Online Secondary Ticket Markets Can Be Good for Teams and Fans

Michael Giberson

The secondary market for tickets to sports events is hot. Once upon a time the market was a bunch of guys standing curbside waving tickets in the air. Or, depending on local antiscalping laws, making furtive eye contact and calling in a low voices. There were brokers, too, for the more upscale crowd.

Then came eBay and Craigslist, then StubHub and others, and even Ticketmaster is in the resale business. A New York Times story provides an update, reporting on Flash Seats, an online ticketing company purchased last year by Cleveland Cavaliers owner Dan Gilbert:

Flash Seats allows sports teams to exert total control over who fills their seats, and to fight back against sites like Craigslist, eBay, TicketsNow and StubHub, which have transformed the shady world of ticket scalping into a $3-billion-a-year business.

Those sites have pushed ticket reselling far beyond the reach of professional sports teams, entertainment arenas and the local police as they try to enforce state antiscalping laws. Now teams like the Cavaliers have conceded the inevitability of ticket exchanges and are creating their own — and, in some cases, taking a lucrative piece of the pie.

In general, this competitive frenzy is good for sports fans and good for the teams. We’ve blogged about secondary markets for tickets before, and I stand by our earlier points:

From “I, For One, Welcome Our New Ticket Overlords“: “Having ‘officially sanctioned’ secondary markets can be a good thing … The designation of a particular secondary market will help coordinate buyers and sellers who would otherwise more likely be dispersed over multiple marketplaces. Bringing them to one place should facilitate trading and reduce the bid-ask spread. Such a market can be more efficient.”

From “Secondary Markets for Tickets“: “Increased liquidity in the secondary market reduces risks to season ticket holders and will increase the demand for such packages.”

Also from “Secondary Markets…“: “Of course the ready availability of a secondary market is going to dampen the supply for one of the perks of working in a large office: the Friday afternoon email from the VP with tickets to the weekend’s game that he can’t use. Now he’ll just resell them on Stubhub.”

Also still interesting to me is that this online retail space remains contested. In “Ticketmaster Ticket Auctions, The Competition, Prices,” I wrote:

The main difference between the stories [one in USA Today and an older one in the New York Times] seems to be that, in the older article the ‘other guy’ was eBay, while in the newer article the ‘other guys’ are StubHub and RazorGator. This is a difference that I find interesting. In the heavily networked world of online commerce, I thought first movers were supposed to be big favorites. In any case, shouldn’t we see one market emerge, not two? But here we have Ticketmaster, no stranger to stitching together various interests and putting itself at the indispensable center of things, fighting alongside eBay against a couple of ticket market upstarts.

EBay decided the best way to fight StubHub was to buy them, consummating the deal in January of this year. Ticketmaster has pursued another tactic: in April it sued StubHub for “interfering with [Ticketmaster’s] agreements with clients”

A key factor in keeping this space contested has been the sports teams control over terms and conditions of initial ticket sales and performance venues, which allows them to muscle into the market once they decide to do it. As long as teams don’t insist upon being the sole controller of the secondary market, the development can be good for fans.

Again from “I, For One, Welcome…“: “It is one thing to observe that having a dominant place to trade can be a good thing for consumers and quite another to assert that, therefore, it should be illegal to trade on any site not officially sanctioned. Stamping out the competition will clearly benefit the secondary market operator — increasingly this is Ticketmaster — but likely at the expense of consumers and not to their benefit.”

On these grounds I’d be reluctant to support the New York Yankees, the New England Patriots, or the Denver Broncos, all of whom seek to prevent fans from reselling through any other means than the team-sanctioned site. According to the Times, “The Patriots … revoked the tickets of 52 season-ticket holders who sold their seats on StubHub.” And they, too, sued StubHub. These are not fan-friendly actions.

(See also Lynne’s post, “Moving from Posted Price to Auction,” in which she wonders why tickets even have a face value printed on them anymore.)

3 thoughts on “Online Secondary Ticket Markets Can Be Good for Teams and Fans

  1. Still More on Secondary Ticket Markets: “Scalping Goes Upscale”

    Michael Giberson If my post of last week didn’t sate your interest in economic commentary on secondary ticket markets, here is a much longer piece put out by the Arizona State University business school: “Scalping goes upscale: The secondary ticket…

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