Ticket Scalping

Those who re-sell tickets have long been known by the disparaging title of “ticket scalper.”  Yet ticket “scalping” (reselling) isn’t as easy or profitable as is often surmised.  Far from exploiting the public, ticket re-sellers provide a valuable service to both buyers and sellers of event tickets.  On this subject of scalping, I wish to make three points.

Scalpers wouldn’t exist if teams charged market prices for their tickets:
If a re-seller can buy a super bowl ticket for a face value of $400 from the NFL and immediately resells the ticket for $1,000, the $600 scalper profit is a gift from the NFL, which has priced its tickets too low.  If the market value of the ticket is truly $1,000 (as evidenced by the price the scalper receives in a voluntary transaction) only the NFL is to blame if they leave $600 on the table for the scalper.  The NFL should charge the entire market price ($1,000) for its tickets; after all, it is the NFL who is paying the players and putting on the show.  In this example the scalper makes more profit from re-selling the ticket than the team makes from fielding a ball club, but it is the team’s under-pricing of its tickets that creates the scalper’s profits.

Scalpers take risks and don’t always make a profit. Ticket scalping is most frequently defined as buying (tickets) for later sale at higher than normal prices.   That’s like saying that a gambler is a guy who goes to Las Vegas and comes home with a pile of money.  Gamblers lose often and so do scalpers.  On the north side of Chicago there are plenty of ticket re-sellers around Wrigley Field.  Some of them walk the streets, but others have retail offices near the park.  Scalpers purchase tickets from season ticket holders who can’t attend certain games.  Let’s say there is a 1:20 pm start for a Friday game with the Cubs facing the Padres.  Days before the event, scalpers buy $60 face value tickets from season ticket holders for $30 -$40, hoping to sell them for $60 or above.  The day of the game there is a thunderstorm and it rains heavily until noon.  However, by game time it clears up and the game is played.  On days like this, most folks change their plans when they see the rain.  They never show up on the streets and the scalpers sell some of their tickets for $20 and most of them never sell at all.  I’ve often purchased tickets on rainy days from scalpers at $10 or even $5.  On days like this a scalper can lose thousands of dollars.

Scalpers improve the fan experience at games. Let’s assume there are no scalpers and that all 60,000 fans at the Super Bowl have paid $400 (face value) for their tickets.  There will obviously be a lot of “fan enthusiasm” at this game, but the total amount of enthusiasm will be greater if 30,000 of the 60,000 people paid $800 per ticket from scalpers.  The $800 per ticket fans are obviously more excited to be at the game than the guys that sold their $400 tickets to the scalper.  I’d rather sit next to a guy that paid $1,000 for his ticket than some guy that paid face value. If you’re going to pay $1,000 for a ticket, you’re going to scream your head off!

This week in St. Paul the Minnesota Senate is going to conduct hearings on a bill that will guarantee the property rights of ticket holders to re-sell their tickets in any manner that they choose, whether they sell them on the street, to a neighbor, or conduct business through classified ads or over the internet.  Passage of this law will guarantee a free market for the re-sale of tickets in Minnesota.  What a glorious day that will be for those of us who enjoy sporting or concert events!

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