I sure enjoyed watching The Masters yesterday, it’s a tradition like none other. Being a fan of both golf and behavioral economics, an article about the price of lunch at Augusta National in my news feed caught my attention.

At Augusta National, concession prices are akin to the pricing on the value menu at McDonald’s. $2.50 for a club sandwich, $1.50 for the traditional pimento and cheese sandwich, $2.00 for a soda,  $4.00 for a beer.

Wow – that seemingly makes no sense. “The Patrons” at Augusta are a pretty well off demographic, it seems to me they could easily pay $10.00 for beer and $12.00 for a club sandwich– something akin the concession pricing at an NFL or MLB game.

So why are the prices of concessions at The Masters one-third of that of other sporting events. Perhaps it’s tradition – The Masters is steeped in tradition, from the Sunday pin placements, to always referring to fans as “patrons.  However, I think there are some behavioral economics at play behind the traditionally low food prices at Augusta National—and some pretty savvy ones at that.

According to my Google search, The Masters attendance is 40,000 per round; including the practice rounds that’s 240,000 total attendances. Patrons are there for 6 hours or more, so they pretty much have to eat—it’s a captive audience. Lets assume the average patron buys $20 worth of concessions–   breakfast, lunch and a couple beers. That’s $4.8MM in concessions revenues. The Masters could triple concession prices and make a quick $10MM a year in additional profit.

Why wouldn’t they? Perhaps because a far bigger moneymaker at Augusta National than the concession stands are the merchandise tents. The Masters takes in $50MM in merchandise revenue Masters week.

So for every $1 a patron spends at the concession stands, he/she spends $10 in the merchandise tent. If you go to The Masters you of course want a souvenir or 2 or 3.   I went a few years ago and I treasure my Masters golf hat and polo shirt. When I think about the psychology of The Masters’ concession pricing in the context of merchandise sale; s a $2.50 club sandwich makes a lot more sense.

The merchandise tent is the last stop its on the way to the parking lot.

If when I walk through the merchandise tent, and I’m feeling like I didn’t spend nearly as much money today as I thought I would.  I’m much more inclined to buy 2 $95.00 golf shirts and a $140 sweater along with my hat. On the other hand, if  in the last 6 hours I’ve bought several $10 beers and a couple $12 sandwiches.  Maybe I just buy 1 shirt and a hat.  And one more thing…that merchandise with the iconic Masters logo travels the world creating ongoing impressions and building The Masters brand.

So maybe it’s not tradition perhaps the concession pricing at Augusta National is intentional. Perhaps by keeping concession prices low, Augusta is foregoing $20 per patron in extra concession revenue and generating $200 in brand building merchandise revenue. The low concession prices at Augusta National may be a Masters Tradition.  But they are a smart and purposeful tradition, like those Sunday pin placements.