OT: Ticket prices

Submitted by Maizerage11 on December 10th, 2017 at 9:02 PM

A recent freakanomics episode shed some light on ticket pricing, and I thought this would be of interest to the board.  The epsiode was not specific to sport events, but I think the main message applies.

 

Problem: Most venues sell ticket prices below market value.  The reason for this is fan outrage at high ticket prices (yes, I was very mad at dave brandon).  However, the difference between the market value of tickets and the actual value goes to secondary brokers and scalpers  (many people are willing to pay 100s for OSU ticket).  Many companies operate bots that purchase large sums of tickets, and then resell tickets on sites like stubhub.  These companies make a lot of money without adding a lot of value to the consumer or revenue to the production company (MI).  

In the episode there is an example where the Rose Bowl sold 1000 tickets, and one company (TicketWise) used bots to buy 830 of the avialable tickets.

 

Possible Solutions:

1) The way the athletic department gets around this now is by paring high value tickets with lower value tickets ( e.g. a package of OSU, Air Force, and Cincinatti).  This solution works well for venues trying to offload low value tickets and high value tickets.  However is ineffective if there are a large number of high value tickets.

2) Auction style.  All tickets are auctioned off.  In this case, Michigan would get a fair market value for all of their tickets and is not responsible for setting ticket prices, which may reduce fan anger towards them.  However, this method creates a socioeconomic devide on who can attend games (atleast state fans would never get tickets).

3) No resale of tickets.  If you buy a ticket, its because you want to go to the game, so go to the game.  This method allows ticket prices to remain "low", and keeps 3rd parties from making a lot of money of of Michigan sports.  However, if you buy tickets and can not go to the game the consumer has no recourse for selling tickets.  Also, may be empty seats especially for the Rutgers games.  

 

Personal opinion:

I like the idea of using a combination of 2 and 3.  Sell some portion of tickets at a low price, but with the condiiton that they can not be resold.  Sell the rest of the tickets to the highest bidder to maximize profit.  

 

What say you MGoBlog?  Do you like the system as is?  Do you like one of the proposed solutions?  Do you have a better solution?

Comments

clarkiefromcanada

December 10th, 2017 at 10:29 PM ^

I'm a season ticket holder and I'm of the opinion that we're edging close to top dollar.

That is, I think the least expensive pair of seats plus PSL (I mean "donation") at the stadium this past year would have been around $1200 "donation" accounted. For a family of 4 that's now $2400 for the year. Now, add in your gas, parking, tailgate, a few beers, buy the kids some Jordan gear every year and you have some costs.

To be clear, they've got me at Michigan. They are getting my money but what I described is the most reasonable costing outside of TicketWatch (helpful when you bring a few more people). I think for a lot of people that would be close to top dollar.

The Mad Hatter

December 10th, 2017 at 10:44 PM ^

We see so much red in the stadium for The Game. Fans can sell the tickets to one game and recoup some serious money, making the cost of attendance much lower for the other games.

This is one reason I'd like to see a stadium expansion. Put in a second deck, level with the luxury boxes, and make those the cheap seats. $25 per game or something.

CarlosSpicyweiner21

December 10th, 2017 at 9:14 PM ^

Easy solution is to provide a venue app. This is where people can sell their tickets with no to little fees. This would be the only venue for buying tickets on a secondary level. It would also kill scalping as tickets are to be sold at face value plus the original fees you paid, or less. This way at the least you can recoup all your money. The scalpers are gone because their is zero profit to be made.

Ron Utah

December 10th, 2017 at 9:38 PM ^

No. I don’t want football (or any other sport) only accessible to the wealthy. Freakonomics is great information, but they are missing the point: tickets are underpriced to help more people afford them.

The real solution is to make the bots illegal and devise a system that does not make scalping so easy.

J.

December 10th, 2017 at 11:45 PM ^

Tickets are absolutely not underpriced to help people afford them. That's borderline ridiculous.

They're not underpriced at all, in aggregate -- they're overpriced for the least desirable seats and underpriced for the most desirable.

Sports teams have managed to do two things by protecting the secondary market.  #1 -- they reduce inventory risk, as they're able to pass on tickets to third parties to sell for them, and #2 -- they contribute to the illusion of scarcity.  There are tens of thousands of tickets to every Michigan game.  The secondary market prices are high in part because only a few of those tickets are made available.  If every ticket in the stadium were available on an auction basis, the prime seats for good games might be very expensive, but the get-in-the-door price would be consdierably lower than the secondary market can manage today.  Michigan benefits greatly from the high secondary market prices, as it may convince people to purchase season tickets in the future in order to avoid being "scalped" for the game they want to attend.  There's a reason that anti-scalping laws are rarely enforced (besides the questionable legality of post-purchase sale restrictions in the first place).  They're very good for the seller.

The vast majority of the tickets to Michigan Stadium are sold either as student tickets -- with an artificial discount made as part of a long-term investment in the students' passion -- or as season tickets.  These season ticket holders are then "asked" to "donate" to the athletic department in order to get better seats, in very much the auction process you're advocating.  It's designed this way specifically in order to allow "the wealthy" -- who, along with friends and family, already make up nearly every non-student attendee at a game -- to get the US Treasury to subsidize the ticket costs.

Keep in mind: not only does it help to be wealthy in order to be donating to a university's athletic department in the first place, but itemized deductions are rare until you get to the upper middle class.  The entire system is set up to benefit the wealthy.

If event organizers wanted to "help people afford" tickets, they could easily do so by destroying the secondary market the same way that the airlines did -- eliminating name changes on tickets and requiring ID.  Then, you can go in and start to offer discounts -- kids' tickets for 10% of face or something.  This will never happen because that was never the point.  And, if lawmakers wanted to do something to reduce prices, they'd eliminate tax deductions for athletic programs, which would severely reduce the appeal of the "seat donation" game.

Whenever a businessperson tells you that they're doing something for your benefit, they're frequently stretching the truth.  Dave Brandon may no longer be at Michigan, but he was hired because the University of Michigan Athletic Department is a medium-sized business, not an adjunct of the university itself.  When Michigan tells you that they want to keep ticket prices low, it's because it's good marketing, not because it's true.  I mean -- they could sell the tickets for $10 each.  They could include concessions with the price of the ticket.  They could require that the M Den sell at cost during sporting events.  The fact that they do none of these things should tell you what the truth is.

You could make a legitimate business argument for child/family tickets, and it's the same one that explains student ticket prices -- you're fostering long-term loyalty.  Unfortunately, few businesses are operated with a view beyond the next fiscal year, and sports are certainly included in that.

In reply to by J.

Tex_Ind_Blue

December 11th, 2017 at 11:28 AM ^

Eactly this. Sometimes I wonder whether the Sports Venues are built just to sell overpriced beer (various "lites") and overpriced merchandise. The sports are just something to keep people occupied while consuming those food wearing those jerseys/caps/etc.

pinkfloyd2000

December 10th, 2017 at 9:48 PM ^

...won't even compare in terms of price to 2019. 2019 will feature ND, Michigan State, and Ohio State as home games. While I love that in terms of the actual schedule, that's gonna leave a bit of a mark in the ol' pocketbook.

That said, I talked to my Ohio State buddy (yeah, I know) about ticket prices at the Shoe, and he was relaying premium game prices (they have a similar "tiering" system) that were quite a bit more than we pay.

We both agreed that prices are getting way out of hand.

lilpenny1316

December 10th, 2017 at 10:01 PM ^

It's much easier and cheaper for me to watch the games with my friends and family at home.  Going to Michigan games usually had me wiped out the next day with all the travel and events surrounding the game.  I can watch all the games at home and get up early the next morning ready to roll.

If prices were lower, I'd consider attending more games in person, but right now my pocketbook keeps me home.

ppToilet

December 10th, 2017 at 10:33 PM ^

What exactly are we trying to solve here? Make more money for the athletic department? Do you think PSDs would go away or go down? I think the real goal should be to maximize attendance and season ticket holders.

If the problem is the brokers/bots, then there are ways to limit their ability to play the game. But I might argue that those agents help prop up the price of tickets. For the season ticket holder, the big thing is you want value from buying your tickets as a package. If the secondary market collapses, you'll lose season ticket holders.

Ultimately, the best plan is to field a great team year in and out. This increases the number of season ticket holders, which increases PSDs and likely decreases reselling. Without studying it, I would surmise this has happened with Harbaugh as coach.

Tex_Ind_Blue

December 10th, 2017 at 10:54 PM ^

Ticket prices don't exist in a vacuum. Lower ticket price entices more people to come through the door and spend money inside the venue. $12 beers, $15 hotdogs and $100 shirts and trinkets. Gate receipts is not the biggest moneymaker or margin maker. If a venue/agent raises the prices to maximize the revenue from the ticket sales, the ancillary items will decline. I don't think the powers that are will be happy if that happens.