This is an excerpt from Sport Marketing 5th Edition With HKPropel Access by Windy Dees,Patrick Walsh,Chad D. McEvoy,Steve McKelvey,Bernard J. Mullin,Stephen Hardy & William A. Sutton.
Secondary Ticket Market
One of the biggest challenges to sport organizations is the availability of tickets in the secondary market and the ease of purchasing them in that way, often at prices below the current asking price of the team producing the event. Arguably, today’s secondary market, which includes major players, such as SeatGeek, StubHub, Ticketmaster, and VividSeats, has become the primary ticket market for consumers and properties. In many cases, the sport property itself has now effectively become the primary and secondary market seller. By partnering with traditional secondary market vendors and brokers and by seamlessly offering the best tickets available on the property’s own website (regardless of whether the inventory has never been sold, or it is “returned” inventory from the secondary market), the fan buys the best seat available directly from the property with full authentication and assurance that the ticket can be transferred electronically for others to use.
Why is this the case? To state the matter simply, for a price-based, the secondary ticket market offers a variety of prices, all of which, except for the marquee opponent games, are usually less than the team offers because the team has a higher cost of doing business. The team or organization must pay the talent, produce the game, and maintain the stadium and the costs related to the fan experience. The secondary market has none of those costs because resellers purchase inventory from consumers (and, in some cases, knowingly or unknowingly directly from the team itself) who have previously purchased from the team and are not planning to attend the games.
The secondary market has always existed. In the past, it was referenced under the collective term scalper. The original role of scalpers was to buy low and sell high for high-demand games and special events. Now their role is to buy and sell at a profit, regardless of whether the game is sold out or is a high-demand game. What has changed is that the primary market, and the sport leagues in general, have legitimized the idea of buying tickets from a source other than the team itself by signing sponsorship agreements with these secondary market sources, particularly StubHub (whose parent company is eBay Inc.). In effect, sport organizations have granted them the only thing they lacked—recognition as a credible, trustworthy source for purchasing tickets. We might argue that the sponsorship deals offered the leagues and their teams a way to benefit financially from at least one aftermarket source because the fans were already routinely buying and selling their tickets offline and online anyway.
But the issue is much more complicated than just the fact that the secondary market sells tickets. Many season-ticket holders purchase their tickets from the team knowing that they will not be attending all the games in their plan. Thus, the opportunity to resell their tickets to offset the costs and, in some cases, to resell them at a higher price than they paid for them can be a critical factor in the decision to purchase the season tickets in the first place. All Ticketmaster teams and organizations offer their season-ticket holders a special web page or an app where they can sell their tickets online. The money is first credited to their season-ticket account. The team encourages the sellers to apply the funds to the next year’s season tickets, but they can also request a payment from those funds at the end of the season. Thus, ticket-reselling options are a real benefit to the season-ticket holder.
Secondary markets also offer benefits to non-season ticket holders, a market that is growing as younger fans shy away from the rigidity of season-ticket packages.36
Secondary market sellers have the ability to offer packages containing games or events from every team or entertainment venue in the same market, allowing the consumer to enjoy a variety of sport and entertainment experiences without owning multiple ticket plans. This is also becoming more common with regard to suites and other premium seating options. Package flexibility has also emerged. Although some innovative sport organizations are allowing a flex spending approach to ticket buying where the buyer agrees to spend a certain amount of revenue, electing to purchase different types of seating options at prices and locations based upon the buyer’s needs throughout the season, secondary sellers have offered this option for years, and it has been very successful.
Consider this comparison: Everyone knows that if you go to a pizza shop, it is always less expensive to purchase the whole pie rather than a number of slices customized to the buyer’s preference. Yet, in our current marketplace, customization, and as Burger King would say “having it my way,” appears to be king.
The NBA and Ticketmaster have created a centralized online portal for fans, designed to serve as one-stop shopping for all NBA tickets, because it consolidates the teams’ primary and secondary ticket-selling options in one place. Users are directed to a page containing all available ticket options for each team, including secondary ticket listings.
In 2018, MLB attendance declined for the fifth time in six seasons and at a faster rate than prior years. Among the contributing factors is consumer confusion during ticket purchasing. Oakland A’s president Dave Kaval argues that “It’s become too complicated and confusing for fans in a lot of cases, and there are a lot of competing offers out there.”37 Both clubs and StubHub recognize a need for greater coordination in customer outreach and sales.
Firms like Eventellect and Dynasty Sports & Entertainment have emerged to address that very issue. With more marketplaces, it is more critical than ever for properties to manage and strategically deploy their inventory. These firms leverage data insights to specifically target and sell tickets on both primary and secondary markets. These platforms, like most marketplaces, also have the potential to track a ticket’s life cycle, giving properties a better understanding of who holds the ticket as well as when and for how long a customer holds it. This data has potential benefits for understanding ticket sales and consumer behaviors, even extending to in-event marketing and better understanding of customer needs.38