Press Box Article

Civilized scalping could lead to astronomical ticket prices   


Gregg Easterbrook


December 10, 2007


Now that we know all the college football bowl game matchups, there is keen action on scalper Web sites, such as StubHub (which has a partnership with ESPN) and RazorGator, to score the best tickets. On Monday, sellers on StubHub were asking from $750 up to a rather comical $164,710 for tickets to the Ohio State-LSU game (the latter price is for a prime luxury-box seat). The season finale Giants-Patriots NFL game might be historic; on Monday, sellers on StubHub were offering tickets for $200 up to $26,000, depending on seat location or box quality. Once the NFL playoff pairings are known, scalper Web sites will come to life for those contests, too. The asking price is not always the selling price, of course. But bowl committees and NFL teams must be saying to themselves -- if these seats really are worth hundreds or even thousands of dollars on the free market, we should be the ones pocketing that scratch. How long will it be until professional teams cut out the middle person and simply auction off tickets for whatever the market will bear?


Any day now, the NFL is expected to announce a deal to affiliate all its teams with one online reseller, probably Ticketmaster or StubHub, formally acknowledging reselling as legitimate and bringing the NFL an expected annual fee in the $20 million range. This might be just the first step in converting sports-ticket selling into StubHub World. As recently as a couple of years ago, the NFL and most other sports leagues aggressively opposed all scalping. Now, pro sports is legitimizing many forms of reselling of tickets. How long until the leagues go all the way and sell their tickets directly for whatever the market will bear? That is, rather than sell individual game tickets for, say, $50, why not offer them at auction? Rather than sell a season ticket of 10 $50 games for $500, why not open an auction and say, "What do you bid?"


Ticket brokering via the Internet has brought scalping out of the shadows and has civilized the idea. Now, rather than stand on a street corner near the stadium holding up fingers, you use a search box on the Web and your purchase is delivered by FedEx. Sites such as StubHub and RazorGator (the latter is financed by Al Gore's venture capital firm, Kleiner Perkins Caufield & Byers) make considerable sense. Ticket reselling sites are convenient, allow comparison shopping and greatly reduce, although do not eliminate, the risk of counterfeiting. Most sports fans are glad StubHub and similar services have evolved.


But the more respectable ticket reselling becomes, the more likely those who print the tickets in the first place are to want to control this action. If a $50 face-value ticket for a New England game, or for a Hannah Montana concert, is scalping for $500, why shouldn't the teams or concert producers pocket the premium? They, after all, are creating the value -- setting aside that "value" is in the eye of the beholder, especially in regard to pop music.


Today, nearly all tickets for sports teams, Broadway shows and concerts are sold at the face price by teams and producers. There is some business logic in selling your tickets at face value. For one, it's a good public relations move. For another, face-value selling places the risk of declining ticket worth in the hands of the purchaser. On a free-bidding basis, tickets may be worth more or less than the face amount. Last week, tickets for the Steelers at Patriots game were rising in value; StubHub offered seats at that game for $250 to $2,245 each. But tickets for woofers such as Sunday's Rams at Bengals game and Monday night's cover-your-eyes Saints at Falcons game were declining in value, going on StubHub for as little as a few dollars each. Sports teams and theatrical producers that use conventional face-value sales avoid the downside risk of declining prices.


But mostly, sports teams and concert producers have long sold tickets at face value in order to support their assertion that scalping is wrong and ought to be illegal. Many states enacted laws either banning ticket reselling or forbidding reselling within a certain distance of the entrance of a venue. These laws supposedly were passed to preserve public order, but that was pretense. Many were enacted at the behest of sports teams or Broadway promoters, who both wanted the face-value price of their tickets to set the market and were driven crazy by the thought of a scalper ending up with more income from a ticket than they themselves would realize. Shortly after setting up shop in Minnesota, for example, the Twins lobbied the state legislature to ban ticket scalping, which it did in 1963. By the 1970s, most states had anti-scalping laws. That's why brokers held up fingers near the gates of sports events. To hold up a sign saying "I NEED TICKETS" or "TICKETS FOR SALE" was, in many cases, illegal.


Roughly five years ago, as the Internet brought ease to ticket brokering -- and physically removed the practice from the view of beat-patrol officers near stadia -- sports clubs and producers began to reassess their positions. The Internet made bans on ticket reselling unenforceable; so if you can't beat them, join them. Major League Baseball and National Hockey League teams began to allow season-ticket holders to resell game tickets through affiliate sites such as Ticketmaster; here is the New York Ranger's reselling page. Easy, legal reselling of tickets you won't use makes buying season-ticket packages more attractive, and thus helps clubs promote season-ticket sales. Joining the Internet wave, rather than bucking it, also allows sports teams and theatrical producers to offer convenience. The Cleveland Cavaliers, for example, have a paperless ticket option: Season-ticket holders can use a credit card or other ID for games, so there is no ducat to worry about.


In the past two years, NFL teams have joined the StubHub World trend, though in patchwork fashion. The Redskins, Texans and Chargers, for example, began providing ticket-reselling links via StubHub; the Giants started a business relationship with Ticketmaster; and the Seahawks signed up with RazorGator. Here is the Seahawks' logo on a page from RazorGator, which calls itself the Official Fan Ticket Exchange Partner of the club. Two teams, the Bears and Ravens, partnered with this site [Link to] to allow a secondary market in personal seat licenses. What pro sports once viewed with horror, or even called the cops about, suddenly became an approved practice -- despite vestigial small-type warnings on the backs of many tickets claiming to forbid resale. By early 2007, of the 32 NFL teams, only the Patriots and Steelers had no alliance with a ticket reseller.


As pro sports has embraced Internet reselling, state laws have been altered. In the past two years, for example, Florida, New York and Minnesota have legalized ticket reselling, making it fairly obvious that the bans were a favor to sports owners all along. Only a few states still criminalize ticket scalping, among them Massachusetts. As recently as 2006, the Patriots sued 52 season-ticket holders for offering their tickets, at more than face value, on StubHub. Imagine if Detroit tried to tell customers they were forbidden to resell their cars! At any rate, just 18 months later, New England is expected to embrace a leaguewide reselling deal, assuming one happens -- although the new agreement is expected to specify that Patriots tickets cannot be resold for more than face value, to comply with Massachusetts law. Until such time as scalping becomes legal in the Bean State, too, that is.


Like many technological developments, ticket reselling via the Internet is impossible to argue with. But now that the NFL has switched sides and decided to join StubHub World instead of opposing it, teams will start to wonder whether they shouldn't just auction tickets directly.


Imagine how high prices might skyrocket if hot teams such as the Patriots or Colts, or perennial-sellout teams such as the Broncos, Giants, Jets, Redskins, Chiefs or Steelers, took bids for their 2008 season tickets rather than selling them at face value. In some cases, season tickets contain contractual rights of renewal; this is why season-ticket holders of the Green Bay Packers can leave the tickets in their wills. But in other cases, clubs offer first-chance renewal to existing season-ticket holders as a courtesy. If the price is fixed at face value, why not offer first to the loyal customer? But if the price is what the market will bear, loyalty might go out the window, at least from the teams' standpoints. Brace yourselves -- a world in which sports teams and rock concerts sell many or all tickets for whatever the market will bear might be coming. It will be hard to dispute on free-market grounds, but brutal for anyone other than the affluent.


For decades, sports teams have fought ticket brokering; in the past two years, they have switched sides and embraced the practice. Once sports teams seriously think through what StubHub World really means, they might find a way to impose major ticket price increases -- and say they are merely letting the market speak.


In other football news, various conspiracy theories swirl around the game assignments the league makes for nationally telecast night contests on ESPN, NBC and now the NFL Network. Sometimes it seems as though the league is trying to play favorites; last week, when the NFL Network had Green Bay at Dallas, it seemed as if the league was trying to favor itself. The less interesting, nonconspiratorial reality is simply that no one can be sure, months in advance, which games will be monsters. Consider this week's NFL Network pairings: Denver at Houston on Thursday night, and Cincinnati at San Francisco on Saturday night. Yuck.

Looking ahead, conspiracy theories regarding the regular-season finale Patriots at Giants game might prove unfounded -- as might the hope for a great game. Pats at Giants on the final Saturday night of the regular season is an NFL Network game, and it was circled by aficionados a month ago as a game that might pit a 15-0 New England team versus a Jersey/A squad desperately needing a W to reach the postseason. That sounds like great football, plus great promotion for the struggling NFL Network. But the Giants cannot win the NFC East, which Dallas just clinched, and hold a two-game lead over Minnesota for the No. 5 seed in the NFC. Jersey/A might lock in its playoff seeding before Week 17 and not only not care who wins the game against New England but rest starters for a first-round playoff appearance.

In other football news, would New England actually be better off losing Sunday against Jersey/B? If the Patriots beat the Jets, they lock in the No. 1 seed and home-field advantage throughout the postseason. Then, with two meaningless regular-season outings and a bye week, a full month will pass until Jan. 12, the earliest date the Flying Elvii could appear in another game that counts. Consider New England's last three regular-season opponents: the 3-10 Jets, the 0-13 Dolphins and a Giants squad that might be resting starters. Even the mad-at-the-world Pats could have trouble maintaining focus for an entire meaningless month. Meanwhile, Dallas is in almost the same situation as New England. With effectively a two-game lead over Green Bay -- owing to beating the Pack head-to-head -- through the final three weeks, the Cowboys need only a combination of Dallas wins and Green Bay losses that adds up to two to lock up home-field advantage in the NFC. Thus, Boys faithful actually might root for Green Bay to beat St. Louis on Sunday -- otherwise it's possible the Boys could lock up the top seed this weekend, and face a meaningless month of their own.