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Triple-Dipping On Ticket Prices
by Mike Chen on 11/16/09 at 01:59 PM ET
Comments (3)
We all know that the NHL is a gate-driven league, and that depending on which market you’re in, tickets can be extraordinarily high. It’s all supply and demand, and what many North American pro teams have done is partner with TicketMaster to create what is in essence a legalized scalping system. It’s generally known as TeamExchange, though some teams have branded it something different, like the Sharks and their Power Play Ticket Trader.
How does TeamExchange work? While much of it is driven by supply and demand (you’re not going to find many, if any, of these tickets for teams that aren’t regularly sold out), there is a model to help the rich teams get richer. It’s important to note that this isn’t necessarily a club-specific way to gouge the fan; it’s just the way tickets are going in pro sports and live events in general. In other words, this isn’t something to blame a certain team or a certain league or a certain commissioner about (but feel free to if you want.)
Take the cheapest tickets for the San Jose Sharks: $18 for season ticket holders, $21 for individual tickets. If Joe Fan can’t use his season ticket, he can post it on the listing and he’s required to put a minimum listing at $26—already an $8 mark-up from the season-ticket price. An additional 15% is added on top of that, putting the ticket around $29. Now, since Joe Fan is selling the ticket, he gets 90% of the asking price credited to his account (which rolls over to playoff or season tickets, not cash).
So let’s see who gets what using this model:
Joe Fan gets a credit of $23.40.
The team makes an additional $6 on top of that.
I call it triple-dipping on tickets: first the initial base price, second the force mark-up when the seller lists the price, and third with the additional 15% on top of that. In short, the team makes a minimum of an additional 30% or so on top of the money they already make for season tickets (TicketMaster adds an “Authentication and Reissue Fee) on top of it, so that’s how they get their cut). Now this gets really interesting for top road draws, like the Pittsburgh Penguins or Detroit Red Wings, and those percentages can go way, way up based on supply and demand. Also, since the seller is only credited on their account, no actual cash changes hands; that money can actually go into the vault to collect interest until it’s needed.
I think the comparison of legalized scalping is reasonable. The team’s still selling tickets over face value, though the market demand of a sold-out game has placed an unofficial price on the tickets. One way to look at it is that buying on Craig’s List or from a street scalper comes with a bit of uncertainty; you never know when you’re going to get a fraudulent ticket. However, with these tickets, you know you’re getting an official ticket that you can print out as a PDF from your computer—and you can even pick your seat based on the selection available.
It helps the rich get richer because teams with strong attendance (Minnesota, New York, etc.) can do this game-in, game-out rather than on the rare occasion when the Penguins come around. Teams that are struggling on at the gate don’t see any of this at all except for when there’s buzz around a certain game, either for a milestone event or a popular road attraction.
One of my friends once lamented that this was the inevitable destruction of pro sports ticketing but in some ways, it’s not necessarily much different than the teams that have placed “premium” prices on certain games. If the regular prices are sold out, you’ll have to pay extra to get in if you really want to go. The question is would you rather have that money going back into your team or would you have it going to a ticket brokerage company?
Filed in: NHL | Mike Chen's Hockey Blog | Permalink
Tags: Ticket+Prices,
Comments
Good write up. I wasn’t aware they required the seller to mark up the tickets a certain amount- that doesn’t sit too well with me. Artificially boosting market price (on top of an egregious TicketMaster fee, no doubt) pisses me off.
As far as only helping teams with good attendance, that’s true, but up to a point. For certain games, fans may want only seats of a certain quality (like lower bowl, for instance) and those tickets would probably only be available through a reseller, even if the team doesn’t fully sell out every game.
Posted by mepex on 11/16/09 at 04:03 PM ET
Nice post Mike…
I think the idea of having an online TicketExchange is great. It provides an easy venue for season ticket holders to sell their seats when they can’t/don’t want to use them… As well as an easy venue for ticket buyers….
The problem I have is what Mike calls “legalized scalping”. I think the NHL allowing teams, and thereby their STH, to charge whatever they want for these tickets is a terrible practice.
At the very most, there should be a limit put on the amount over face value for these legitimate tickets. Being authorized to overprice at will simply promotes scalping….
In my view, you want to make money, but the tickets on Ebay/Stubhub….
Posted by Tony from Virginia Beach, VA on 11/16/09 at 04:03 PM ET
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To me, the ability to print out right then a legit ticket is worth the mark up. No worrying about shipping tickets, etc… Sure there’s a premium… The alternative is watching the date tickets go on sale at the beginning of the year, and trying to get in the minute they open. I recently followed the Penguins road trip from Anaheim, LA, to San Jose and managed to pay face value for the first two games, and got the San Jose seats thru their Power Play exchange. Being that we were traveling, I wanted to have the tickets in hand or at the box office for every game. Stub hub wouldn’t have guaranteed that.
Posted by penguinsfan on 11/16/09 at 02:50 PM ET