Econ 101, A Case Study
One of the hallmarks of liberal economic thought is the belief that politicians are able to suspend the laws of economics by enacting their grandiose thoughts about the “public good” into law. Unfortunately for the do-gooders, individuals trying to make ends meet and business owners trying to make a profit tend not to voluntarily cooperate with the social engineers.
Governor Mark Dayton advocated for, signed into law, and celebrated legislation providing a massive public subsidy to help the Minnesota Vikings build a new football stadium. The legislation contains a provision that allows the Vikings to license various football related rights, including stadium seats. The language in the bill can be understood by anyone who takes time to read it.
The Vikings’ ownership recently indicated the intent to license seats for season tickets, presumably as a way to recoup some or all of the team’s investment in the new stadium. The Governor reacted by sending Zygi and Mark Wilf a sternly worded letter in which he points out that this is supposed to be the “People’s Stadium,” not the “Rich People’s Stadium.” In other words, the Governor apparently expected the consummate entrepreneur to discontinue looking for ways to make money. The Governor would like Mr. Wilf to forgo income opportunities for the public good, or middle class people, or the children, or something. LOL!
First of all, going to the stadium to watch an NFL game is already an activity engaged in primarily by the evil one-percenters. Just for the fun of it, I did a little ticket shopping. If you want lower level seats at the end zone line for the December 9 game against the Chicago Bears, it will set you back $186 a pop. Let’s see . . . four tickets, $744. Parking, $20. Four Cokes and four hotdogs, $40. Naïve governor, priceless! “People’s stadium?” Ya . . . sure.
To be fair, you can buy less expensive tickets. But I am really not interested in paying even $50 or $100 to crane my neck or see the action only when the teams are playing on “my end” of the field.
Lest you think I am casting aspersions on the Vikings, let me be clear. The Vikings have done nothing wrong. The Wilfs own the rights to sell a product (NFL football games) that lots people want to buy. And these consumers of football continue to pay, even when the price goes up dramatically. Economists refer to this as an inelastic demand curve. Inelastic demand curves are very good for sellers. Mr. Wilf has every right to charge whatever price he can get for his product. Am I willing to pay $186 for a football ticket? Nope. But that doesn’t matter. Other people are willing. The Vikings don’t need me. Good for Mr. Wilf!
By taking advantage of the seat licensing provision in the statue, the Vikings are engaged in smart business decision-making. They are acting legally to maximize profits and minimize losses. Despite the Governor’s expectations to the contrary, the Wilfs are in this thing to maximize profits. It seems Governor Dayton believes the laws of economics should not apply here, because he doesn’t want them to apply. In his mind the Wilfs should just sit back, write a check, and not attempt to recoup their costs or make higher profit margins. Sorry Governor, that is not how the world works.
Cross-posted at From The Senate Floor.