NFL Football Week 16 – The Great Ticket Monopoly
“Tickets!! Get your tickets!! The NFL has expanded it’s interest in the ticketing business by asking it’s existing partner in primary ticket sales to handle the ticket resale business as well. Starting with the 2008 football season, the company called Ticketmaster‘ will be the NFL’s official ticket resale service, which would be used by sports fans who have previously bought tickets to an NFL game (or games) but now want to sell them to other fans. According to Eric Grubman, executive VP of the NFL, “…fans demand more creative opportunities to experience our games. We will now be able to meet their expectations with our safe, consistent and guaranteed service.”
The new service would be accessible through the Ticketmaster website as a feature called ‘TicketExchange’ and would also be linked directly from the NFL’s own website.The terms of the arrangement between the NFL and Ticketmaster (henceforth called ‘TM’ in this article) have not been disclosed, but it’s been reported that the corporate megalith, nicknamed ‘Ticketbastard‘ by thousands of disgruntled users, will pay about $20 million to the NFL in return for the league’s endorsement. All 32 pro football teams have reportedly signed on to this concept even though many of them already have existing contracts with other online ticket selling services. TM will apparently become the ticketing agency for these teams too as soon as the old contracts expire.
Pro football teams offer tickets for sale well in advance of the actual games, often at below market prices for a couple of reasons. First, there is no way to be absolutely sure how popular any given football game is going to be; by selling early and at a fairly low price the franchise sells more tickets and avoids the risk that tickets will be unsold due to lack of interest, usually caused by lackluster performance on the football field. The other reason, probably the main one, is that unless an NFL team sells all the available tickets to a home game, the league rules prevent the game from being shown on television. This practice, called a ‘game blackout’ causes the team to lose out on lots of money that they would otherwise get by selling the broadcasting rights to a TV station or other provider.
What happens many times as the date for an NFL game draws closer however, is that a lot of people suddenly have the urge to attend a game and they start hunting for tickets. For reasons mentioned above the game will probably be sold out, and searching your teams’ Internet website reveals that no more tickets are available. That is to say, no more tickets are available at the original selling price. But there are lots of tickets available, many of them in prime seating areas, as long as you are willing to pay a price much higher than the original face value of the ticket. Welcome to the lucrative ticket resale market.
The law of supply and demand has created a whole industry of reselling tickets, more commonly known as ‘scalping’. And although the term may have a negative implication, ‘scalpers’ are simply taking advantage of the opportunity to make a profit that is created when the original tickets are sold for less than (some) people would be willing to pay for them. Some states still have â€œanti-scalpingâ€ laws on the books but in recent years more and more of these laws have been repealed as legislators realize that the simple functioning of a market driven economy for the resale of tickets is best left to flourish or wither on it’s own merits.
Gone for the most part however are the days of being accosted by a hygienically challenged individual waving tickets at you outside the stadium – the advent of the Internet has made the process of buying and selling tickets quicker and easier for the average person and has spawned a number of websites who’s popularity has exploded over the past several years.
One of these websites, called ‘StubHub’ is an online marketplace where holders of NFL tickets can put those tickets up for resale on the open market. StubHub, which was recently purchased by eBay, was only one of several websites that were chasing the NFL ticket resale contract that eventually went to TM. StubHub has the lion’s share of the resale market right now, but with the landing of this NFL deal TM hopes to move towards domination of the ticket resale market in the same way it has dominated primary ticket sales nationwide for more than a decade.
So, is the Ticketmaster deal with the NFL really such a bad thing? Well, it depends.
TM will essentially be doing the same thing that StubHub and similar sites do now, but it will do so with the NFL’s public blessing. The advantage to the NFL is that they will have a share of the profits from this huge business. They will also have some measure of control over the way the ticket reselling occurs, as individual NFL teams can require that the deals which take place at TM involving tickets to games in their own stadiums are carried out in compliance with that teams specific requirements for reselling. The advantage to TM is that it will become the official ticket reseller (eventually) for every team in the league, and that it will gain exposure and traffic from it’s affiliation with the league.
The advantage to resellers and buyers of tickets, at least as stated by the NFL, is that a â€œsafe, consistent and guaranteed serviceâ€ would be provided to the fans. More than anything, what they are offering is an assurance that the tickets you buy at the TM website are guaranteed to be legitimate. One of the obstacles that online ticket resale sites had to contend with early on was the fear that buyers would lose their money on tickets that were not authentic. That fear has been greatly reduced in recent years by the honest operation of sites like StubHub, but to have a stable corporation like the NFL standing behind the guarantee is expected to be a major factor in where people decide to go to buy tickets.
The most ominous potential outcome however of the merger between TM and the NFL is the spectre of a TM monopoly over ticket resale. TM is a company that sells close to ninety percent of tickets to events in the US that are held at large venues like stadiums, concert halls and the like. They have become so large and so powerful that they, not the owners of the buildings where these events take place have dictated the terms of ticket pricing and distribution.
TM signs exclusive agreements with the largest facilities in any given city, places where performers must go to have the best chance at a successful event, and then threatens to sue these facilities if they sell tickets using any method other than TM. Naturally, with no competition TM is free to levy exhorbitant surcharges and â€œconvenienceâ€ fees and to thumb their nose at anyone who complains about it.
TM has even sued StubHub for providing a forum in which to sell tickets, saying that StubHub is â€œincitingâ€ people to violate the terms of TM’s exclusive contracts. The ruling on that case does not appear to have been handed down yet, but it seems ludicrous to believe that people could be found liable for violating the terms of a contract to which they are not a party.
Unfortunately the US Justice Department seems to be in bed with these guys. Recent attempts to indict TM on antitrust violations have failed at the highest levels of government â€“ get this â€“ not because the judges think that TM hasn’t broken the law, but because the ticketholders who brought the lawsuit â€œdid not buy anything from TMâ€. Apparently you as a ticket buyer cannot sue TM when they monopolize the industry with jack-booted thug tactics and then rip you off for outrageous charges, because they are only an â€œagentâ€ for the owner of the concert hall or stadium who is actually the one selling the ticket. TM is the one who is extorting these criminal fees however, and justice must truly be blind not to see that.
Many fear that what the NFL actually aims to do is take complete control of the ticket resale market and all the wealth attached to it by restricting the number of places that people can go to buy NFL tickets and ultimately forcing everybody on the planet to go to Ticketmaster if they want tickets to pro football games. If that happens, TM and the NFL will be free to gouge the public any way they see fit, and it will be just one more victory for corporate greed and one more screwing of the common man.
But as long as companies like StubHub exist that allow alternate means for fans to resell their NFL tickets, the market forces will naturally cause Ticketmaster to either offer a service that people want at a reasonable price or risk losing their business to the competition.