StubHub and Major League Baseball have just renewed their agreement that make the eBay the official reseller for most of MLB’s teams. As Businessweek tells it, this has to date generally been a good deal for both sides (Why the New York Yankees Cry Foul Over Ticket Prices, Dec 11).
The league first joined with StubHub in 2007 through its Advanced Media wing, known as BAM. The marriage worked reasonably well. Ticket holders selling through StubHub could ask any price they wanted. And ticket buyers could access that market on team websites alongside the primary box office. StubHub skimmed about 23 percent off every transaction and sent more than half of that back to BAM, according to SportsBusiness Journal. The league, SBJ reported, has been reaping roughly $60 million a year from the arrangement. (BAM spokesperson Matthew Gould declined to comment on that figure.) Baseball helped StubHub recruit buyers and sellers. In return, teams profited twice from the sale of a single seat.
The interesting part here is that the deal only cover most of the league. Three teams — the Cubs, the Angels, and the Yankees — have opted out.
The trouble is that baseball teams have to worry about the feelings of season ticket holders. Paying $40 for a seat and then watching the one next to it sell for $2 can lead to some awkward questions when it comes time for buyers to renew. And according to ticket search engine SeatGeek, about two-thirds of Yankees tickets that sold on the secondary market last year went for below face value. “We believe there are serious issues with the StubHub relationship,” Randy Levine, Yankees team president, told the New York Post in June. “We are actively reviewing more fan-friendly alternatives for next year.” Translation: We want price floors. …
An unnamed source at the Yankees told ESPN that the team will be announcing a deal with Ticketmaster that is “more favorable to season-ticket holders.” Stubhub spokesperson Glenn Lehrman says the teams have “decided to create their own marketplaces.” It’s likely all three will employ systems like those used by many NBA and NFL teams, setting a limit on minimum prices.
Is the Evil Empire right? Are price floors really better for season ticket holders?
It is hard to see how this can be. There is an efficiency argument for having a designated ticket reseller. It creates an obvious place to go for tickets and thus brings more buyers to the market. If a season ticket holder is unable to make a game, this ups the chance of finding a buyer. Plus, the club’s stamp of approval should provide some assurance to buyers in the secondary market that they are getting genuine tickets.
Should a season ticket holder care if the person next to them got their seat for a lot less than what they paid? One often hears complaints like this about airline pricing. However, it doesn’t seem to make sense here. In the airline setting, cheap seats were sold because the airline chose to cut price. At the ballpark, if the guy next to me got the ticket for $2, it means that some other season ticket holder got his clock cleaned on that transaction.
An active re-sale market should benefit season-ticket holders. They commit to buying tickets for 81 games without knowing their complete schedule for the summer. Having an easy way to resell tickets they don’t need or want, provides some insurance and should allow teams to actually raises prices on season tickets. Anything that inhibits transactions is then a problem. As the Businessweek article notes, the preferred reselling partner is not going to monopolize the secondary market. Hence, there will be cheaper tickets out there if the preferred provider sets a price floor. And let’s face it, if your team is disappointing enough (says the guy who is number 78,175 on the Cubs season ticket waiting list), a pre-determined price floor is going to keep some transactions from happening. When we are talking about a late-season match up between teams that are completely out of contention, one should be happy to get what one can for tickets.