). Changing the size of the stadium does not affect the shape of the supply curve, but shifts it to the right (if you increase the number of seats) or left (if you decrease the number of seats). Assuming a downward-sloping demand curve, what would you expect to happen to the price of tickets if you shift the supply curve by reducing the number of seats in the stadium? Does the graph you drew help explain the logic behind reducing stadium size?

• The article indicates that the administrators are hoping to sell more season tickets to fans who want to make sure that they can guarantee seats for popular games. This implies that some games sell out and others do not. Can you think of another way that the administrators could change their marketing policy to even out attendance to different games?
• Princeton University both reduced the size of their football stadium and reduced the price of tickets. The reduced ticket prices initially led to much higher ticket sales and total revenue increased. Does this mean that price elasticity of demand was elastic or inelastic?
• Eventually, attendance at Princeton football games fell back to lower levels, even though ticket prices remained low. Why do you think that happened? (Note: There could be lots of answers to this question.)