February 12, 2004

Breaking Balls

Mailbag Fun

by Derek Zumsteg

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Last week's column got some fine feedback. Let's get right to it:

Pricing

I guess this is starting to happen everywhere but in different degree's [sic]. The Lakers this year set up TicketMaster accounts for all their season ticket holders to sell (scalp) our season tickets. Good in that they take no cut so when some fool pays me 500.00 for 180.00 worth of tickets I get the full 500.00. Except that it only goes toward my Laker account and I can't get cash. I love it in that I don't have to go to Ebay or on the street to sell the tickets and it works for people who want to buy tickets but not carry 500-1000 cash with them to a game for what may or may not be a valid ticket.

-- PG

This is the greatest thing ever for the fans for a number of reasons:

• The poor sap pays the fees
• The season ticket holder makes the money
• The team probably takes a cut of the fees
• You don't even have to go anywhere to scalp the tickets!

It's been interesting to watch the shift to online scalping over the last few years. I've yet to come across any data on this, but I get the distinct impression that there's a large block of season-ticket holders that sell each game's tickets on eBay (or the team-supplied mechanism).

What happens next, though, is probably going to suck for those fans. A smart team will take all the data TicketMaster collects on sales and use it to raise prices. If front-row seats on the second deck are consistently able to sell for $20 more than the next row, it won't be long before the team starts to break seating down by row- as well as game-demand, and then ticket-holders will be trying to scalp... nothing.

I may be one of the only people really cheering for better pricing on tickets. I would love to see struggling teams drop the bottom out of their prices to keep the turnstiles spinning and hot dogs selling, which would allow local poor college students to form lifelong attachments on the cheap. Of course, this brings us back to the issue of how teams might best maximize their revenue--which gets us nicely back to the Cubbies.

Fun with Related-Party Transactions

SC writes:

I'm a little confused by the venom directed at the Cubs over their (admittedly farcical) attempt to pretend they're not simply scalping their own tickets. If they were honest about what they were doing, would it really be that bad? Airlines do similar things with their tickets - they charge more for some tickets (last minute purchases) and less for others (Saturday night stayovers) because they know that business travelers will pay more than family vacationers. Why shouldn't baseball clubs also price discriminate?

-- SC

First, I'm of the opinion that airline pricing is insane. One of the reasons airlines lose so much money is because they don't really know how many flights they can fill from point A to point B, so they end up doing things like adding flights until they're not selling enough seats per flight, and then they cut back.

But that's neither here nor there. Other teams are starting to move to increasingly demand-based ticket plans, either openly (i.e., weekend games cost more; marquee teams cost more) or in more subtle ways (ticket packages assigned by the team, including combinations like Yankees and Devil Rays, or Rangers and A's). Fans get a little annoyed, and there are issues the teams haven't given enough thought to--for instance, what happens if you charge more to see last year's good teams, but they stink this season?--but on the whole it works.

The problem everyone has with the Cubs isn't that they're selling their own tickets for more, it's something else entirely:

• They're breaking the law for profit
• They're doing it for the express purpose of avoiding revenue sharing with other teams

The second one seems petty compared to the first. That the Tribune Company would construct a giant scheme to scalp their own tickets illegally--with a law on the books that says "Don't do what you're about to do"--because it would make them money is appalling. On the spectrum of crime, it's not as if they're serving poisoned milk to school-children who don't subscribe to the Tribune, but it's still pretty heinous.

How much you care about the second point depends on how you feel about revenue sharing. If the Cubs had sold the tickets in question legally for premium prices themselves, they'd have had to share that revenue. However, given that all the money the Tribune Company has made off this scam is off the Cubs' books, they don't have to share one lick of it with the rest of the league.

It's the same situation as when a media company owns a team, and pays that team a token sum for the rights to broadcast their games--thus allowing them to sell the ads (and so forth) themselves and pocket the change. If fans really want to see teams play on more level-footing, and feel that the way to get there is through revenue sharing, then this kind of conduct directly undermines their stance, moving the competition into the accounting.