(Photo: Broadway Tour/Flickr)
For the past decade, ticket prices for each year’s “Best Musical” Tony winner have spiked 17 percent on average the month after the awards, with prices for many shows trending significantly higher for months. The “Tony bump” in revenue is a symptom of a phenomenon in economics known as price elasticity of demand, or how the market’s buyers react to a change in the product’s price.
Robert Florence External, an adjunct economics professor at the Martin J. Whitman School of Management at Syracuse University, attributes the price increases to how theatergoers perceive choice. He said the most important factor driving elasticity of demand is “the availability of close substitutes.”
“What else could you buy? What else could you do? How substitutable are the plays?” Florence said. A musical winning a Tony “reduces the number of substitutes” by joining a smaller pool of the very best musicals on Broadway.
Take a look at this infographic that showcases ticket sales before and after a Tony win:
Infographic provided by MBA@Syracuse, the online MBA program from Syracuse University.