Wednesday, January 30, 2008

Countdown to Kickoff – Super Bowl XLII Perfect Ticket Storm

The Super Bowl has evolved into one of the single greatest economic events. From hotels, to commercials – to the resell of tickets, the Super Bowl is an event that dwarfs every other sports event. And when it comes to ticketing, specifically the reselling of tickets, the melding of technology and the law of supply and demand has created a buying frenzy that if nothing else is a ticket version of shock and awe. This years average ticket price -- $4,322 per ticket!!

University of Phoenix Stadium will seat 75,000 for Super Bowl XLII. The Patriots and Giants each received 17.5 percent of the available tickets. After each team dealt with their own needs (key sponsors, owners and others), they each held ticket lotteries to distribute the remaining tickets to their season ticket holders. Usually Super Bowl teams weight the lottery based on the number of years someone has been a season ticket holder. The Cardinals received five percent for hosting the game. The other 29 NFL teams split 34.8 percent of the tickets. Most tickets allotted to individual teams are shared with corporate sponsors and season-ticket holders. The NFL offices retained 25.2 percent of the seats, most of which end up with sponsors and league officials. The 1,000 tickets made available to the public come out of the league's share.

Over the last few years the Internet has afforded many “entrepreneurs” to use the power of the Internet to drive and create businesses. The secondary ticket market has exploded and the Super Bowl presented the perfect storm for the likes of, and

The National Association of Ticket Brokers reports that there are more than 650 ticket brokers nationwide, virtually 100 percent doing most of their business online. The days of buying two tickets from street scalpers outside an arena or a stadium have long since passed. You can be very sure of one thing Sunday, football fans won’t be walking around Dolphins Stadium with thousands of dollars burning a hole in their pockets ready to hand that money over to a complete stranger hoping they’re buying legitimate (non-counterfeit) Super Bowl tickets.

"The street business has really died," said Don Vaccaro, who has been selling tickets since 1979 and is the founder and chief executive of Vernon, Conn.-based in an Associated Press report. "The old-time brokers are saying, 'Look, you got a bunch of geeks selling tickets now.' It's really a lot more brains going in now."

"It used to be, buy a ticket, triple your profit," Vaccaro said. "Now it's buy a ticket and you're lucky if you get 20 percent."

Face value for Super Bowl XLII tickets: $700 and $900. “Street” or resell price – surging close to $4,000 for impatient football fans who have to have tickets today for Sunday’s game.

Asking prices for the Feb. 3 game range from $2,450 to $19,446 at StubHub, a unit of eBay Inc. and the biggest of the online resellers. Officials there say the average price so far is $4,300 for tickets that the National Football League originally priced at either $700 or $900.

"It appears our face value is under priced based on demand and what people are willing to pay," said NFL spokesman Brian McCarthy in an Associated Press report, who seems resigned to the fact that the league is mostly powerless to stop the profitable turnover of tickets.

Ticket scalping or the reselling of sports tickets above face value existed long before the Internet. Ticket scalpers have moved from street corners to wherever “entrepreneurs” can find an Internet connection.

What may have seemed unimaginable a year ago became reality on December 18. It had been said in the very pages of Sports Business News “Would the National Football League ever seriously consider a league wide sponsorship with a secondary ticket operator? Never, it wouldn’t make sense to potentially taint the NFL’s brand with the perception of being directly linked to anyone selling NFL tickets for more than face value. Leave that to other sports leagues; leave that to those ‘desperate’ enough to accept money from anyone.”

On December 18 the National Football League gave Ticketmaster the right to resell NFL tickets from its TicketExchange website, which fans will be able to access from the NFL’s site and Ticketmaster’s. Specific financial terms were not disclosed, but the agreement spans multiple years, and could cost Ticketmaster an estimated $20 million in annual payments to the NFL. The NFL, a sports league that held itself to the highest of all possible ideals, offered their brand, logo and everything else associated with an NFL sponsorship to a business committed to selling tickets above the face value of their tickets.

"The ticketing marketplace continues to evolve and sports fans demand more creative opportunities to experience our games. We will now be able to meet their expectations with our safe, consistent, and guaranteed service. The new partnership also will enable us to work with Ticketmaster to further develop fan-friendly ticketing programs and innovations," Eric Grubman, the NFL's Executive Vice President and President of NFL Ventures, said in a statement.

StubHub! and viagogo currently have deals with several teams for the next few years, and this new Ticketmaster/NFL deal will not unseat those agreements. Earlier this year, StubHub! and Major League Baseball cut a similar, exclusive deal, under which StubHub! is the official secondary ticketer for the league, but that deal came as a whole with all 30 MLB teams under the StubHub! umbrella at once.

“The league’s endorsement is very attractive,” said StubHub! spokesperson Sean Pate of the Ticketmaster/NFL deal, “but at the end of the day, is it going to drive more traction with the fans?”

StubHub! bid for the NFL contract, but Pate said that Ticketmaster landing the deal “doesn’t markedly change the landscape” because StubHub! still has agreements with several teams. “Unless this system has the same open, fan-friendly platform that StubHub! has, remains to be seen.”

"Fans expect and deserve to be able to resell their tickets in a safe, convenient and legal way," Eric Korman, Executive Vice President of Ticketmaster, said in a statement. "We are thrilled that the NFL has entrusted Ticketmaster as its partner to provide to NFL fans everywhere the best possible resale experience. This is a great win for fans, who benefit from the unparalleled security and efficiency of our technology, which will connect the league, the majority of NFL teams, and millions of NFL fans around the country."

"You gotta mortgage your home to get into the game," said Michael Hershfield, a former lawyer who recently started the ticketing Web site "There's this recipe that's been spiced up for a very exciting, very hot event. With all the changes in the industry, this combination has created this current wave of supply and demand."

According to an Associated Press report: StubHub figures show the march higher of scalped tickets in recent years. Tickets it handled for last year's game between the Bears and the Colts averaged $4,004. That was sharply higher than the Steelers-Seahawks in 2006 at $3,009, the Eagles-Patriots in 2005 at $2,659, the Patriots-Panthers in 2004 at $2,290, and the Raiders-Buccaneers in 2003 at $2,767.

"You gotta mortgage your home to get into the game," said Michael Hershfield, a former lawyer who recently started the ticketing Web site "There's this recipe that's been spiced up for a very exciting, very hot event. With all the changes in the industry, this combination has created this current wave of supply and demand."

"The pursuit of the perfect season and the matchup against the New York Giants have really helped the increase in sales" says James Holzman, President of Boston based Ace Tickets. "Even people who have seen 1 or 2 Patriots Super Bowls in person are heading out to Phoenix for this one."

And this little gem from ESPN: each year, the NFL gives the local host committee about 750 game tickets. Sullivan's group used theirs primarily for fund-raising. It put together packages ranging in price from $4,000 (for a ticket, a parking pass and access to pregame and postgame hospitality areas) to $100,000 (for 10 tickets and a table for 10 at the Big Ticket gala, where Jay Leno will provide the entertainment).

The committee still had 15 packages for sale … until last week. Then last Tuesday, two days following the NFC conference championship game, a big swarm of orders started coming in from the Big Apple. The packages sold out in, well, a New York minute. The host committee put another 30 packages on sale Saturday, nearly half of which had been sold by Monday.

At TSE Sports & Entertainment (a national company but one based in New York), which sells Super Bowl tickets-and-travel packages, "the phone started ringing off the hook after the Packers game," says Robert Tuchman, the firm's president. Those calls weren't just coming from midtown Manhattan. Many were from companies based elsewhere; wanting to be sure their New York offices were stocked with corporate America's most valuable late-January currency: Super Bowl tickets. Tuchman estimates he'll sell 1,000 packages, typically priced at $6,000, which about equals last year's total.

The good news patient might have it reward for those willing to wait a few more days, at least based on how the reselling ticketing for Super Bowl XLI played out. Two days before Super Bowl XLII, the free market system is working to the advantage of the consumer. Earlier in the week ticket prices stood at $4,100 for end zone seats at Dolphins Stadium dropped to $1,800 per ticket by Friday morning.

Mike Nowakowski, co-owner of Ticket King in Minneapolis, told the Minneapolis Star Tribune little if anything affects the price of Super Bowl tickets.

As for this year's market, he said, "Minnesota is not a hotbed for Super Bowl tickets unless the Vikings or the Packers are in it."

Right now, "the market is about $3,000 to get in the door," he added, and that's very similar to years past." For those on the fence about when to jump in and get a ticket or two, Nowakowski said, "My gut tells me the price is gonna come down on this ticket just because of the amount of seats flowing around."

And how much did tickets cost for Super Bowl I? $6 and $12 – and the Los Angeles Coliseum, the host of Super Bowl I wasn’t even sold out that first Super Sunday when the Green Bay Packers beat the Kansas City Chiefs.

For Sports Business News this is Howard Bloom. Sources cited and used in this Insider Report: The Associated Press, ESPN and The Minneapolis Star Tribune

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