December 11, 2012

Dynamic Resistance

Three big market Major League teams opted out of the new StubHub deal because their season ticket holders felt ripped off.

“Consumers aren’t dumb,” writes SeatGeek spokesperson Will Flaherty in an e-mail. “They’ll flee to the lowest prices, wherever those are.” He points to ticket pricing for the New York Jets football game against the San Diego Chargers on Dec. 23. The Jets resale service, run by Ticketmaster, sets the floor at $125 for lower-level end zone seats. Elsewhere on the Web, tickets in the same section are going for half as much. Any season ticket holder with internet access can see this. You might think that the Yankees, the team with the highest payroll in baseball, would recognize the futility of standing in the way of market forces and perhaps move to dynamic pricing. You’d be wrong.

The price information from the secondary market tells season ticket holders they can get a better deal, which should drive down prices as either fans refuse to buy or negotiate a better deal. That could mean a huge loss of funds. Of course, in years when the team is in high demand, this can work very much in favor of the team. These big market clubs shouldn’t throw those signals away.

2 thoughts on “Dynamic Resistance

  1. Tim

    I had season tickets to the Texas Rangers the last three years, and StubHub is a major reason we didn’t renew this season. It’s not so much the secondary market value per se, it’s the 25% service charge that StubHub and MLB charge that affects the secondary market.

    I’ll try to explain using some examples:

    Say it’s late August. It’s hot in Texas and the Mariners are in town for what seems like the 10th time already. If you have 2 $42.50 seats (like we did) and don’t want to go, the seats have to be listed for $110.00 total for you to break even. (15% buyer charge, and 10% seller charge). So, for me to just get back the $85, I have to list the two tickets for $25 over list value.

    Well, unless it’s dollar hot dog night or Friday fireworks night, that isn’t going to attract a buyer. The buyer can just go to the box office and see what seats are available.

    OR…

    If the buyer simply waits long enough up until game time, the BOTTOM falls out of the secondary market! Often, our $42.50 seats would go for $10. There are also tons of seats going for the $5 minimum. Because you don’t have to arrange for shipping ahead of time with StubHub, you can make transactions very close to game time. I like the convenience of this feature, but there are some unintended consequences.

    Oh, and if the Yankees are in town and you can get $200 for those seats? Stub hub lists them for $220. Then you get $170, stub hub gets $25 and MLB gets $25. So they’ve charged me $6,885 plus tax for season tickets in November, and then they make money again on the re-sale. In fact, on games that go for over market value, we almost never re-sold them on StubHub.

    MLB needs to consider the effect of the %25 surcharge on the already nebulous “value” of tickets. Season ticket holders shell out a lot of money on the front end and provide teams with security and cash flow. Punishing season ticket holders by 25% on resell and taking money back on tickets they already sold to me drove this season ticket holder away.

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