Why March Madness ticket prices are as unpredictable as the games

Courtesy of MarketWatch:

It pays to wait if you want to save money on tickets!

Now that the excitement of Selection Sunday has subsided, many college basketball fans have taken to various ticketing sites to find a way to see their team compete in person. If you want some leftover cash for a postgame celebration, however, it may be best to wait.

The NCAA basketball tournament is a six-round, 64-team competition that ends with the crowning of a champion. This year, the first two rounds will be played in Spokane, Wash., Providence, R.I., Oklahoma City, Raleigh, N.C., Denver, St. Louis, Des Moines, Iowa and New York City, with the first games starting on March 17. Once the teams are whittled down to 16, games will be played in Louisville, Ky., Anaheim, Calif., Philadelphia and Chicago. The Final Four and the championship game will be played in Houston.

The diversity of schools, locations and game times involved in the NCAA tournament has a varying effect on ticket demand and pricing on the secondary market as the tournament proceeds. For example, a large school playing near its campus tends to attract high demand and boost prices, while smaller schools playing far from their campuses offer more affordable ticket prices, says Chris Leyden, a content analyst at secondary ticketing site SeatGeek. However, upsets are a tried and true characteristic of the tournament, so buying later round tickets in advance could be risky.

Face value tickets to the games are sold through Ticketmaster LYV, -0.36% or the venues where the games are played, but typically sell out quickly after the tournament teams are selected.

Tickets to games in the first two rounds are sold in sets of two, known as strips — meaning if you buy a ticket to a game, it’s good for two games. Sweet 16 and Elite Eight tickets are also sold together, while Final Four tickets include both semifinal games — and championship tickets can be added to that package or purchased separately.

Unlike other major sporting events, the amount of uncertainty involved in the NCAA tournament makes it difficult to predict ticket prices on the resale market. From 2011 to 2015, the average resale value on SeatGeek of tickets to the Final Four were $392, $360, $739, $608 and $897, respectively, while for the championship game, resale prices were $357, $236, $538, $405 and $547 for the same period, according to data from the site.

Table: Average March Madness ticket prices for the last 5 years

2011 $139 $194 $268 $202 $392 $357
2012 $112 $161 $210 $169 $360 $236
2013 $122 $172 $186 $125 $739 $538
2014 $112 $179 $130 $176 $608 $405
2015 $111 $178 $183 $156 $897 $547
Source: SeatGeek

Two factors can drive up prices: When a team enters the tournament undefeated, or when a lot of evenly matched teams play each other, Leyden says. “[The University of] Kentucky’s undefeated run [last year] was a huge driver in demand. People wanted to see if Kentucky could do it,” he says, adding that the games that are “more competitive and less predictable” have a similar effect. In 2013, another year of high ticket prices, The University of Michigan made its first Final Four and championship appearance since 1998 — the 1998 season was eventually vacated because of NCAA sanctions for an illegal gambling operation — and Wichita State made its second ever Final Four bid.

This year, no team is coming into the tournament undefeated, but the lack of a clear front-runner could drive prices up early on. Tickets for the first two rounds have already reached high resale values — the games in Des Moines, which feature competitive teams such as No. 1-seeded University of Kansas, Indiana University and Kentucky, are going for nearly $600 for the first two rounds on the secondary market, according to SeatGeek. Individually, the three sessions are selling for $210, $221 and $360, respectively.

Resale prices have already increased about 15% to 20% from last year, says StubHub spokesman Cameron Papp. The rise in demand can be attributed in part to better placement of games near major fan bases. “The tournament organizers are getting a little more privy to these zones where it’s easier for fans to travel,” he says, citing University of North Carolina’s first round game in Raleigh and Notre Dame’s matchup in New York, where many of the school’s alumni are located.

If you aren’t picky about your seat location, the best time to buy tickets may be right before the game, Leyden says. With each round, half of fan bases, and demand, will decrease, and if a high-seeded team loses early, prices are expected to drop further. “If you’re just a fan trying to get in the door, it’s better to sit and wait,” he says.