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?
February 5, 2013 at 8:00 am
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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
March 24, 2013 at 7:37 am
Shella
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March 29, 2013 at 8:28 pm
Quale broker per scalping?
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