Positive externalities from a better football team

In Friday Sept. 30, 2011's Cavalier Daily Opinion column there is an article called "Crowd control." This article, like so many dealing with Virginia football, laments the cyclical relationship between poor football performance and poor support from the crowd. It notes the "downward trajectory" of the program and suggests that fans have moved their consumption of leisure towards other substitutes (like "restaurant outings, concerts and movies"). One suggestion to fix this would be to lower ticket prices to attract fans.

The paragraph continues: "For this step to be taken, however, either the marginal revenue generated from the additional fans would have to exceed the marginal costs they induce, or the University would have to decide that subsidizing fan attendance is a good way to spend its money. Although a bigger crowd could provide a small lift to the football team and could have positive spillover effects for local businesses if it draws fans from outside of the area, it would be tough for the University to justify this measure since it most likely would necessitate sacrifices from student-athletes involved in other sports or a hike in the fees that students pay to support the Athletic Department."

The most relevant part of this article for the class is the discussion of "positive spillover effects." These are what we have talked about in our class as positive externalities. The story told here is that cheaper tickets would motivate positive effects both for the athletic program, but also for the wider community. Since the social benefit is greater than the private benefit to the athletic program, this good is underprovided. In this instance the good can be considered as subsidization of tickets. The article suggests that students or student-athletes would have to bear the burden of ticket subsidization, but this analysis shows that any increased costs could be shifted to local businesses as they receive the added benefit of increased attendance. This Cavalier Daily article demonstrates a cursory understanding of positive externalities, but the suggestion that students should subsidize attendance seems to be misguided.