Skip to comments.Ticket Scalpers Are Hidden Heroes
Posted on 12/10/2009 8:04:37 PM PST by sickoflibs
Dozens of people among the throngs of jubilant fans hold crudely made cardboard signs featuring the words "I Need Tickets." Strangely, these people who, to an outsider, appear to be in desperate need of tickets for the big game, hold numerous tickets high above their head so everyone can see. These people are the noble ticket scalpers.
They are a people scorned by athletic organizations, lawmakers, and many fans. What are they doing to merit such ill will and legal persecution? Are they truly unscrupulous, greedy parasites who dupe fans and injure the athletic organizations?
The United States does not have a federal prohibition on ticket scalping, but many states and even more municipalities have restrictions or outright prohibitions. This is very unfortunate for everyone attending events in such areas because the ticket scalpers are real public servants. The laws, to the degree that they are enforced, are actually responsible for the majority of the unfavorable things attributed to the practice of scalping.
Scalpers provide a myriad of services and benefits to a surprisingly large, and seemingly disconnected, group of individuals, businesses, and organizations. Surely, they deserve praise rather than scorn and persecution.
One of the first beneficiaries of the Scalper's services are the athletic organizations themselves. This may seem surprising, since many event organizers go to great lengths to discourage fans from purchasing from scalpers. Scalpers enable the teams to presell tickets much more effectively. This is because scalpers are willing to purchase tickets in advance in the hope of being able to hold them for some period, and then resell them for a profit.
In contrast, many people are unsure, at the time of presale, if they will be able to take off from work or other obligations. This uncertainty leads people to abstain from purchasing until they are certain they will be able to attend. Thus, the ticket scalper enables the team to get their money earlier through ticket presales.
Scalpers absorb the time risk associated with events. They absorb the risk associated with scheduling issues (i.e., whether or not fans can attend). They also absorb the risk that unfavorable events could occur. Anyone who has ever bought or sold a ticket knows that ticket resale values drop dramatically after a team has a few losses on its record. If the team does well, the scalper can make a nice profit; if the team does poorly, he can suffer a huge loss.
This opportunity for profit is good for fans because it ensures that tickets will be made available should the team do unexpectedly well. It is good for the team because it will be able to presell tickets even for bad seasons. The more the local law enforcement cracks down on scalpers, the greater the reduction in these positive externalities.
Season-ticket holders are also indebted to scalpers. Though the season-ticket holders have chosen to absorb the scheduling time risk, they are more comfortable doing so with the expectation that, should something unavoidable arise, they could sell their ticket to a scalper. Thus the scalper provides a type of scheduling insurance. The scalper is able to provide liquidity for season-ticket holders.
If the season-ticket holder find himself or herself in a financial tight spot, he or she is able to recoup some or all of his or her ticket cost by selling to a scalper. These factors can increase the consumer's willingness to purchase season tickets. This is a major benefit to the team because season tickets often sell at quite a premium as compared to general admission tickets. It is difficult to see how prohibition of this act helps anyone; it certainly does not help the season-ticket holder or the team.
Event goers benefit from the high level of convenience provided by the scalper. This convenience takes the form of easy accessibility. Attendees are not forced to plan as much and are able to show up at an event, spur of the moment, and purchase a ticket. This is a major benefit for those who are unable or unwilling to commit themselves to inflexible plans.
Even local workers and businesses benefit from the scalper's actions. People who do not have tickets often travel to the city hosting the game in the hopes of purchasing a ticket from a scalper once there. If the fan is unable to find a ticket at a price she or he deems reasonable, the chances are very good the individual will still visit local dining establishments and businesses before leaving town. Thus, restaurant workers get more tips, and businesses have higher sales than they would without the expectation of last-minute ticket availability. By banning scalping, local governments are effectively stealing this additional income from the community.
Clearly, scalpers provide vast benefits for entire communities. Unfortunately, the often-illegal nature of their work reduces the benefits to be had. As with any prohibited good or service, there is always a risk premium associated with its illegal provision. Buyers are forced to compensate the scalper for undertaking the legal risk associated with providing this harmless service. The legal risk also creates an artificial barrier to entry. There are many citizens who would like to share in the profits to be had from ticket resale but who are unwilling to skirt the law. Thus there are fewer competitors in the market, and those willing to resell are able to earn higher profits.
The prohibited nature of the service also adds to the consumer's searching costs. In areas where scalping is prohibited, there exists no reliable location in which those desiring tickets can obtain them. There can be no ticket store. Since scalpers cannot open a shop, those desiring tickets must spend time and energy searching the area for clandestine scalpers. The inability to advertise greatly increases the search cost.
This is why clever scalpers hold up signs stating they need tickets while, at the same time, holding tickets high in the air as a signal of their desire to sell tickets. They are forced to advertise the opposite of what they are doing. While those who frequent games quickly learn to decipher this curious signal, many people unsuccessfully search for tickets, ignoring the very people they seek because they do not understand the cryptic message. Obviously, this headache is unnecessary.
Scalpers are hidden heroes at events. They take personal, financial, and legal risk in order to provide a critical service in the hopes of earning a profit from their labors. Many of the aspects of scalping that people decry are, in reality, a direct product of the prohibition placed on the service. The prohibition raises prices, reduces supply, and limits competition. In addition, in the absence of the prohibition of scalping, buyers would have legal recourse against unethical scalpers who sell counterfeit tickets.
Scalpers bravely defy ill-conceived laws. In doing so, they provide a service to the communities in which they operate. Though it is probably not their intention, they serve as warriors for the free market. They fight against the notion that people must be protected from free, uncoerced exchanges. The scalpers are as critical to a successful event as the food vendors, the gatekeepers, and the janitors. They should be afforded the same legal rights as everyone else.
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Scalper gets 50 tickets for $20 each from Tiketron, cost $1,000. Tiketron is happy to get rid of the tickets.
Scalper sells 30 tickets for $40 each, total $1,200. scalper makes $200 with no added value and probably with no withholding. Would have been nice to sell all 50 tickets and get $1,000 profit, but that's the way it goes.
Everybody made money and is happy.
Well, maybe the people who can't attend the event because they couldn't get a ticket from Tiketron because Tiketron sold them to a scalper aren't happy. Remember the scalper had 20 tickets left over, so these people obviously couldn't find him. Or maybe they could find him but couldn't afford the extra $20.
And maybe the vendors at the event aren't happy. Remember, the scalper had 20 tickets left over so the vendors’ customer base was potentially reduced by that much. And of course it was reduced some more because some of the people who paid the extra $20 for tickets didn't have enough money left to buy from the vendors.
But what the heck, Tiketron is happy, the promoters of the event are happy, and the scalper is certainly happy since he profited for so little effort.
We should do this with more things. How about restaurant reservations?
That's even better for the scalper because there's no investment. He makes reservations under several different names, hangs around the restaurant door, and when someone without a reservation shows up he offers them one of his reservations at whatever price so they don't have to wait. That bears thinking about.
Uh, no. I am a Columbus Blue Jackets season ticket holder. The best I have ever been offered by a scalper for my tickets (for a playoff game, no less) was 30% of face value.
I give my tickets away when I don't use them.
Back in 1991 in the days of newspapers I read and cut out a editorial in the NY Post about the public service done by price-gouger’s in state's of emergencies like Hurricanes. Exactly like this article he stepped through the benefits to society based on economic principles. I never read anything like it before it. It struck me as previously untold truth. That author in 1991 was Thomas Sowell and he changed my thinking greatly.
FWIW, I know the $5 tickets are available for certain groups for blocks of 20 or more. So I'm sure the scalpers aren't losing money because they are buying them in blocks to resell. It is not unlike tour operators who buy airline seats at discounts which would otherwise fly empty.
Only a...diehard fan would buy scalped tickets to a Pirates game.
Utter nonsense. One, the guy desperate to buy a ticket probably couldn’t because it was sold out because scalpers were buying them 50 at a time. Two, the season ticket holder can sell his ticket to anyone if he can no longer use it, so he doesn’t need to sell it to a scalper.
Your speculation omitted the fact that scalpers will sell the remaining tickets for anything they can get as game time approaches. Scalpers don’t ever want to walk away with tickets in their pocket. So if you want the cheapest tickets to an average game, then simply wait near the scalpers till game time, then make an offer. You could get two $30 seats for $10 bucks total.
How about the AAs here in Maryland that shop at Walmart, work at Walmart instead of other stores, but vote democrat, and the democrats here in this Union state pass anti-Walmart laws to raise their prices and decrease their unemployment??
Did you get past the title?
As game time approaches and passes, do you think the scalper's price might start to drop?
My experience with scalpers is different than yours. I never attend sporting events, but they’re common at rock venues. You’ll often find scalpers skulking outside selling the $30 nosebleed seats for $200 bucks a pop. What’s tragically comical is that some poor fan usually shows up just desperate enough to spring for it. Poor guy (or girl) was typically unlucky enough to be 3 hours into a line a week before, for a show that sold out in 2 1/2 hours. Local law enforcement has a rep for being particularly nasty with scalpers, and I salute them for it.
Things must work very different for ball games than concerts. A scalper at a concert can command five to ten times the original price of the ticket and never have to worry about being stuck with a ticket. Their only fear is being busted.
It looks like scalpers are not popular here. Are they not futures market buyers ? They were hated when gas prices went up.
Many cities now require that scalpers hold a street vendor license, which means they have to pay for the license, meet vendor requirements, and pay taxes on their sales. They have to display their license the whole time they are dealing.
Plus even the worst seats at PNC Park give you a better view of the game than a lot of seats at bigger stadiums.
Ever hear of Craigslist? I have Wild season tickets. Until just the last few weeks I've always been able to get face value by placing ads there. Maybe it's easier in a hockey town. It's been tougher lately though after the team had a bad start to the season. That's why this is my last season acting as an unpaid sales rep for the local hockey team. If they can't assure me they won't suck, I can't assure them those seats will be filled any longer.
Scalpers are such heroes.
Right. I knew that.
If people wouldn’t but from them the problem would take care of itself.
I imagine that's true. My Pirates experiences were all in Three Rivers.
If somebody is willing to pay $200, then that's the value. Blame the concert promoter for being to naive to understand the worth of their product, not the scalper. The tickets wouldn't have sold out so quick if they were price right.
Right on the money. Plus, I paid for two PSLs 10 years ago.
People wouldn’t have to worry about price gouging during emergencies if they were properly prepared.
A little forethought when you live in hurricane country, or any where else where a natural disaster is likely, will go a long way.
If we were housebound because of snow or ice, we’d be OK for a few weeks. I always make sure we’re prepared before winter really sets in. Aside from the fact that I don’t like hauling groceries through slop, in the cold, I hate fighting the crowds, especially when the weather is starting to get nasty anyway.
Gougers and scalpers wouldn’t be a problem if people planned ahead. In some respects, like with natural disasters, if they aren’t prepared, it’s their own stupid fault.
I did and I can’t disagree with melas.
(Haven't made it to Fenway Park yet, which I understand is right up there.)
Just a corollary; the worst MLB parks I've been to were Montreal, Toronto and Shea Stadium. But get to Dodger Stadium before they tear it down. It's a gem.
$150 each for two tickets to see Iron Maiden, Motorhead and Dio in 2003. That’s insane profit right there.
Most of the MLB, NBA & NFL teams now allow their season ticket-holders to re-sell their unwanted tickets directly on their websites. This has drastically cut down the scaleprs income.
The season ticket-holder can sell the ticket for whatever he thinks the market will bear and the team often adds a 10% “service charge” which they get to keep. Plus, the buyer knows that he has purchased a legitimate ticket and is not subject to buying a fake or invalid ticket.
We get there, and of course they're sold out. We hang around in front of the auditorium, and soon enough we get approach by scalpers, guy walking around saying “..ticketsmanticketsgottickets...” I picked out this brother who didn't look like the worst of the bunch, and I think we paid like $220 for a couple of $80 tickets. It was worth it and we had a great time.
Funny thing though, we got in early and some folks sat down a few rows in front of us, some guy and his girl. Apparently they had bought tickets from a scalper, too. Unfortunately, they were counterfeit tickets and the real seat-holders showed up, and this poor guy and his date got thrown out.
It’s obvious you have not had the same experience as most folks I know regarding scalpers and tickets.
At the last concert I attended, the “public” sales were all sold out within 12 MINUTES of the online box office opening, with a limit of 8 tix per transaction.
Face value on the tix was $65., but I paid the LEGAL, SANCTIONED vendor $105. per ticket, what with handling fees etc.
The “official” ticket seller had sold (to a shadow company) the VAST majority of the tix available, and had them up for sale on a (LINKED TO THEIR OFFICIAL) site for a premium of 150%!! That $65 ticket I “lucked out on” for $105 would cost the next guy $250! From a “SANCTIONED” seller!
Tell me how “good for the economy” scalpers are: PLICKUTBASTERD ITSELF is a scalper, with legal protections!
The “scalpers” you see outside games and concerts are small fry!
So far FRers are pretty down on Ticket Scalpers here.
Just because you don't see it, it need not be absent.
Think of the value added by wholesalers.
True. Isn't it the general principle of the world? Don't the airlines do the same with tickets? You pay for convenience of not being in line 3 hours prior to the event.
Exactly. I don't recall anybody sending them donations or even expressing a word of sympathy when the prices are down.
That's why we have a socialist in the White House: even conservatives don't like the markets. They only tolerate them when they work in their favor.
People freely buying and selling for a price they agree to is the very definition of an economy, a free one anyway. If the middle man is getting too big of chunk, as seems to be your complaint, that just means the producer should charge more. Or maybe it means the middle man is actually an agent of the producer, which is all well and good.
I live about 5 miles from Daytona International Speedway (DIS). For about a week before the Daytona 500, and the July 4th NASCAR races, if I had a dollar for every “Need Tickets” homemade sign I have seen in the 30 plus years I’ve lived here, I wouldn’t have to play the Florida Lottery ever again.
How some of the people sell their “extra” tickets is to “bundle” the ticket with something else.
Examples: A newspaper ad reads: Rent my 2 bedroom beachside condo for seven days Daytona 500 week for $5000 and get 4 FREE tickets to the big race.
The really clever one, is the scalper who will sell you the ball point pen out of his shirt pocket for a predetermined price, and “throw in” a couple of 500 tickets.
Sports Arenas are learning from their foolishness of trying to control a market and have instead allowed such to happen.
They've set up an eBay like system to allow season ticket holders to resell there ticket (you don't even have to ship them, they just print up new tickets and send them to the new buyer.)
We love the system which allows us to attend the games we wish and make a small profit on the remaining games which pays for the entire season.
Those aren’t scalpers then. My understanding is that those selling tickets legally are ticket brokers, and those who sell them illegally are scalpers.
No, forced scarcity is clear legal anti-trust.
You missed the bit where the original seller CREATED the shortage in the first place.
Thanks for playing. Sorry about the lack of cognizance.
Different economics, I guess. I have not seen such behavior. I've seen scalpers very willing to pocket unused tickets rather than drop the prices, even after the game is in progress.
And don't forget that the taxpayers likely funded the athletic organization's place of business. Funny...the city never agreed to build me an office building for mine.
The Mises Institute is great, but misses the target sometimes.
This came up here after Katrina. Some guy bought a U-Haul truck full of generators and chainsaws from Wal-Marts up north, drove all through the night, and was supplying them to people who needed them the morning after the storm for two or three times the regular price. There were folks here who thought he should have been put against a wall and shot.
You would think that any person of normal intelligence would understand supply and demand, but you'd be surprised how many FReepers support anti-gouging laws even if it means people suffer more after a disaster.
Three cheers for scalpers and disaster gougers. They help their fellow man by taking big risks, and deserve to be richly rewarded for them.
Often the prices of seats in the venue are regulated. It isn’t a case of the naivete of the promoter, but rather price controls imposed by the state.
Scalpers are scum for just the reason you state. Some on FR act like this is just a routine business transaction, but I guess they would also think an ugly woman should thank the rapist that raped her for the sex!
Scalpers do not provide any service, just jack up the price.
Under Bush, I heard many republicans here cursing gas station owners while selling their houses for huge capital gains, one gouging, one capitalism.
What I have found, especially with dems, but with many or most republicans too, is they think we allow profits, allow capitalism, for moral reasons. This justifies price controls, anti-gouging laws,government takeovers.
StubHub runs an online ticket brokerage, matching ticket buyers and sellers, for sports events, concerts, and theater. It's a quick, honest, and efficient market driven system.
I have friends who buy season tickets for both the Sox and Cubs here in Chicago, who almost totally pay for them buy selling off enough individual games to cover the tab.
By having a popular product, or by having an under priced product? Isn't that the only two ways to have a shortage?
Thanks for playing. Sorry about the lack of cognizance.
It's the unwarranted snark on your part you should be sorry about.
If you haven't noticed, this is a place that is sort of fond of free markets. Your analogy is ridiculous for reasons too obvious to point out. Those engaged in agency and arbitrage play valuable roles in any market. Those that compare them to rapists don't understand liberty or markets at all.
So promoters are colluding with themselves to under price their product, so people unrelated to them can capture the profits more rightly due to the prompters themselves? You sure about that? If, as another poster claimed, it's regulation that keeps face value artificially low, that's not anti-trust. That's government trampling property rights, and distorting markets.