At $507.83, the average ticket price to see “Springsteen on Broadway” was even more than “Hamilton”:
Above and below, do also look at Gross Potential. The comparison to Gross Gross is interesting:
Because of blockbuster hits, Broadway theater revenue and attendance have hit new highs. This past year, you could have seen one of 67 plays on Broadway. However, the top 10 generated 52% of the revenue. (Interesting that we saw the same phenomenon for blockbuster films.)
The big hits, the preference for musicals, and tourism are the reasons for soaring demand. People want to see “Hamilton,” “Springsteen,” and “”Dear Evan Hansen.” Attendance was also up at “Wicked,” “The Lion King,” and “Aladdin” but tickets were cheaper. As for tourism, New York said international visitors were the big spenders.
Meanwhile on the supply side, we have theater size. With the biggest hits like “Springsteen” in mid-size theaters, the number of seats created “shortages” that boosted prices. You can also see above that “Springsteen” does five performances a week while Hamilton has eight.
Our Bottom Line: Elasticity
Theater owners have become much more aware of who is willing and able to pay more for a ticket. By charging that higher price, not only do they increase their own gross but they also make reselling tickets less lucrative. As a result, for 2017-2018, gross theater revenue is up a whopping 14.4% while attendance increased by only 1.6%.
As economists, we are talking about elasticity. Think a rubber band that stretches when price drops and expands when price falls. Like that rubber band, certain theatergoers can have elastic demand. They know that price will be lower on a Tuesday during the beginning of January when it’s quite cold. They also are willing to sit on the side and avoid paying the average price of a Springsteen ticket.
Sometimes though, with a show like “Springsteen on Broadway,” we want to go no matter what. Then our demand is inelastic:
Returning to where we began, we have “Springsteen” with less supply and inelastic demand. The result? A $500 average ticket price.
My sources and more: An article in yesterday’s NY Times reminded me it was time to return to Broadway ticket prices. The Times also provided some insight on tourism spending. However, for all the possible theater revenue facts you could ever want, do go to Broadway League.
Please note that our featured image is from the AP through wtop.
Could you explain the difference between “Gross Gross” and “Gross Potential”?
I assume that Broadway League was comparing actual revenue (gross gross) to the maximum (gross gross potential). When they exceeded the maximum, I thought it was standing room. I will call them this week to see if they will confirm my interpretation and note what they say in a comment. Thanks for asking!
I should add that at their site, Broadway League says, “Beginning with week ending 5/31/09, “Gross” represents Gross Gross, “Potential” represents Gross Gross Potential…For every week prior, these numbers represent Net Gross, Net Gross Potential, and Paid Attendance respectively.”
I was fortunate enough to get on the “Been Verified” list and tried twice, to no avail, to not be able to obtain a ticket. I thought that by specifying an “off” night and a lousy seat (meaning a cheap ticket) I would snag one of the coveted tickets. Never did “it” offer me a seat in the cheap section, even though I got online as soon as I received the text with the secret code enabling me to log onto the “Been Verified” ticket purchasing process. As you state in your article, even though I chose the $70 – $400 range, I was consistently only offered tickets beginning at $500+. So now I know it was due to “inelastic” demand. I’ve had friends tell me that it was actually cheaper to hop a flight to Kentucky to see Bruce at some stadium than to purchase a ticket at a venue in NYC. I also found it harder to try to purchase just one ticket, rather than two seats together. Anybody willing to sell me a ticket to “Bruce on Broadway”?