New York Attorney General Eric Schneiderman recently announced an investigation into ticketing. The investigation will likely shine a light on how tickets really work, and why consumers have no chance.
It’s 9:58am Saturday morning and millions of fans are ready for the on-sale. In just two minutes, each will feverishly refresh their browser, nervously type in the re-captcha code, and hope to hit the jackpot: Tickets. It doesn’t matter if it’s an Adele concert, a Seahawks playoff game, or a festival, the story always ends the same. After ten minutes, hope evaporates as the tickets are sold out.
In desperation, fans flock to StubHub, Vivid Seats, and other marketplaces finding thousands of tickets already available, for a significantly inflated price, mere minutes after on-sale (and some even, gasp, before on-sale!). The blame game starts. My internet is too slow. There weren’t enough tickets put on sale. Those corrupt brokers with their bots took all the tickets!
Live events are more popular than ever as proven by attendance trends, price inflation, and a scorching hot live event tickets industry where Live Nation is thriving, StubHub has grown into a multi-billion dollar venture, and even companies the mainstream haven’t heard of yet, such as Ticketfly (sold for $450 million), Eventbrite (valued over $1 billion), and SeatGeek (raised over $100 million in financing) are fetching valuations in the hundred millions to billions. With this much money in the game, one would easily conclude the playing field cannot be level for the everyday fan hoping to buy tickets.
In this two part series, we’ll explore what really happens behind the scenes. Who ends up with the tickets? How do they end up on the secondary market so quickly? Why do the content providers allow it? And why can’t you get tickets at an affordable price for highly sought after events?
There are 7 common ways ticket brokers get tickets*:
- The Insiders: Companies, Sponsors, Agents, Promoters, Players, Coaches
- Deals with team executives
- Buy and Hold
- Fan Clubs
- Card Deals
* We recognize there are more than 7 ways and have seen most all of them, however, we are focused on the 7 that represent the vast majority of the tickets brokered on the market.
Who are the players?
Tickets to live events are notoriously underpriced when they go on-sale and it’s for a reason: live events are a business and businesses need to eliminate risk where they can.
There is much more to a concert, festival, or game than the fan sees or even considers. The very basics:*
- Securing a venue costs money, whether building, renting or managing. Usually this is done through multiple forms of finance which require cashflows and predictable revenue to pay for expenses and planning
- Live events make money through X major channels: Sponsorship, Premium Seating, Parking, Concessions, Merchandise, and Tickets. Yes the tickets are the most important to the fans and, sometimes, to the performers, they are only a fraction of the actual event
- Locking up predictable revenue early helps the content provider eliminate risk. Sell all the tickets and lock up the revenue in advance. To do this, tickets are priced below market to sell quickly.
*An entire book could be written detailing all those involved. These are the basics.
Who Gets The Tickets:
Once the event is a reality, the negotiations begin as to who has access to what tickets long before on-sale. Tickets are silo’d based on contractual obligations. Where they most commonly go:
- Contracted pre-sale: Many sponsors and seat license holders, as part of buying a product and paying for it upfront, get access to tickets before the general public. Some are sponsors of the venue or team while others are sponsors of the event, league, or tour.
- Sponsorship deals: Major sponsors get tickets in advance as part of their agreements. Brands sponsor tours and get ticket allotments. Common sponsors include the major payment providers, such as American Express and MasterCard, who negotiate a block of tickets for their cardholders as part of their sponsorship deals, and brands looking to connect to the fan base of an act or team, like Salesforce with U2 and Xfinity with Taylor Swift.
- Fan Clubs: The performer will usually negotiate a block of tickets for their die-hard fans and distribute them through Fan Clubs
- The Content: Tickets are always held back for the players, coaches, performers, managers, promoters, and insiders. Usually, they are some of the best tickets.
Who are the players involved:
- Content Providers: Teams, Venue Operators, Promoters
- The Content: Artists, Players, Agents, Managers and their family members
- Brokers: When demand overpowers supply, prices rise and capitalists* surface looking to benefit from the delta. It’s the simplest business equation there is: find underpriced assets and sell them for a large profit. From this simple premise dawned a $10+ billion dollar industry employing tens of thousands which gives the common fan very little chance of getting great tickets Say what you want about ticket brokers, but we’ve met with billionaires, millionaires, tech entrepreneurs, and titans of all business in our 10+ years with StubHub and TicketManager, and some of the most savvy and intelligent people we’ve met are ticket brokers. They may not enjoy a great reputation, but they are not to be underestimated.
This is a two part series. Read on for part two.