Check out the prices on Stub Hub for tickets to the upcoming Big10 basketball game between the Iowa Hawkeyes and the Wisconsin Badgers. Quite a few of them are significantly below the $24 face value of the tickets. This can happen because fans who buy season tickets for Badgers basketball are buying for the games against the conference powerhouses. For the games against cellar dwellers like Iowa they dump their tickets on the secondary market at whatever price they will fetch.
Coping with scalpers who buy tickets through the box office and resell them at inflated prices is one thing. You could have raised prices yourself but you chose not to. But what do you do when scalpers are undercutting your box office price?
You should buy the tickets back from the scalpers is what you should do. The fans who are going to buy from the scalper at the low price might also be willing to buy at box office prices. If you buy the cheap tickets on StubHub first then the box office is the only option left for them. And if they do buy from the box office you have made a profit because you bought low and sold high.
But there’s a chance those fans aren’t willing to pay box office prices and in that case you’re just losing money. So there’s a tradeoff. It means that you don’t want to buy secondary market tickets at prices just below your box office price but you definitely do want to buy the tickets priced so low that they are worth the risk. Indeed there is some optimal offer price that you should be prepared to repurchase tickets at.
In fact every venue’s box office should be both a buyer and seller of tickets with an optimally calculated spread between bid and ask prices.
Now you might wonder whether this only further encourages season ticket holders to dump their unwanted tickets. Indeed it does but that’s exactly what you want them to do. The tickets will be reallocated more efficiently and you will capture the gains from trade. Moreover, fans are now willing to pay higher prices for season tickets if they know they can easily resell their unwanted tickets. You can then raise season ticket prices to capture those gains.
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January 30, 2013 at 10:51 am
Enrique
I wonder if it is “illegal” to sell such tickets below their face-value?
January 31, 2013 at 8:09 pm
Donald A. Coffin
Every anti-scalping law of which I am aware only makes sales at above the face value illegal…
February 2, 2013 at 1:13 pm
wellplacedadjective
does this work without frictions?
you suggest buying low and selling high… why doesn’t the original seller just sell high?
June 10, 2013 at 2:27 pm
Mukhtar
Robert Miller,Yes, I have a 1994 Harley Davidson. I had to pay list price for a used one in 1995 that had 12,000 miles on it.My friend at the local HD dieharslep found the bike for me. Even he could not get a new one for me. The dieharslep doled out its fixed allotment of the next year’s bikes by lottery. I drew a high number in a public drawing. Some dealers had waiting lists, but that did not work out too well because some people magically moved up the list faster than others and painted all the dealers as shady.Although manufacturers could charge whatever they wanted to charge, HD twisted dealer arms not to do so. It sure made the dieharslep mad when a lottery winner loaded a new bike on a trailer to sell for above MSRP–it couldn’t have any miles on it or the value dropped. I guess that could be termed motorcycle scalping :)HD eventually fixed the supply problem by opening another assembly plant, and the company is still doing very well. I wish I had bought HD stock instead of GM, but you can’t win them all.
June 13, 2013 at 10:26 am
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June 26, 2013 at 1:36 am
Constance
That's a good point Benjamin, and I had the same thought, although the question should probably be "are we anarchists?" I agree that the venue should have some control over what happens to their tickets and if they only let in the person that originally bought the ticket that should be up to them. However, to maintain a free market, controls, regulations and dispute resolution systems are necessary. We would not permit the venue to say that only white people are allowed to attend, or that they will beat up anyone that attends that is not the original ticket holder. I assume that what is really going on here is that the government has been enforcing the 'no scalping rules' and the legislature wants to stop that.On a purely philosophical level, I never understood what the problem is with scalping – all the arguments against it seem completely nonsensical. Mark, your analogy to Opec is actually too weak – Springsteen has more control over what people pay for the tickets because he not only controls the supply, but also the initial price. One argument I have heard is that the baseball team or rock star is losing potential revenue because of scalpers, but that makes no sense because the team or star could just charge more per ticket!Another problem often cited is counterfeit tickets, but caveat emptor! If you don't want to risk counterfeits, take the time and effort to buy the original ticket. If you want to pay someone else a premium to wait in line for you, or go online at the right time (called scalping), then you should be able to do so.
July 1, 2013 at 1:19 am
Donyell
You make a few great points. I stopped going to DMB shows because the scene just melted away into a pool of drunk dudes looking to get laid and kids there jsut to get high. I don’t want to see that for Phish but I think it will be hard to stop. Hampton was special, the cost made it hard for anyone but die hard fans to be there. Summer tour will be a better view of what the scene becomes. I just hope the hassle is relatively low.Good point on the PTBM. I forgot about how difficult it was to game from a scalper perspective. The money orders and all of that made it a pain to deal with but also part of the joy of getting those sweet tickets. I once was selling a few extras I had and a kid didn’t want to buy them. Between the look of them and that fact that I was selling July 4th tickets for face scared him. He called over a buddy to verify they were real!!! HA.In the end I think we will all have to deal with either having them back and dealing with all the crap or going back to a phishless world. Until I see them a few times this year I will have to reserve my judgment on that one.
July 2, 2013 at 1:25 am
Bubi
I agree that it isn’t fair for real fans to get shut out of shows. It’s all about greed. I know people who put in for lottery tickets with the sould intent on selling them on ebay. I also know people who are really bummed out because they didn’t get tickets for shows they were looking forward to. It would love to see someone coordinate with phish ticketing and start their own ticketing distribution. Have some kind of monitoring for ticketing resale and flag ticket numbers sold for more than face. Then people would know when they are scanned at the show, they would not be allowed entry. Obviously I wouldn’t want innocent fans to be screwed, but with enough warning and time, the message would get through. Or have law enforcement prosecute these scalpers. Put forth some effort to clean the situation up. Scalping is still illegal, right? Just my opions.
July 3, 2013 at 6:25 am
Rayann
The problem is that they laid off all but a handful of people when they quit in 2004. In fact, they slowly disbanded their organization starting at the hiatus in 2000 with the outsourcing of Dry Goods and Tickets by Mail.The other problem is that most venues and promoters have affiliation with Ticketmaster or Live Nation. Pearl Jam found this out the hard way when they boycotted TM. It actually upset some of their fans because they had to play smaller venues and fewer shows, making it much more difficult to find tickets.Phish could go the non-transferable ticket route, requiring the purchaser to be present for entry. That would upset people trading tickets or people who have plans that change, but it would prevent scalpers from buying tickets because most of them don’t want to go.The original PTBM system would be a step in the right direction, but it doesn’t answer the Ticketmaster/Live Nation issues.
July 3, 2013 at 6:25 am
Kristabelle
The problem is that they laid off all but a handful of people when they quit in 2004. In fact, they slowly disbanded their organization starting at the hiatus in 2000 with the outsourcing of Dry Goods and Tickets by Mail.The other problem is that most venues and promoters have affiliation with Ticketmaster or Live Nation. Pearl Jam found this out the hard way when they boycotted TM. It actually upset some of their fans because they had to play smaller venues and fewer shows, making it much more difficult to find tickets.Phish could go the non-transferable ticket route, requiring the purchaser to be present for entry. That would upset people trading tickets or people who have plans that change, but it would prevent scalpers from buying tickets because most of them don’t want to go.The original PTBM system would be a step in the right direction, but it doesn’t answer the Ticketmaster/Live Nation issues.
July 10, 2013 at 7:33 am
Flip
"True that some clubs can and have gone for private financing….would you rather come up with a private solution to stay in the bay area or take another city's offer to pay you to move? Easy choice. Not so for a medium-ish market like Baltimore."i do not understand your reasoning here.so, baltimore and maryland taxpayers should be forced to pay for somehting that had massively negative returns? why is that precisely?you seem to be either arguing that a project that was not seen as attractive enough to get private funding ought to be shunted onto taxpayers (to benefit a privately owned crony) or that because another city threatens to do something economically stupid, that baltimore ought to beat them to the punch and commit the stupidity themselves.neither sounds like a great plan to me. am i missing somehting here?also:you did make a claim. inherent in your argument that there was $3 million in taxes from payroll to be had is the assumption/claim that that tax was somehow incremental. my point was that that is quite possibly not true. they were getting it before. they might get it in the future at the old stadium or a private one.this "over the barrel" you describe seems odd to me. how is demanding that someone spend $14 million to save 3 having them over a barrel? if i demanded that of you, would you feel compelled to acquiesce to my demands?the real issue here is one of political donation and patronage where a big crony capitalist buys gobs of taxpayer funds with some donations and then reaps massive monetary gain.it's simple political capture and crony capitalism.there was never any barrel to have anyone over, just politicians being bought and paid for and pretending there was as spin.
July 11, 2013 at 12:47 am
Brandice
Robert Miller,Yes, I have a 1994 Harley Davidson. I had to pay list price for a used one in 1995 that had 12,000 miles on it.My friend at the local HD dealership found the bike for me. Even he could not get a new one for me. The dealership doled out its fixed allotment of the next year's bikes by lottery. I drew a high number in a public drawing. Some dealers had waiting lists, but that did not work out too well because some people magically moved up the list faster than others and painted all the dealers as shady.Although manufacturers could charge whatever they wanted to charge, HD twisted dealer arms not to do so. It sure made the dealership mad when a lottery winner loaded a new bike on a trailer to sell for above MSRP–it couldn't have any miles on it or the value dropped. I guess that could be termed motorcycle scalping :)HD eventually fixed the supply problem by opening another assembly plant, and the company is still doing very well. I wish I had bought HD stock instead of GM, but you canât win them all.
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September 3, 2013 at 5:27 am
Reshma
Looks great – shame about their publicity thuogh. They don’t seem to have a website! Castlepalooza was the same the first year it ran and it was almost a disaster. Hope Birr can get it together, it’s a great venue, better than Castlepalooza as it’s right in Birr town.
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October 17, 2013 at 2:12 pm
Caiya
Very true! Makes a change to see sonoeme spell it out like that. 🙂
February 5, 2013 at 8:00 am
Should Sports Arenas Buy Back Tickets That Fans Don’t Want? | TIME.com
[…] Anti-Scalping Cheap Talk […]
February 6, 2013 at 11:18 am
ACROSS THE FADER – BIZ - Should Sports Arenas Buy Back Tickets That Fans Don’t Want?
[…] isn’t merely embarrassing for sports box offices, it’s a missed business opportunity. At his Cheap Talk blog, Ely wrote that arena box offices should scoop up tickets on the cheap before fans have the […]
February 10, 2013 at 8:48 pm
Rich D
Speaking as someone who regularly scalps concert tickets for profit, I would think the prices on the secondary market are so low because the demand is low. (However, I have not seen what the actual ticket offerings are for these games, which would be revealing.) The prices may be so low because there are so many unwanted tickets, and the sellers are undercutting each other. If that’s the case, tickets are not likely to be selling well from the primary either. In that case, the primary seller could lose big buying up the secondary market. Here’s something to watch for: if there are a lot tickets a few days before the game, and prices are tumbling, that’s a likely scenario.
Another consideration: buyers are price sensitive. (I’ve learned this the hard way, btw.) Many buyers who will pay $5 for a ticket will not pay $25.
Another consideration, and an important one: seat location. Buyers will pay more for better seats. The really cheap tickets could be for bad seats that fewer people want. The good seats will likely go for more than face value. The secondary market sites like stubhub are good at naturally creating a smooth curve relating seat desirability and price. I think this means exploiting the secondary market in this way would be complicated. If the primary seller is offering bad seats, the buyer will go to the secondary market to find those better seats and pay more than face value for them.
March 13, 2013 at 12:35 pm
Anonymous
I think stunhub is a ripoff
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March 29, 2013 at 8:28 pm
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