He told fans that ticket prices would be going up, perhaps as early as this season, because of the deal. In a July 14 column in the Wall Street Journal , Sam Walker derided major-league teams for their wastrel ways, lavishing large guaranteed contracts on some really lousy players and then later releasing them. If baseball could just raise ticket prices willy-nilly whenever player salaries increased, the owners would spend themselves into oblivion, knowing that sure profits awaited because they could hike ticket prices to make up for the higher expenditures. Economic analysis bears this assertion out.
Baseball teams are, in fact, monopolies.
If you live in Boston and you want to see a major-league baseball game, you have one choice and you will pay through the nose for it. There are imperfect substitutes, but there is no perfect substitute, making the Red Sox one of a few dozen monopolies. Monopolists want to maximize their profits, just like all companies, but they have relatively free rein in the market. Assuming there s enough demand for the good, a monopolist will produce and sell another widget if the widget can be sold at a profit. Teams all have software systems to help them determine the optimal pricing level.