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.
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.
Another time it was nosebleed seats in the upper deck-- nowhere near as good a view of the field as their counterparts at PNC.
BTW, I agree with you about Shea Stadium. I understand it was built on top of a former garbage dump. It should have been part of the garbage dump. Another totally hideous stadium was Philadelphia's Veteran's Stadium, which replaced a perfectly functional old classic park which, I beleive, had been built back in the days when Connie Mack still owned the A's. Three Rivers wasn't anything to brag about either, but I still think it was better than either of the aforementioned parks.
Or, to look at the same argument a different way, if the people value the time saved by not thinking ahead, the scalper/gouger is providing a service they're fortunate to get when the goods are scarce and in high demand.
Love Wrigley. It’s got a cozy, homey feeling to it. Dodger’s sucks. In the summer, the place is an oven, and if you’re in the red (nosebleed) seats when the wind’s blowing, the wind that’s already been funneled by the ravine gets further funneled by the stadium, to the point it’ll blow your whiskers off. At least they have the sloping parking lot, so you can park at roughly the same elevation as your seats. I had to sit at the top one time, and it’s on a flat parking lot. By the time I got up there, I was wondering if they called it “Angel’s” stadium because you were actually in heaven at that altitude, or just because you were dead by then!
Oh, my last comment about the flat lot was WRT Angel’s obviously.
lol...funny...but they do have some excellent talent coming up...mccutchen and garrett are 2 to watch for.
Or it may mean he's getting a bigger markup than is justified by the value he adds, which means there's a opportunity for someone to go into scalping, competing with him and make 5% less and still be happy for the return on their effort.
StubHub’s service charges are outrageous.
There is nothing free market about scalping tickets. Your analogy is mistaken at best.
Well, they have no place to go but up. Every 15-20 years brings a Pirates team that contends. It’s been 17 years now, so they’re due.
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