Wednesday, December 10, 2008

More on Using the Airline Model of Pricing to Price Tickets 

Matt Phillips at a Wall Street Journal blog called "Middle Seat Terminal" takes up this TSE post on the San Francisco Giants using the airline pricing model:
Granted this is just an experiment, and maybe selling seats in a stadium isn’t radically different from selling seats on an airplane. But with technology developments such as RFID — radio-frequency-identification chips that, among other things, let retailers and warehousing operations keep close tabs on inventory — you wonder how far “dynamic pricing” could extend into our everyday lives. Someday, will the grocery store raise the price of bananas based on how many fruits remain on the shelf? Or will the bus driver charge a different fare depending on how many riders are aboard?
Technology has already changed how teams view scalping. Now that they can get a piece of the action with scalping, the secondary ticket market doesn't look like such a bad idea now. What's next in store for ticket pricing?

Cross posted at Market Power

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Wednesday, October 01, 2008

Football in Dixie 

After my futile attempt to secure tickets to the USC-Ohio State game (Ticketless Trojan), a friend passed along a copy of Dixieland Delight: A Football Season on the Road in the Southeastern Conference. It's not exactly Grisham or Faulkner but provides insightful and humorous observations ranging from the pre-game culture and rituals to comments on "Bama Bangs" (male adolescent hair styles of AL fans). On funny excerpt on the relative confidence-insecurities of Georgia fans in the run-up to the 2006 Tennessee game in Athens :
"... as we cross the campus a Georgia fan approaches me and syas, "I just want to go ahead and congratulate you on kicking our ass." Then he shakes my hand. The Georgia Bulldogs are the defending SEC Champions, yet, based on their fans, you'd think that they were Vanderbilt about to kick off against the Chicago Bears."
DD's author, Clay Travis, relates ticket purchasing experiences on gameday on each campus. In all cases, tickets were available. In seven of the eleven cases with data (AL-AU seemingly not provided), he secured tickets at or below face value (UK-GA, Ole Miss-MSU, VU-SC, AR-AL, MSU-AU, TN-Cal, LSU-UK) and one slightly above (AU-LSU). The games substantially above face value include GA-TN, SC-TN, FL-SC. The ease of tickets at quality games (AR-AL) or rivalry games (Miss-MSU) likely owes itself to the size of the stadiums relative to the fan population base. Highest price (GA-TN at $100/ticket) involves high quality teams with relatively close proximity, relatively close to the South's largest metro area. Of course, the availability of tickets leads back to my question of the lack of them at the Trojan game. (Additional insights on ticket markets appears in the Boston Magazine, quoting one of the sports econ crowd, Craig Depken.)

DD also draws out socio-economic and cultural contrasts to my USC adventure. Twenty- and thirty-somethings dominate the USC fan base. I would estimate fewer than 10% were older than me (47) with hardly any below college age. In contrast, from both my experiences and Travis' book, the SEC demographics include a much wider dispersal of ages both on the low and high ends. Why such a difference? The SEC v. USC games reflect differences that others have noted about places such as Chicago's U.S. Cellular Field versus Wrigley Field (affluent 20s and 30s). No doubt, the alumni base from a relatively small private institution differs from that of large, public institutions in terms of affluence, and this may but why the age differences?

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Tuesday, September 16, 2008

Ticketless Trojan Game 

I've had an longtime fascination with gameday ticket resell, not just the analytics and systematic data study but in a "hands-on" way -- I guess you could call it "behavioral" research. Various friends and I have attended FSU-Miami (91), Auburn-Alabama (Birmingham), Auburn-Florida (Auburn), TN-Arkansas (98), Texas A&M-Baylor (College Station), Ohio St.-Michigan (Columbus), Michigan-Penn St. (Ann Arbor), plus odd assortment of Arkansas, SMU (pre-death penalty), UK, and Vandy games without tickets in hand. The only "shut out" was the Notre Dame-FSU game in 93.

Differences in ticket prices at various NCAA football games tend to follow supply and demand in predictable ways with game quality, stadium capacity relative to the population of the market highly influential, and local resale restrictions and their enforcement highly influential. In recent years, tickets can be secured via online brokers, but the expiring option nature of a ticket frequently means lower prices closer to game time -- the actual process of this price movement is interesting to observe if you aren't too concerned about seeing the kickoff.

The availability of ticket sellers is a different matter. In places such as Ann Arbor, Knoxville, Auburn, Birmingham, or College Station gameday resale comes close to an organized exchange in volume of tickets for sale. The price varies, depending on the game's characterisitcs but ticket sellers abound. At places like Columbus or Florida State where (when I visited) resell restrictions were in place and modestly enforced, resellers existed but in much smaller numbers and with less obvious marketing. This makes sense.

That brings me to last Saturday and my head-scratcher. My family and I drove to campus very early, hung around until near game time, and canvassed the campus and Coliseum area. In total, we saw 3 tickets openly marketed. I also observed two others being sold. According to sources that I had consulted, local authorities sometimes discourage resell near the Coliseum, but not on campus. In fact, the tickets that I observed being resold were near the Coliseum in full view of strolling police officers. So why so few tickets openly marketed? The online sites posted a large number of tickets as late as noon on Saturday. Any ideas in the Sports Economist world?

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Wednesday, December 12, 2007

Electronic Ticket (Re-)Sales 

TMQ's Gregg Easterbrook, after a sensationalized introduction, asks an interesting question:
On Monday, sellers on StubHub were asking from $750 up to a rather comical $164,710 for tickets to the Ohio State-LSU game (the latter price is for a prime luxury-box seat). The season finale Giants-Patriots NFL game might be historic; on Monday, sellers on StubHub were offering tickets for $200 up to $26,000, depending on seat location or box quality. Once the NFL playoff pairings are known, scalper Web sites will come to life for those contests, too. The asking price is not always the selling price, of course. But bowl committees and NFL teams must be saying to themselves -- if these seats really are worth hundreds or even thousands of dollars on the free market, we should be the ones pocketing that scratch. How long will it be until professional teams cut out the middle person and simply auction off tickets for whatever the market will bear?Any day now, the NFL is expected to announce a deal to affiliate all its teams with one online reseller, probably Ticketmaster or StubHub, formally acknowledging reselling as legitimate and bringing the NFL an expected annual fee in the $20 million range. This might be just the first step in converting sports-ticket selling into StubHub World.
If one thinks of tickets like shares of stock, it is unlikely that franchises will initially place 100% of each season's seats by an electronic auction mechanism. But what percentage will be "placed," and what percentage will be auctioned?

I think rich people in particular are willing to pay to sit in the same spot ("their" seats in some sense) near others that they recognize. The latter component may be modest, but it might also account for the some of the interest in prosecuting scalpers in the old days. Legal reselling increasingly puts that component at risk. This is a stretch, but one way of interpreting laws against scalping is that clubs didn't mind you selling tickets to your friends, just any old high bidder.

One can debate the purpose of anti-scalping laws, as the economic literature has done for some time without a clear resolution. But what is clear is that electronic exchange mechanisms are leading to the repeal of these laws. The rise and fall of scalping laws is an interesting question in political economy. Easterbrook's piece provides a few useful anecdotes in that regard.

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Wednesday, November 28, 2007

Ticket Scalping in Missouri - Now It's Legal 

In Missouri, ticket scalping at prices above face value is now legal..

And there was some rejoicing (and economic development???).

To wit: Hal Wagner, owner of Ace Sports & Nationwide Tickets at Oak Park Mall, already has opened a location at Independence Center.

“We’ve been waiting for that ridiculous law to be repealed,” said Wagner, whose company buys and resells tickets at prices that exceed face value. “This is a great, great thing for Missourians.”

But ticket scalping was still illegal last weekend when the University of Missouri and the University of Kansas met in Kansas City to determine the Big XII North champion in football. But you wouldn't have known it had you looked at the vigorous secondary market in tickets around Arrowhead Stadium.

Before the Border War on Saturday night at Arrowhead, there was the Price War in the parking lot.

“Tickets! I got tickets!” a man named Bill yelled as cars crept by him on the way to the MU-KU game. “Two tickets, $600!”

One week before a new Missouri law will kick in legalizing ticket scalping at sporting events, scalpers like Bill, who declined to give his last name, combed their way through the crowd. Tickets with a face value of $30 to $55 sold from $100 to as much as $400.

“This is a day to make money,” he said.

Underpriced tickets create opportunities for scalpers. As I've written before, event tickets are priced with an eye towards expected demand and are oftentimes set months in advance. No one can throw anyone under the bus for underpricing this particular event. Who'd have thought, coming into this game, that MU and KU would have been ranked 4th and 2nd respectively in the BCS ratings with one loss between them and with both schools sporting national championship hopes? Not I, said the fly. The Missouri Tigers, with all their returning talent, had not had many Novembers to remember recently. The Kansas Jayhawks were coming off a 0.500 season in which they were not invited to a bowl.

The beauty of legalized scalping is that it allows tickets to go to the people who value them the most and it allows more information to be used in the setting of ticket prices. But the first article notes that scalping today has some new problems.

Missouri Attorney General Jay Nixon recently cracked down on ticket brokers, suing three of them for scalping tickets to an upcoming Hannah Montana concert at the Sprint Center. Nixon later asked for a temporary restraining order against an Illinois broker who was selling tickets to the recent Missouri-Kansas football game at prices well above face value.

“Unfortunately, the elimination of this consumer-protection tool has come at a time when the ability to take unfair advantage of consumers has grown significantly through the Internet,” said Nixon spokesman Scott Holste.

If he's talking about the ability of scalpers to snap up loads of tickets when they first go online, what amounts to butting into a virtual line, that's not the fault of scalping per-se. You can argue that legalizing scalping increases the benefits from butting-in, but it's not scalping that is the root cause of this problem. It's the butting-in.

If you are cooking a turkey and you realize you might burn your hand, you don't throw away the food to keep from getting burned. You take other precautions to keep from getting burned. Why ban an activity where people engage in voluntary trade when the problem lies elsewhere?

Why not ban computers? Technology has lowered the cost of butting in, so if you make an argument that scalping should be banned because of the butting in, you can make a similar argument about banning computers.

Of course banning computers is not the optimal solution, but neither is banning the secondary resale of tickets above face value.

(Cross-posted at Market Power)

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