Thursday, May 17, 2007

Teams scalping their own tickets – fast becoming the norm

A report in Wednesday’s St. Louis Post Dispatch suggested the State of Missouri is set to legalize ticket scalping. According to the report once the state’s politicians change the law, the St. Louis Cardinals and the St. Louis Rams will both create ticket reselling sites offering Cardinals and Rams fans the opportunity to resell tickets they have at whatever price the market determines with both franchises collecting a percentage of the price. In the ever increasing secondary ticket marketplace not only are sports teams seizing the opportunity, but more teams are following the example the Detroit Tigers established during the 2006 World Series – creating their own ticketing websites and collecting their share of the “Vig”, a significant percentage of the price the tickets are sold for (what the Cardinals and Rams are set to introduce).

For the Tigers who have the second best record in the American League, their ticketing website has been dubbed Tigers Ticket Exchange, and the World Series served as the ultimate litmus test for the Tigers and a Twilight Zone version of what sports fans seemingly have to look forward too.

How did the Tigers Ticket Exchange work during the Tigers 2006 post-season run? According to the teams’ website as simple as this -- season ticket holders, were offered the opportunity to use the Tigers Ticket Exchange to resell their 2006 postseason tickets for games at Comerica Park.

If you couldn’t use all of your postseason tickets (or figured out this was nothing more than a moneymaking scheme offered to Tigers season ticket holders), you could have made them available to other Tigers fans with this efficient and easy-to-use service. As a full season ticket holder, you post your available unused tickets and name the price you want for each ticket (that in part taken from the Tigers promo material).

Buyers can view and select the tickets that meet their game, price and seat location needs. The Tigers Ticket Office conducts the transaction from season ticket holder to purchaser to ensure a safe and secure exchange.

All payments are made directly to the Tigers. Tickets are e-mailed to the buyer and they are able to print their tickets at home. If a potential postseason game is not played, the Tigers Ticket Office will refund the purchase to the new ticket buyer. It's that easy!

However, while it may be easy, the Tigers Ticket Exchange operates under the principal of the free market system. The system allowed Tigers season ticket holders to sell tickets at whatever price they determined. Four days before the start of the 2006 World Series, there were 169 different ticket offers for game one of the 2006 World Series. Tickets with a face value of $250 per ticket, a ticket price established by Major League Baseball, were offered for sale at $8250 per ticket. The least expensive tickets with a face value of $75 were being offered at a cost of $572 per ticket.

The concept of offering your season ticket holders an opportunity to resell their tickets for games they cannot attend is a great example of customer service. Trying to attend 81 baseball games is a near impossibility. A season ends and a drawer full of unused tickets sends the worse possible message to season ticket holders. At the very least season ticket holders pause and wonder if it makes sense to own season tickets if the tickets can’t even be given away to certain games. A ticketing reselling program helps to ease that challenge.

The Cleveland Indians created a ticket page on the teams’ website to assist Indians season ticket holders in reselling tickets they’d like to sell for any game. It’s very similar to the Tigers website, with one very important difference; you cannot sell tickets above the face value of the tickets. The Indians’ created their secondary ticketing opportunity after Jacobs Field major league 455 game sellout streak ended. Since the Indians sellout streak ended early in the 2001 season, the Indians have sold out a handful of games. By offering their season ticket holders the opportunity to resell their tickets at face value, in essence the Indians are competing against themselves. Indians tickets are readily available but the Indians belief is that it makes more sense to offer great service to their season ticket holders, as long as they sell the tickets at face value.

The Boston Red Sox arguably the hottest ticket in baseball with nearly four consecutive seasons of sellouts at Fenway Park offer their season ticket holders the opportunity to resale their tickets at “Red Sox Replay”. Buyers have to pay a nominal fee ($50 for a one year account). Tickets are sold at face value. The season ticket holder account holder receives a credit on their account and the buyer can either pick up their tickets at Fenway or print them at home. The membership surcharge may seem expensive if you’re just interested in one or two games, but for those New Englanders who it seems can never find Red Sox tickets, the Red Sox have created the right opportunity for those with and without tickets.

The Tigers make it very clear, the rules are very different at the home of the 2006 American League champions -- Season Ticket Holders may charge a price above face value for their tickets. All Tigers Ticket Exchange sales are final — no returns, refunds, or exchanges.

The obscenity only begins with the Tigers creation of a Ticket Exchange board. Selling tickets above face value is illegal both in the City of Detroit and in the State of Michigan. However the Tigers are working within the bounds of the law because the law doesn’t apply to tickets sold by the Tigers. World Series tickets are being sold well above face value through eBay, StubHub, Razorgator and all of the usual suspects. However, none of those would be considered legal in Detroit or in Michigan. And the Tigers, and here’s the real kicker – collect 10 percent, the Vig, the Juice, their cut of the pie.

If you were interested in buying four tickets being offered for a Tigers World Series game at 8:15, in section 130, Row 9 Seat 6-9, all you had to do was login to the Tigers secured ticket server (Ticketmaster), debit your credit card $33,001.75 and you’d have four great seats to game. The tickets would be sent to your email inbox, using Ticketmaster’s TicketFast technology. If you wanted actual tickets (a nice souvenir for your $33,000 expense) sorry all you’re going to have is an email printout from your computer. The Tigers pocket $3,300 by doing nothing more than offering the opportunity to their season ticket holders. The Tigers season ticket account holder has in effect sold his four tickets that he paid $1,000 for, for $29,701.

Before the Tigers won the American League championship, anyone who was prepared to purchase 2007 season tickets had access to 2006 World Series tickets. If you believed the Tigers’ destiny included the 2006 World Series (remember this was once the Tigers had qualified for the playoffs) in reality you could have resold your World Series tickets, covered the cost of your 2006 World Series and 2007 Tigers season tickets, and resell your 2007 Tigers regular season tickets at Tigers Ticket Exchange. The Tigers continue to collect their ‘juice’ 10 percent – when each and every ticket is sold.

The Tigers Ticket Exchange is one perverse example of how the Tigers were leveraging their first World Series appearance in 23 years. While not being advertised on the Detroit Red Wings website, both organizations owned by Mike Illitch are offering anyone who’s prepared to buy 20 single tickets to Red Wings games played at the Joe Louis Arena during the 2006-07 National Hockey League season, had the opportunity to purchase two side-by-side Tigers tickets, located in the outfield box, for $256 per seats for either game one or game two of the World Series. Joe Louis Arena seats 20,066. Motown likes to call itself “Hockey Town,” and the Red Wings sellout most of their home games. With the opportunity to sell hundreds of single tickets, the Red Wings find it next to impossible to sell on a consistent basis, however by offering World Series tickets is a sound business move, yet is it the right decision in terms of the Red Wings and Tigers image. Is it a clear attempt to take advantage of an opportunity presented to two businesses owned by Mike Illitch.

All that’s stopping the Cardinals and the Rams from moving forward with their ticketing boards -- the signature of Gov. Matt Blunt.

"This does allow us to get out there and participate in the secondary market," said Michael Naughton, vice president for ticket sales of the Rams.

"We will open up our ticket exchange window in the fall," he said. "Our season ticket holders will be able to post their tickets and resell them."

Cardinals President Mark Lamping told the St. Louis Post Dispatch the resale of baseball tickets already is widespread, by Internet companies operating outside Missouri, sometimes just miles away in Illinois.

"If it's legal for us to do so, we would do so as soon as we can," he said.

"This is in the best interest of Cards fans," Lamping added.

Ironically while the Kansas City Royals plan to look at their options once the Governor signs the bill, the NFL’s Kansas City Chiefs told the Post Dispatch they have no immediate plans to allow their tickets (at least with their blessing) through the secondary ticket marketplace. The same can’t be said for the Buffalo Bills who earlier this week announced a partnership with Ticketmaster to sell tickets above face value or the Detroit Lions who announced a similar agreement with Ticketmaster late last month.

“We want to ensure that our fans have the best event experience possible and this includes providing them with an authorized site to buy and resell tickets and avoid potentially fraudulent online resellers,” said Russ Brandon, Buffalo Bills Executive Vice President of Business Operations. “With Ticketmaster, we are receiving the very best ticketing technology and the very best team of professionals to help us grow our ticketing business and better serve our patrons and the team’s fans.”

“The Buffalo Bills realize that this is what their fans need, want, and deserve,” said Steve Weydig, Area Manager, Ticketmaster Buffalo. “We’ll continue to work closely with the Buffalo Bills to introduce TicketExchange and other exciting new services to the team’s many fans. We share the team’s dedication to event-goers and we work hard to ensure that every aspect of the Buffalo Bills expanded ticketing business provides their fans with added value and the best possible scope of services to make it easy and convenient to attend events at the Ralph Wilson Stadium.”

“Ticketmaster has served the Lions well for over a decade. We reviewed a variety of resale providers and found Ticketmaster’s service to best meet our needs,” said Dave Glazier, Lions Sr. Vice President of Business Development and Sales. “We are extremely happy to be able to increase the level of service we offer to our valued season ticket holders as well as countless Detroit Lions fans. We want to ensure that our fans have the best possible game-day experience and this includes providing them with a Lions-authorized site to buy and resell tickets and avoid potentially fraudulent resellers. By choosing Ticketmaster as our secondary market provider, we know that the team and its fans are receiving the very best ticketing technology available.”

“With TicketExchange, the Detroit Lions demonstrate that they are a forward thinking team dedicated to providing their fans with the utmost in customer satisfaction, including a safe and secure purchase experience,” said Bob Garsh, General Manager, Ticketmaster Detroit. “We look forward to working closely with the Lions to introduce TicketExchange to their season ticket and club seat holders, as well as ensure that all Lions fans find it easy, convenient, and enjoyable to attend games at Ford Field.”

At the very least it seems awkward when a sports franchise (the Bills and the Lions) have partnerships with Ticketmaster – as their primary and secondary ticket operator on behalf of the team. It potentially exposes both the team and Ticketmaster to ‘issues’ and ‘questions’ concerning the teams’ game day ticket inventory.

The most valuable ticket in sports are NFL game day tickets. Teams play eight regular season home games; virtually every game is sold out. The Lions and the Bills are heading towards a very dangerous place filled with recent examples of NFL teams trying to make another buck at the expense of their most important stakeholders – their fans.

"Teams for decades were frustrated by the fact that they couldn't get any of those profits from the secondary market," Stephen Happel, an economist at Arizona State University who follows the secondary ticket market told the Washington Post’s Thomas Heath last year. With the help of the Internet and entrepreneurs such as RazorGator's David Lord or StubHub's Jeff Fluhr, "they get a cut of this and it's more money in their pocket."

According to Heath, as is the case with most National Football League, National Basketball Association, Major League Baseball and National Hockey League teams, all four Washington based major league sports franchises have partnerships with secondary ticket agencies. Heath reminded readers the Post, which had Washington Redskins season tickets, lost their tickets a year ago amid reports the tickets were being resold. The Post’s season ticket contract with the Redskins dictated the tickets had to be used by Post carriers.

"We had the Redskins a couple of years ago taking tickets from people who had big accounts," said Jeff Greenberg, owner of ASC Ticket.com, a ticket broker in Rockville in the Washington Post report. "We had them last year going on eBay to see that people were listing their tickets on eBay and taking them right away from people. But this story is a 180-degree switch. . . . They have teamed up with these people just to get a piece of this pie."

Karl Swanson, a spokesman for Redskins owner Daniel Snyder, made it clear to Heath the Redskins has no issues with their secondary ticket partner, StubHub.

"We have never been concerned with individual ticket holders selling individual tickets," Swanson said. "Our concern has been with blocks of tickets."

The Philadelphia Eagles sold out their remaining tickets for the 2006 season an hour after putting tickets on sale on last year. According to a report in the Philadelphia Inquirer, moments after game day tickets were unavailable at face value, the Eagles posted a notice on their website: "Still looking for tickets? Go to RazorGator.com where fans can buy or sell tickets... "

The reaction in football crazy Philadelphia was swift and too the point.

"When this happened, we got a flood of calls from people who said the ticket sales [from the Eagles Web site] were closed in a matter of seconds, literally seconds," said WIP-AM sports-talk host Angelo Cataldi.

"Now regular Joes can't go see a game unless they pay four or five times the value, and the team is actually suggesting that they go to scalpers," said Tony, a longtime Eagles fan who declined to give his last name to the Daily News.

The Eagles were just as quick to react when suggestions arose the Eagles were working hand-in-hand with secondary tickets sellers.

"This is crazy," said Eagles president Joe Banner.

"The same number of single-game tickets were available this year as last year, and it's more than when we were at the Vet," Banner said. "What was different this year was that, in response to fan complaints, we made them available through the Internet as well as Ticketmaster, so they went that much more quickly."

Nevertheless the optics aren’t just bad, aren’t just terrible, they’re embarrassing. TicketsNow Chief Executive Mike Domek was a broker for seven years, a ticket scalper working the phones. Now according to a Business News report: his business employs 100 people and generates annual revenue north of $40 million from online sales and the licensing of its listings, which allows smaller online brokers to have access to a ticket inventory and that was 18 months ago.

And let us not forget about what the Tigers did to their fans last fall, to long suffering Tigers fans. Making a trip to the World Series is a rare experience for a Major League Baseball team. Properly positioned it can be a tremendous opportunity to build your season ticket base, create goodwill, and build your teams brand for many years. If an organization understands what they’re doing, and see the opportunity for what it is (a chance that comes once every so often) and doesn’t take advantage of their fan base, the organization can create goodwill for years, goodwill that can be used in tough times.

The Tigers may have not done anything legally wrong, but morally and ethically the Tigers set an example that is embarrassing on every possible level to Major League Baseball. The optics of tickets being sold for $33,000 (that have a face value of $1,000), the Tigers collecting 10 percent of that sale, the Red Wings and Tigers dumping single tickets for Red Wings games in order to sell World Series tickets demonstrate what the values of the Tigers, the Red Wings and the business acumen or lack thereof of Mike Illitch.

For Sports Business News this is Howard Bloom

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