A TechCrunch article: So, Recode reported today that Twitter was tinkering around with the idea of expanding its 140 character limit to a number a bit higher….10,000 characters. But what,...
Courtesy of MarketWatch:
The baseball team may be overvaluing its season tickets as attendance declines!
The New York Yankees last month made a change to its digital-ticketing policythat, on its face, looks minor. However, if you’re a season ticket holder who wants to sell tickets to a few of the 81 home games you can’t or don’t want to attend, the pro baseball team just made getting rid of those tickets a lot tougher by:
1. Using partner Ticketmaster to bring digital tickets to season ticket holders’ mobile devices.
2. Eliminating print-at-home paper tickets (PDFs) that made it easy for season ticket holders to sell through sites like StubHub instead of Ticketmaster’s secondary-ticket marketplace.
3. Telling fans that PDFs are gone because of “fraud and counterfeiting.”
4. Forcing season ticket holders who want to sell their tickets elsewhere to take traditional hard-stock paper tickets that can’t be sent to secondary buyers online.
5. And forcing fans who buy individual game tickets to take only paper tickets, with no option for either mobile tickets or PDFs.
Though the Yankees claim these are safety precautions, there’s a whole lot of back story here.
Major League Baseball’s secondary-ticket marketplace of choice is StubHub (a unit of eBay Inc. EBAY, +0.20% ), which resells tickets based on market demand and charges a nominal fee for resale. However, the Yankees absolutely hate the fact that StubHub doesn’t institute price floors that would keep a ticket price from falling below a specified value.
During the 2012 season, for example, the Yankees saw 88% of their $200-to-$275 field-level seats resell for less than face value, according to ticket-resale marketplace SeatGeek. That season, more than 66% of Yankees home-game tickets on the secondary market sold at a discount.
Last year, the Yankees broke with MLB and partnered with Ticketmaster, whichsets price floors for resold tickets. However, the print-at-home format made it easy for season ticket holders to go around Ticketmaster and sell tickets on sites including StubHub anyway. With that option gone, season ticket holders have to either get physical tickets to their buyers or resell their mobile tickets through the price-floored Yankees Ticket Exchange provided by Ticketmaster.
The team’s frequently-asked-questions site makes clear that fans can resell paper tickets at any time, but resale of their mobile tickets “depends upon the operations of such other websites, which the Yankees do not control.”
As a result, representatives from StubHub declined to comment for this column, citing ongoing discussions with the Yankees. However, SeatGeek spokesman Will Flaherty notes that while the price-floor tactics the Yankees and Ticketmaster are using have become increasingly common, they aren’t always a great solution.
“Our general perspective on price floors is that markets operate better without them,” he says. “In the case of the Yankees, if you’re a season ticket holder, you’ll probably opt to take paper delivery of your tickets because it provides better flexibility to do what you want with them. Provided that there’s some opportunity to do that, the price floor doesn’t matter and probably harms any marketplace that imposes one because it makes it less viable of a place to sell in certain circumstances.”
So why would the Yankees strip season ticket holders of convenience and burden Ticketmaster with a pile of secondary-market tickets that it might have a hard time moving? Because the primary market hasn’t been all that kind to the Yankees either. Since the new Yankee Stadium opened in 2009, the Yankees have watched attendance dip from a peak of 3.765 million in 2010 to a stadium-low 3.19 million last season.
While only five teams even hit the 3 million attendance mark last season, there’s a bit of a different standard for the free-spending Yankees. It’s a franchise whose attendance rose above 4 million in each of its last four seasons in the old Yankee Stadium and hit 4.3 million during the House That Ruth Built’s curtain call in 2008. Last year’s average attendance of nearly 40,000 per game was good enough for fifth in the league, but that’s only enough to fill about 80% of Yankee Stadium and is a per-game capacity on par with the far smaller market of the Pittsburgh Pirates.
Considering that the $51.55 face value cost of the average Yankees ticket is considerably more than the average $20 seat (not to mention average $305 premium seats that are almost five times the $62 that the Pirates charge), the Yankees face fairly high stakes for not using price floors to keep secondary market prices up — and season ticket holders happy.
“It is a general direction/tactic teams use to hold the value of their tickets on the resale market,” says Chris Matcovich, director of data and operations at TiqIQ, which aggregates resale ticket prices on the secondary market. “If you wanted to know how many teams do this, my answer is not scientific but of the four major leagues, I’d say a majority do this some shape or form, and of those they have been a fairly recent occurrence.”
He added: “Season ticket holders don’t always want to sell their tickets but can get frustrated when they pay up front for tickets they could have bought at a discount later on.”
The only problem is that there is no consensus among season ticket buyers when it comes to resale. Earlier this month, a group of Minnesota Timberwolves fansfiled suit against the team for not only eliminating paper tickets, but forcing season ticket holders to access and resell their tickets through the Flash Seats app created by Cleveland Cavaliers owner Dan Gilbert. That service not only charges a fee to both the buyer and the seller, but gives the team a 15% cut of the resale price (on top of the face-value price it has already received) and allows the team to set up a price floor that’s typically 75% or more of a ticket’s face value.
Oh, by the way, the Timberwolves are struggling to keep attendance about 14,000 per game in an arena that seats more than 19,000 and have averaged a crowd of 17,000 or greater just once in the past decade. Meanwhile, total attendance is second to last in the league and the only team less popular — the Philadelphia 76ers — still hadn’t won its 10th game by nearly mid-March. While not all teams go to the same extremes as the Timberwolves, there’s an undercurrent of season ticket holders that wants teams to at least provide them an option to sell their tickets elsewhere.
“The Dallas Cowboys enacted a similar season-ticket policy last year, where if you were a season ticket holder, you could either get paper tickets or you could only access your tickets at the gate through their site,” SeatGeek’s Flaherty says. “Year-over-year, we didn’t see any meaningful material impact in our ticket sales for the Cowboys, but the one difference was that we sold a much greater proportion of hard-copy tickets than last year.”
There is, however, one other option: If teams don’t want to embrace an open market, they can at least listen to it. Season ticket holders have known about the risks inherit in plunking down a whole lot of cash for a year’s worth of seats — as Flaherty says, they capitalize in the good times and are cannibalized in the bad — but a high buy-in and low resale value only amplifies the risk. If the Yankees are charging 178% times the league average for tickets, according to Team Marketing Report, and more than two-thirds of those tickets sell on the secondary market for below face value, the team is considerably overvaluing the commodity.
Meanwhile, if the Timberwolves are charging 31% less than the league average for tickets and still feel the team needs to double dip on ticket charges for your season-ticket investors to get maximum value, maybe it’s time to either reconsider the initial pricing or reevaluate the rest of the business.
The market is sending professional sports franchises a message, and there isn’t a price floor thick enough to muffle it.