Higher Rock Education - Economics Blog

Tuesday, January 17, 2017
What show has entertained Americans for 146 years? The Ringling Bros. and Barnum Bailey circus. Approximately 10 million attend the circus annually according to a New York Times article. For generations, the circus has rolled into towns, pitched their huge tents and dazzled audiences with flying acrobats, amusing clowns, freak shows, and other incredible feats. I remember trapeze artists performing summersaults high above the ground, jugglers of fire, men being shot across the arena from a cannon, more clowns than you can imagine emerging from a small car, but most of all, I remember the animals. The dazzling show of horses, lions, chimpanzees, and elephants. I enjoyed the wonder on my children's faces when we took them to the circus. It was indeed, "The Greatest Show On Earth."

On Saturday, Kenneth Feld, the CEO of Feld Entertainment, Inc., the owner of the Ringling Bros. and Barnum Bailey Circus, announced that the curtain will fall for the last time on May 21 in the Nassau County Coliseum in Uniondale, NY. Until then there will be two tours entertaining in 30 cities.

The Felds cite lower ticket sales, growing costs, and on-going fights with animal rights groups for the demise of the circus. Animal rights groups have successfully built public awareness of the harsh treatment of the animals. (To learn more about the animal activist response read the article by Amy E. Wang that was published in The Washington Post on January 15, 2017.) In May 2016, management decided to discontinue including the elephants in their shows. They will retire to a conservation for elephants in Florida. The irony is that ticket demand plummeted. The elephants had been the biggest draw. There have been other reasons for the drop in ticket demand. The circus now competes with more entertainment options: movies, video games, and the Internet are mentioned by the Felds in their announcement.

Imagine what it would cost to pay the approximate 500 employees, tend to the animals, transport the entourage in a train from town to town, and provide the children a school. Management has a dilemma that many businesses confront. The price elasticity of demand is probably elastic. Higher prices result in a loss in total revenue. (See our lesson Price Elasticity of Demand – How Much of a Price Change Would You Tolerate? Yet, the higher operating costs warrant increasing the price. The circus will visit Raleigh, North Carolina in February. Ticket prices range from $35 to $100. The Felds find themselves in the vicious cycle of having to increase prices to absorb the higher costs, but because they have an elastic demand curve, higher prices result in less total revenue. They are not alone. Cole Brothers Circus stopped performing in 2016 and the Big Apple Circus filed for bankruptcy protection in November and is now for sale. See Big Apple Circus Hopes Bankruptcy Auction Leads to a Second Act, Jonathan Randless, Wall Street Journal, December 27, 2016.

I haven't been to the Ringling Bros. and Barnum Bailey Circus in over 20 years, but I will still miss it. It must be one of the longest running shows in America and represents some of our history. I understand and agree that the abuse of animals is wrong and wish that Ringling Brothers could survive without the animals, where audiences are entertained by clowns, trapeze artists and other marvelous human feats. Shows like Cirque de Soleil have succeeded without animals. I guess it is the animals that make Ringling Bros. and Barnum Bailey "The Greatest Show on Earth!"

To learn more about the closing read a CNN article by Tony Marco and Azadeh Ansari published on January 16, 2017.

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