Over on our Facebook page, Wanda has posted an article about the parking lots at Yankee Stadium. You can read it here. The hummer driving girl is right. Who in their right mind is going to pay $35 to park at a friggin ball game. It’s like these people have no clue. The numbers are going down down down and they think the way to increase revenue is to raise prices.
Let’s see, what happens when gas prices go up – people buy less gas. What happens when the cost of water goes up (as it did during the drought in California) – people use less water. So what do these brainaics think? When you raise the prices for parking more people will drive and park there?
The article predicts default before the end of the season. Then what? I’ll tell you what – the city of New York will be pressured to step in and cover the bond holders. It was a bad deal when it was conceived, a bad deal when it was built, and a bad deal now.
The article’s author is right –Mayor Bloomberg will be forced to step in and save the day. In the meantime the companies that are profiting are the local garages a block or so away who sell out during the games. (Some, I’m told, have been asked to reserve large blocks of space for groups coming to the game.)
JVH
One Response
In the article they say they are 31% occupied. That is 2,790 cars at $36, for a total of $97,650. Last year at 60% occupancy, 5,400 cars parked at a rate of $23, for a total of $124,200. They are losing $26,550 per game compared to last year. Over a 81 home game season that is $2.1 Million less than last year.
Typically parking demand is inelastic to rate increase because rates usually increase when the demand is there to justify it( just like all other goods), or because there is a monopoly of the parking( think Philadelphia’s sports complex).
Here there was neither, so a 50% increase in rates decreased demand by 50%, that’s a disaster. The math tells the story. If we assume that the original price point of $23 was justified in a business plan based on a 90% occupancy for all games then the total revenue expected would be $15.3 million. After a year they saw 60% occupancy, or 5,400 cars a game. Divide $15,090,300( expected revenue) by 437,400(5,400 cars 2010 average x 81 games)= $34.50
Who thought raising the price would not decrease demand, I have a bridge in that area to sell him.
Drop the rate to $20, fill the garage and be happy with the $13 Million, its better than the $8 million you are on track to make this year, and better than the $10 Mil you made last year.
There has to be another piece to this puzzle that we don’t know. I can’t imagine that this is all happening without someone saying something.