I am a fan of the Miami Dolphins, but since I live in Pittsburgh, I only get to see my team occasionally. The Dolphins were visiting the Steelers this year, so I decided to buy tickets. The Steeler games are all sold out, so the secondary market was the only option. There were some interesting pricing lessons demonstrated by Steeler season ticket holders, including: 1) know what the current market conditions are, 2) understand your specific value proposition, 3) understand your competitive strengths and weaknesses, 4) in a negotiation, the person who needs the deal the most has the least leverage.
Let’s start with the current condition of the market – it is not great. Going into the weekend, the Steelers had lost 7 games and were a long shot to make the playoffs. The Dolphins had a better record, but they need other teams to lose in order to get into the playoffs. Also affecting the market was a poor weather forecast. When I started to look for tickets, the high temperature for the day was expected to be 30 F with sleet or snow. Although the Steelers have one of the most loyal fan bases, these things would be expected to reduce demand. Similarly, I would expect those conditions to also increase supply. A potentially meaningless game against a middle-of-the-pack opponent in poor weather is less interesting to a season ticket holder who could watch the game on TV. Reduced demand and increased supply should cause prices to be lower than face value.
There are a number of obvious factors that determine a seller’s specific value: seat location, line of sight, covered or not, and access to the club lounge or not; and the face value of the tickets should already incorporate those factors. For example, upper deck seats in the end zone have a lower face value than upper deck sideline, which have a lower face value than lower deck. However on a day of expected bad weather, covered seats and those with access to the heated club lounge should be in greater demand than uncovered seats without access. I would expect those covered club seats to have a greater chance of selling at or near face value than non-club, non-covered seats.
Separate from the value of the seats, some sellers had competitive strengths compared to others. For example, with secondary tickets, there is always the risk of legitimacy. I had 5 sources through which I could look for tickets: the NFL Ticket Exchange, Stub Hub, EBay, Craigslist, and Facebook. Tickets from the Ticket Exchange and Stub Hub are guaranteed to be legitimate, but there is a risk of counterfeit tickets on Craigslist and potentially a risk on EBay. I would pay a little more to sellers I am certain offer legitimate tickets. Another competitive differentiator is the ease of doing business. On Ticket Exchange and Stub Hub, it is very easy to pay online for the tickets and download them. I would have to arrange to get the physical tickets from sellers on EBay and Craigslist.
Another area of competitive differentiation I found was access to parking. In every NFL venue, parking can be a hassle. That is especially true for fans without prepaid parking passes. Since I am going to pay for parking anyway, the sellers that could also sell me a prepaid parking pass in addition to the game tickets were more attractive.
When you add all that up, I would expect to see tickets priced on a continuum. The tickets that should sell closest to face value would include: 1) certainty of legitimacy, 2) covered seats, 3) access to the heated lounge, 4) a parking pass, and 5) easy delivery. At the other end of the scale, uncovered tickets that an individual seller says he can email may go unsold, because the risk of legitimacy is high.
The last point was about negotiating leverage. Tuesday morning, there were a few sellers that mentioned they had to sell their tickets by Wednesday or Thursday. They were going to be away and would not be able to get the tickets to a buyer. Since they recognized there were plenty of seats available and they did not have any leverage, their prices were substantially less than face value.
Sunday night, I posted a message on Facebook that I was looking to buy tickets. During the course of the week I received several responses. I also went to each of the other 4 sites Tuesday morning, and I found there were a substantial number of seats available. It was clearly in the thousands, and I did not want to try to count them. However, that confirmed for me that supply would be high and prices should be less than face value.
There was a wide range of prices on each site. The range for 2 tickets on Craigslist was $60 – $700. On EBay, the range was $100 – $675 for 2 tickets, and on Stub Hub it was $92 – $2,750. Ticket Exchange had a range of $134 – $1,000. I ended up buying covered seats with access to the lounge and a prepaid parking pass from someone on Craigslist. The seller delivered the seats to my house, which was a big help. The tickets were a slight discount to face value, but the seller included the parking pass at no extra charge. I would have been willing to pay for that, but he was leaving town and needed a quick sale. It was a win for both of us.
Interestingly, there were several sellers asking for more than face value. I took a small sample of those Tuesday morning and checked back Friday afternoon. They were all still available, although on EBay and Craigslist some of them had decreased their prices. I suspect those who were still above face value will either not sell their tickets, or they are owned by brokers who had scalpers standing outside at the game. I spoke to one of the scalpers at the game. He said there were plenty of seats available, and he would take whatever amount he could get.
It was a good game. The Dolphins won, and there were plenty of empty seats. And it was a great illustration of the market at work with some strategic and not-so-strategic pricing.
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