Given the number of empty seats on display during the typical pro sports event, arenas seem to be having a pretty tough time selling tickets. Still, one economist says arena box offices should consider a buy-back strategy so that they could sell the same ticket not just once, but multiple times.
The emergence of secondary ticket sales sites such as StubHub and SeatGeek has caused havoc—and a fair amount of bad PR—for venues that host sporting events with lackluster demand. We’ve reached a time when relatively few fans pay face value because the easy availability of tickets on the secondary market pushes prices up or down based on how much people are willing to pay and how badly sellers want to unload their unwanted seats.
Through the course of the long pro basketball season, and the even longer pro baseball season, plenty of games come across as boring, perhaps meaningless, from the fan’s perspective. The prices in the online resale market demonstrate just how much fans “value” these games. See: NBA seats for $1 and MLB tickets for a measly 1¢ (before fees are added on).
An obvious devaluing takes place when a product is resold for a fraction of its original list price. Pro sports leagues, franchises, and arenas hate the idea their product isn’t worth full price. (They even have the gall to suggest $8.75 is a reasonable price for a Bud Light draft, so long as it’s drunk in a place where some of the world’s top athletes play.) What’s more, the system can leave season ticketholders—their absolute best customers—with a bad taste in their mouths, wondering why in the world they paid full price when the guy in the next seat paid one-tenth of face value.
Jeff Ely, an economics professor at Northwestern University, recently suggested that the online ticket resales market 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 chance:
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.
The box office shouldn’t bother purchasing seats if they are near or above face value, but instead “buy the tickets priced so low that they are worth the risk,” according to Ely. He also said that season ticketholders would love such a system—and even be willing to pay more for their seat packages—because “they know they can easily resell their unwanted tickets.”
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Meanwhile, the venue benefits supposedly because it would essentially be able to sell the same ticket twice, or hell, maybe three or four times, potentially turning a profit each and every time the seat is flipped. If this concept is such a slam dunk, why aren’t arena box offices doing this already? We reached out to Ely and asked just that.
“I honestly don’t know why they don’t do it,” he replied via e-mail. “Some programs even have formal relationships with StubHub effectively using StubHub as their ticket office. But as far as I can tell, they sell but don’t buy. I expect this will change eventually.”
The folks at StubHub—who are hardly unbiased on the matter—have a different perspective. Arenas aren’t in the business of buying cheap tickets and reselling them at face value largely because consumers often just aren’t going to pay face value. “If fans were willing to buy at box office prices, then sellers would price at such,” Athena Makish, StubHub’s head of analytics, explained when asked to respond to Ely’s theory. “Sellers are smart – they create an efficient market in most cases.”
What’s more, while any venue would love to “corner the market so that the box office can set price at whatever it wants,” doing so would be next to impossible in the real world, according to Makish:
So, would this actually work in reality? Well, how does the box office know that it has bought all the supply? It’s not possible and, as such, the box office would never really be able to price much higher than the price that exists on the secondary market (both online and on the street).
For the time being, this means that you can look forward to more of an active and dynamic secondary market for sporting events tickets, sometimes with seats going for $1 or mere pennies. Not that you’d really want to go to those games anyway.