Sunday, October 10

Parking at Scotiabank Place

On Tuesday, I attended Jason Mraz's concert at Scotiabank Place. It was awesome.

What was less awesome was the $9 I paid for a package of M&Ms and a bottled water and the $17 I paid for parking. I anticipate gouging on food and drink at hockey rinks since they have a monopoly and prohibit the bringing in of outside food, but I was surprised to find that the parking lot near the arena charged $17, considering that it was only about five per cent full (the concert was not very well attended).

For those not familiar with the area, Scotiabank Place is located in Kanata, Ontario, about 25 kilometres southwest of downtown Ottawa. The arena is more or less in the middle of nowhere, with not much around the arena except about 10 different parking lots totalling about 6,500 parking spots.

Given there were so many parking options (i.e. numerous suppliers) and so little demand for parking spots that evening, I was surprised the lot was charging $17. One would think another lot would undercut the price and get all the cars, and that there would be a race to the bottom among parking lots. My guess at the time was that the parking lots were all owned by the same company, or that there was collusion between the various parking lot owners to keep prices high.

In fact, it appears that the Ottawa Senators, the main tenant of Scotiabank Place, also own the arena and the land around it. It seems that the team has control over parking prices, although according to Ticketmaster, parking management is contracted out to Ideal Parking.

That's a little bit unusual for pro-sports arenas, as most are located in city centres where there are numerous parking lots that belong to several different owners. The fact that Scotiabank Place also controls its parking is crucial, because if the arena owner doesn't control parking prices, he or she may face lower ticket sales if parking prices go too high. The parking lot would have an incentive to gouge, since once you buy your ticket and drive all the way to the event, you're not likely to forgo parking and go home. But the arena would suffer decreased repeat business in this case; owning the parking lots instead gives the arena an incentive to charge reasonable prices in order to encourage repeat business.

Still, I wonder if the parking situation at Scotiabank Place is legal. The Competition Bureau is responsible for making sure companies operate in a competitive manner, and can punish companies if they abuse their market power. Apparently, this can happen if three criteria are met:
  1. The dominant firm has market power — the ability to set prices above competitive levels.
  2. The dominant firm engages in anti-competitive acts — business practices that are intended to reduce competition. These include buying up a competitor's customers or suppliers, using discount brands to keep out competitors, cutting off essential supplies to rival companies, using long-term contracts to stop customers from changing suppliers and overstepping authority granted by intellectual property rights.
  3. The anti-competitive acts have substantially lessened competition, or are likely to do so.
Clearly, the first criterion is fulfilled. Scotiabank Place has market power and the ability to parking prices above competitive levels — there is no way that $17 parking spots, when a lot is mostly empty, is competitive. What's less clear is the second criterion; one could argue that Scotiabank Place has "cut off essential supplies to rival companies" by not renting out their parking lots to rival firms at competitive rates, but I have no idea whether other companies have tried unsuccessfully to buy or lease land for parking from Scotiabank Place or whether land for parking lots would be considered "an essential supply to rival companies." If the second criterion is violated, it's pretty clear that the third criterion would also have been violated, since there is absolutely no competition for parking spots at Scotiabank Place.

I wonder if the high parking prices don't hurt the arena by keeping fans away (yes, there are alternatives such as public transit and taxis, but the arena is so distant from the city centre that it makes these options much less desirable). Still, it would be interesting to see what would happen if someone were to submit a complaint to the Competition Bureau. Maybe I'll send one in for the fun of it.