Friday, April 15, 2011

The Invisible Hand of Sanctioned Extortion

Check out this video from yesterday's panel discussion on the business of baseball. As Sam Kennedy, one of the Sox reps, starts talking about a responsibility to keep tickets affordable, window washers descend over the exterior of the room to distract everyone and break the tension. A classic, "keep looking at the dancing monkey" moment. I wonder if Sam Kennedy was simultaneously bound and carried out of the room before everyone's attention went back to the stage.

First of all, Red Sox tickets are not affordable. Woe is the middle class family of Red Sox fans who want to head to Fenway. That same expenditure could probably cover 4 flight tickets to Florida (in season) or 65% of a mortgage payment. Red Sox tickets will remain unaffordable while demand is high. But the demand is a smokescreen, as the secondary ticket market is driving the demand.

The Red Sox are supposedly on this unprecedented sell-out streak. How many times over the past few years have you seen empty seats at Fenway? Even at big games, empty seats. During last year's B-team run and the 2009 collapse, there were entire empty sections. But those seats are paid for. They're sitting in a pile at an Ace Ticket or Stub Hub office. The game is a sell-out, who cares if they actually go to a fan who wants to see the game. The Red Sox don't care. Major League Baseball doesn't care, they made their revenue from the ticket.

Now, if I have a couple extra tickets to the game that I need to unload. I can go down to the park and sell them. But if I sell them over face value I am scalping and breaking the law. There's a fair chance I'll be arrested. All the tickets sold by Ace Ticket and StubHub are priced over face value yet that is somehow legal and embraced by the community. They are licensed ticket brokers allowed, by law, to re-sell tickets at a premium. They give you a guarantee that the tickets are authentic, otherwise they could lose their license pawning off bogus tickets. You don't get that same guarantee from the scalper hawking tickets out on Van Ness Street. Is that really worth paying a premium.

Sure the team avoids the headache of wondering how many tickets will be sold for each game by unloading their share to StubHub before the season even starts. They can guarantee how much revenue they'll earn and focus their energy elsewhere. But is there anyone in the front office unsettled by seeing all the empty seats in the park while they are touting their unprecedented sellout streak? We heard all types of moaning from the Red Sox last year because ratings were down and the park wasn't full (yet every game was still a sell-out). The team was considered boring by the public so they went out this year and acquired a couple of new superstars to get everyone excited. But the only money lost last year came from the lack of a post-season. Ad revenues on NESN sure didn't decrease. And, sure enough, ticket prices went up again this year.

The ticket situation is entirely bizarre to me. In a very short period It is not the fault of the Red Sox, it is sanctioned by Major League Baseball. And it certainly isn't exclusive to baseball, it's a part of all sports and events these days. In a very short period of time, the last 10-15 years, ticket brokerages have become a powerhouse industry. Yet the common person on the street ca be arrested for attempting the same deal they offer. Money talks, and big money begets big money, who cares about the fan, they are just a piggy bank waiting to be pilfered. At a time when Wisconsin's governor is inciting other lawmakers and business leaders to become union busters, why isn't there any elected official who wants to bring back vending equality? The power of the ticket brokerages also has to do with our newfound 21st century entitlement to have anything at any time. If you want to go to that show, or that game, you can, for a price. We have fed it with our lack of discipline and rationale. And now it's a business that will never go away. It makes too much money.

Meanwhile, if I want to go to a game in San Diego, I can walk down to Petco Park 20 minutes before any game and get a face value ticket from the box office and sit in a beautiful ball park (except maybe if the Red Sox are in town). The demand is not there. It's here in Boston. And it's there in New York but the new Yankee Stadium is a total miscalculation of the market. The best seats there cost $1500 at face value and are always empty. The greatest franchise in Major League Baseball history, with the most fans worldwide, and they exclude their own fans from the games on account of the fat cats, who aren't big enough fans to plunk down the money themselves. And, if I'm not mistaken, the $1500 ticket price is actually a reduction from where they were last season. But even if the Red Sox keep playing like they have for the first two weeks of this season and the demand for tickets plummets, they'll still have their sell out streak, because their tickets are already sold. And if anyone in the front office wants to talk about making going to Fenway affordable for the families who want to go and enjoy America's pastime in person, cue the window washers.

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