River Ave. Blues reports on the parking lots around Yankee Stadium going into default on their bonds. This was the most interesting part to me:
According to those who run the Bronx Parking Development Company, the answer is a mixture of supply and demand. The company claims that the lots were, at most, 60 percent full during game days, but those running it also claim that the Gateway Shopping Center has been siphoning off cars for far less.
To park in the stadium lots costs well over $20 a game while Gateway charges under $5. Officials claim that 800 cars per game are taking advantage of the price discrepancy, and thus, the company is raising rates to $35-$45 per car in 2011.
A competitor is beating you on price, so your raise your rates! What brilliant business men run these lots! That will just drive more people to the subway and train, which are much cheaper than parking. It strikes me the right thing to do is sell off a couple of the lots, so the supply of parking meets the demand. Raising rates is just going to throw the owners into a death spiral.
If demand drops less than 50%, the owners will make more money. Demand is not necessarily linear in price.
Bjoern » But if they dropped the price to $15 and sold out the lots they would make more money, too.
Good old fashioned price elasticity. We’ll find out which end of the spectrum they fall at…
I would assume that the demand for parking at the Yankee lots here is rather elastic.
There are many substitutes for the lots which you mention such as the train and subway. In addition this would make many turn to other non-Yankee lots they may not be as close but people will go through quite a lot to avoid spending money especially if they feel that they are being gouged.
So with out looking at the specific information or alternatives my gut economic leaning tells me that this is likely to be a money loser.
In general the elasticity of demand for a specific product is very high and I think that is the case here (as you can see from the defections to the lower price lot) and that this will backfire.
Here in Toledo they’ve got $5 lots (private) right next to Fifth Third Field. I park two blocks away for free. As do lots of other people.
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I think the company is betting that their existing customers will pay extra for the convenience of parking near the stadium, and an extra 15-20 bucks means nothing to them. If true, even if they lose 20% of their customers they still make more.
They could also offer steep discounts for early arrivals (2 hrs before game time) to attract more customers, and large penalties for those leave late (1 hr after game is over).
If it does not work out, they can drop prices across the board, or sell off property, but thats a last resort.
When you consider a party of 4 probably pays 200 dollars or more for tickets/concessions, whats an extra 15-30 dollars for parking.
Raze the excess parking and build some playgrounds.
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