Friday, May 29, 2009

Scalping Scalpers

NOTE: I no longer work for a ticket broker. However, I wrote this back in April 2008 when I did work for one, so that will explain the references to idiots willing to spend ridiculous prices for concert tickets and the last seasons at Yankee and Shea Stadiums. Ticket brokers have been in the news a lot recently over Bruce Springsteen concert tickets. They just can't seem to get it right. I say don't bother going to the concert if its going to cost you triple your rent, but what do I know. Fans are still going to want to be a part of history because Springsteen is the last act that will take place in Giants Stadium as we know it. Yes, they are building a new stadium in a recession. First, they were directing people to the secondary market where prices were hiked up and now three brokers who I am very familiar with are being sued by the NJ Attorney General for selling tickets a week before they actually went on sale. For those of you unfamiliar with how the secondary market works, ticket brokers will take your money for tickets they don't actually have. Just a heads up.

IN APRIL 2008...
"Scalping" has such a negative connotation. And I was once a ticket scalper. I used to buy tickets to major wrestling events hosted at the Garden and set up auctions on eBay. Highest bidder got the tickets. Sometimes I would mail the tickets (buyer paid the shipping costs) or we would meet in-person for the clandestine cash deals. Then eBay turned "righteous" and didn't allow auctions in which buyers paid a certain percentage over face value. I soon left the ticket reselling business.

Years later, I find myself working for a ticket broker in New York City during a time where buying and selling tickets off the secondary market is legal. Legal doesn't mean fair to some. There is still a backlash to reselling tickets; the term scalping is spit out with disdain. Ticket brokers are evil raping the "little guy" of his hard earned money. Recently, the extent of the perceived problem came to light during the Hannah Montana/Miley Cyrus Best of Both Worlds tour. Tickets were going for $1000 to see the teenage pop star. Unfortunately, many of the true fans were shut out due to the price. Why blame the ticket brokers? True fans (or rich fans, depending on how you look at it) were willing to pay those prices to see the concert. And it's a prime example of supply and demand. Once a concert is sold out at the box office, a fan's only option is to buy tickets on the secondary market. Supply is low, but demand is high. That fuels prices.

This season, both the Yankees and Mets are playing their final seasons at their respective stadiums. Fans will most likely pay exorbitant prices regardless of the team's record, just to say they were a part of history. The final subway series in Shea Stadium and the House that Ruth built. Boston Red Sox and the Yanks will battle it out Fourth of July weekend and in August at Yankee Stadium. Prices for seats with a face value of $65 can easily reach $300, earning brokers a profit of nearly 500%. Now the question remains, if fans, including the "little guy", are willing to pay $300 for a $65 ticket then doesn't that mean that ticket is in fact worth $300? Ticket face values will undoubtedly rise for Yankees, Mets, and SuperBowl Champions, NY Giants.

How do tickets to concerts and shows sell out within minutes? How do the brokers obtain those tickets? The distribution of the supply is undoubtedly one-sided. Although some brokers do use underhanded tactics, I quickly learned once tickets go on sale, most the staff at the company I work for responsible for stocking our inventory are hard at work snapping up what they can off Ticketmaster just like every other buyer. The pace can be frenetic. When tickets go on sale, shouts of "Buy!", "Sell!" and "Lock those up!" are heard all around. It's akin to the floor of the stock exchange. Purchasing particular tickets is like buying stock, it's an investment. And similar to short-term investors who sell stock when the market is high, the same goes for tickets. In the end, the victors' pockets are lined mightily.

America's economy is based on capitalism. Astute and shrewd businessmen (or women) tend to be the most successful. However, when a show or event flops, hundreds or thousands of dollars can be lost. This mercifully over and pathetic NY Knicks season is a prime example. Numerous times throughout the season, hours before a home game, courtside tickets could still be bought at an eighth of the $300 plus face value. Broadway shows are also part of the mix. Young Frankenstein, despite the marquee power of Mel Brooks, didn't do well at the box office.  For die hard fans, or folks who want a taste of Broadway, the ticket isn't worth the full face value.

In the world of ticket resales, the potential for profit isn't only in the hands of brokers. Season ticket holders and even the average Jane (such as my former self) can resell tickets for major profits to other fans or to ticket brokers. At the time I was a 20 year old kid trying to make a buck. Majority of the time, I had no intention of attending the event. I bought the maximum number of tickets I could get off Ticketmaster and minutes later set up my auctions. Profits all depend on the market; supply and demand.

One has to wonder how closely regulated the secondary ticket market will be. We are slowly entering the age of the "super broker." Ebay bought Stubhub for $310 million and has reclaimed its place in ticket resales. Ticketmaster acquired TicketsNow for $265 million largely in response to the acceptance of ticket reselling. What some fans may not realize is that all the tickets on Stubhub or TicketsNow don't just belong to other fans. Ticket brokers also sell their tickets through those websites. Professional sports have long been against the unlawful reselling of tickets, but now they realize, if you can't beat them, join them. Stubhub is the official Major League Baseball fan-to-fan marketplace.  Ticketmaster is the official reseller for the National Football League.

Are "scalpers" still lurking around arenas trying to sell tickets out of their inside pockets? I'm sure there are adventurous entrepreneurs still at large. And I don't doubt the problems of counterfeiting and/or double selling still take place. But the ticket is in essence currency. What you're willing to pay for it is the exchange rate. The determining factor of what a ticket is worth will always be determined by the amount the buyer is willing to spend.

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