Why the Toronto Maple Leafs are justified in raising their ticket prices

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Photo Credit: Tom Szczerbowski/USA TODAY SPORTS

In yet another case of “things that are only a story in Toronto”, a report from the Star today revealed that the Toronto Maple Leafs are going to increase their season ticket prices this year. The number is insignificant by percentage, but with the team sitting near the bottom of the standings, seeing any sort of increase to what is known to be the league’s most expensive ticket is a bit jarring.

With that said, here are a few reasons why it’s not something to worry about.

The Dollar Is Down

The Star report mentions that ticket prices are up, on average, by 2% per ticket. Now, that’s not overly massive to begin with; we’re talking $0.50 for nosebleeds or $8 for platinums. Surely that’s worse than zero, but nothing overly crazy. But there’s another thing that people forget.

March 1st, 2015 March 1st, 2016
79.92¢ USD = $1 CAD 74.61¢ USD = $1 CAD

The National Hockey League is a league that deals largely in American Dollars, and while ticket prices may have gone up by 2%, those tickets could very still amount to less US income than they did last year. The dollar has dropped by over 5 cents, or a 7% value tumble. Even with the rebound of the past few weeks, the Canadian dollar is still down more significantly than these tickets are up. That’s without adjusting to inflation, as well; last year’s Canadian rate was 1.13%.

By comparison, 2.0% is the same increase that the Ontario government set for home rental this year.

It Feeds The Salary Cap

The NHL’s salary cap is sputtering. Coincidentally, a lot of that has to do with the aforementioned dollar dip; a lot of the NHL’s money comes from the financial strength of most of Canada’s seven teams and the behemoth that is their $5.4 billion TV contract with Rogers. If you want a higher salary cap, you have to increase hockey related revenue.

How do you do that? Tickets, merchandise,  watching those annoying 30-second ads before 12-second goal clips on NHL.com… it all adds up. This 2% increase should add about $2.5 million to HRR, which isn’t a ton, but every bit helps.

Next Year’s Product

Part of the reason that the ticket prices saw a price freeze last year was the fact that this team was known, for a fact, to be a bad one. They didn’t need to freeze prices to ensure people would keep buying tickets, but if you expect your paid customers to keep buying into your plan, showing them that you plan to earn their respect back is a good decision from a PR perspective; especially when it costs you less than half a Nathan Horton.

But if we’re being real about things, the Leafs will absolutely not be this bad next year. We’re talking about a team of quickly-developing young players who are expected to be better next year. A team that had many of it’s best players miss significant time with injury. A team that is 11th (and rising) in Corsi-For percentage, but second last in even strength shooting percentage. A team that should have upwards of $20 million left to spend on upgrades after re-upping Nazem Kadri and Morgan Rielly. A team that’s going to probably pick no worse than 4th in this year’s draft.

They might not win the Stanley Cup next year. Heck, they could still miss the playoffs. But they’re going to win many more games with what should be the league’s youngest team. How is that not a more valuable experience?

Supply and Demand

If Leafs tickets cost too much, attendance would fall. Here’s the thing, though; that definitely isn’t the case. In every year that the Leafs have been in the Air Canada Centre, their average attendance has been over 100% capacity (standing room and luxury suites tipping them over the total). You often hear that tickets are too expensive for “the real fan”, but if the prices were to drop, the same balance of long-time holders, corporate interests, and scalpers looking to flip would just save money that they’re already spending. It wouldn’t add to the fan market – it would literally make the rich get richer.

Fans will often point to the “end of the sell-out streak” as proof that there’s a declining interest, but Toronto’s occasional no sell-out comes from the fact that they tend to release tickets that were promised to players families and sponsors and unclaimed by game day. It’s actually easier in Toronto to pick up a ticket two hours before the game than it is two months before. That’s not because the interest is dying, it’s because the Leafs found a way to make an extra few thousand dollars a night at the sacrifice of not having a “We’ve sold out this many games in a row” footnote on Page 116, Paragraph 4, Appendix E of your Media Guide.

You’ll Die Before It Matters

It’s incredibly unlikely that a season ticket holder will decide to not renew their season tickets. Holders budget for increases, and more importantly, Personal Seat Licences are transferable and worth five to six figures. Owning these tickets is a business as much as it is a passion and as such, these people could care less about what amounts to an annual rounding error.

Because of that, renewal rates are consistently over 99%. That means fewer than 180 tickets are left un-renewed every year. Just to put that into perspective.

Death Rate (Canada)  Season Ticket Expiry
0.70% <1.0%

We don’t know where the first decimal lands on “greater than 99%”, but it’s likely that a higher percentage of Canadians die every year than the percentage of Leafs season ticket holders that walk away. Given the fact that the average holder is probably mid-to-late aged (there’s a minimum 20-year) waiting list, the odds of a season ticket holder dying are probably a fair chunk higher than them walking away due to a 2% increase.

Oh, and if you’re waiting to take the spots of those dead people, don’t; personal seat licences can and often do get passed on in wills and estates.

  • silentbob

    I’m starting to think some of you guys are getting kickbacks from the leafs because at times there is overly apologetic tone for leaf management.

    The leafs operate like a utility company (electrical, cable or gas) who raise prices because they can with little to no competition. A truely competitive company can only raise prices because they offer more value then their competition.

    And there you have it – there is no viable alternative and they set the price they want. They can raise prices 2% or 5%. And it doesn’t matter if they make the playoffs, or improve or regress.

    Wish my pay raises were like this rather then based on the merits of my year performance.

    • “The leafs operate like a utility company (electrical, cable or gas) who raise prices because they can with little to no competition.”

      There’s a massive difference between an essential services company raising prices on something you have to pay and choosing to have the luxury of watching what is effectively live performance art in-person instead of on TV/Online like the rest of us. They have competition, and it’s themselves displayed on different formats that don’t involve gate revenue. There’s also a ton of ways to watch different levels of hockey in this city that get ignored.

      The Toronto Maple Leafs are not an essential service. They are a thing you like watching. They are owned by a for-profit corporation and are designed to profit. There should be absolutely no ethics in the decision making process behind adjusting the rice of an entertainment product.

      • silentbob

        Actually there are pricing ethics. Price gouging and predatory pricing (neither of which the Leafs are doing here) are examples of non-ethical business practices. Generally speaking, to ethically raise prices, a company should have justification for doing so.

  • silentbob

    The dollar – yes, I agree that is a legit reason for the team to raise prices. However when the salaries of most fans isn’t also raised it still stings and does/can make it harder for many to go to games, so I can understand fans not liking it even though it is defenseable

    The Salary cap – lame. 1 team raising ticket prices will have next to no impact on the cap.

    Next Year will be better – MAYBE. The team may be worse next year. We don’t know. They may not be able to add Stamkos or any other impactful veteran’s. Young players liek Rielly and Nylander may not improve next year (its not always a steady, upward climb for many young players) etc….. I think this justificatino for raising ticket prices should be reactionary. They don’t lower the price’s when they expect the team to be bad.

    Supply and Demand – yes, as a business they can increase the price of their tickets and still sell out, thus increasing their profit. Whether or not you believe they means they SHOULD or its the RIGHT thing to do depends on you personally.

    It doesn’t matter – I have season tickets in my family (my uncle), and I’m sure he does what many do, he keeps a few tickets but sells the majority to family and friends. In reality there are probably a dozen people contributing to the cost of the season tickets. So yes its not like there is goig nto be a flood of season’s tickets to hit the open market because we/they simply don’t let them go and deal with the cost increases, but does that mean raising the price and making those season ticket holders pay is the “right” thing to do or justifiable? Probably a matter of opinion.

  • So, in one of the graphs Jeff posted the death rate in Canada at .7% now I would like to suggest that the death rate is actually 100%(everyone is going to die) playing with numbers and you can come up with anything, a little like hockey analytics.

  • In a free market this would be justified.

    Although, this is a managed market with little competition imo. Perhaps the competition bureau should look into this.

    Meaning the NHL calls the shots and places like Hamilton, Quebec, and some others are shut out along with things like the WHA. Then prices might come down…only saying this because the puchasing power of the dollar will continue to drop for the avg Canadian because of massive gov debts and deficits.

    Frankly, I think this is pretty much obscene. I think 2/3 of the nation earns under 40k. Only corporate types along with public sector workers for the most part can afford these tickets. Youth soccer is quickly catching up to hockey due to high costs. Pro hockey will start losing its grass roots support.

    I really see no sound connection between NHL/media and the public. One use to be able too view games on basic cable lol

    I recall CHCH with Dick Beddoes and CTV doing games and of course global with WHA games.

  • Supply and demand is apparently hard for people to understand.

    If you were going to buy tickets, 2% isn’t going to stop you.

    If you can’t afford tickets, it shouldn’t matter to you.

    If you think the Leafs should operate like a charity and not a business, I hope you have an explanation for shareholders on why you’re not maximizing revenue.

    • silentbob

      Spoken like a true corporate lackey. Tell me, do you even posess the ability to form your own opinions or thoughts that don’t go along with what corporate interests want?

  • jimithy

    The worst franchise in the league gets away with insulting the meek fans because they have no soul and the ‘fans’ have no backbone. This is why the team will never win anything. Sure, why not, take advantage of the simple minded hockey fan. The worst team in the league for the last twenty years has the highest priced ticket!! That is insane. This is not right. Shame on you.

  • silentbob

    Leafs Nation is supposed to be a fan site right? The reason I ask is because I’m confused by this article’s obvious attempt at putting spin on ownership’s decision to raise ticket prices… again.

    Here’s the real reason they are raising prices: Greed. That’s right, the ownership is greedy and they think Leaf fans are nothing but walking wallets. They also think fsns are stupid and will pay anything to watch what is sure to be a lottery team for the next few years.

    And don’t judge my opinion because I’m an Oilers fan. I’m on your side Leaf fans because I think you’re being taken advantage of.