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Stub Hub and MLB Ticketing

2011 October 27
by Dennis Coates

This week’s issue of the Sports Business Journal has an interesting article about ticket sales for MLB and the relationship of the league to Stub Hub. Written by Bill King & Eric Fisher, A Second Look at Secondary Ticketing, suggests that some of MLB is not pleased with the way the secondary market has developed. The crux of the matter is that individual team’s are losing revenues on ticket sales because of the wide-spread availability of good tickets on the secondary market.

Consider a season ticket holder that does not intend to attend a specific game. They sell their ticket on Stub Hub, getting more for it than they paid but less than the buyer would have paid to the club had he or she gone to, say, the club’s online ticket sales. None of this is surprising, as that is the way secondary markets for sporting tickets often work.

Of course, when one thinks of secondary markets, scalping is often what comes to mind. King and Fisher write:

Once thought of as a place where fans could pay a premium for great seats at hard-to-crack events, the secondary market has revealed itself to be something far more worrisome to many teams: a flea market where buyers have their pick from thousands of seats to many games, often at prices that compete with, or even beat, the prices offered by the teams.

This wide availability of tickets of all types to many games means, possibly, that fewer season tickets will be sold, cutting into the revenues of the clubs.

The SBJ collected data on Stub Hub sales and discovered what they called two Stub Hubs.

there was the StubHub of the Giants, Red Sox, Chicago Cubs, Minnesota Twins and Pittsburgh Pirates,where more than 90 percent of tickets sold for more than their face price. Tickets for the rematch of the Giants’ National League Championship Series against the Philadelphia Phillies brought an average profit of 90 percent. Tickets for the Yankees’ visit to Fenway Park went for more than three times over face.

This is the traditional sort of scalping story.

And then there was the StubHub of the other two-thirds of the teams — the Los Angeles Angels, Houston Astros, Baltimore Orioles, Arizona Diamondbacks, Florida Marlins, New York Mets, Texas Rangers, Tampa Bay Rays, Colorado Rockies and Kansas City Royals — each of which saw upward of 69 percent of their tickets sell for less than the face price. More than 80 percent of tickets were under face for six of those 10 games.

This is the worrisome case for many MLB clubs.

A further interesting institutional circumstance is that Stub Hub pays MLB a portion of the fees it charges on the ticket transactions, and some of that money is rebated to teams. Nonetheless, the situation is considered significant enough that a top issue for MLB executives is a new Stub Hub deal.

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