Tickets for the Ashes series of cricket Test matches in the Australian summer went on sale yesterday to unprecedented levels of demand. Interest in cricket contests between England and Australia, which have a long history (the first series of Test matches was in 1877) is at an all time high in the wake of England’s winning the 2005 series. The return contest in the Australian summer of 2006/07 has been eagerly awaited ever since.
The demand for tickets was expected to be strong, but Cricket Australia’s ticketing system was overwhelmed by the public’s response. I was not surprised by that.
As is now traditional, the travelling English support is likely to be tremendous. Even when English sporting teams have been uncompetitive, their travelling supporters have stuck by them; in 2006 England’s football and cricket teams are doing quite well and naturally England’s supporters want to be there for the good times. Thanks to the Internet and air travel, now they can be, and in greater numbers then ever.
This is not exactly welcomed by Australia’s cricket administrators. They fondly imagined that they could sell out their stadia to domestic audiences, rake in the cash, and wave the patriotic flag and all the usual sentimental blather. They forget that, for all its history, cricket is an entertainment, and a business. Cricket administrators sell entertainment in the form of television rights and seats at stadia.
And of course when you mismanage your pricing, one of two things happen. Either you don’t sell your tickets at all, or they become so valuable that profits can be made by reselling them. The latter is happening in this case. And Cricket Australia CEO is not happy about it:
Scalpers have also cashed in by immediately placing their buys on EBay for prices thousands of dollars more than their retail value. “Scalpers using EBay are a disgraceful insult to normal, loyal cricket fans who should have access to these tickets at face value,” James Sutherland, Cricket Australia’s CEO, said. Organisers have told people purchasing black market tickets to beware and say they have asked experts about tracking the passes.
Scalping on this scale indicates that there’s a severe underestimation of the financial value of the tickets. It’s a bit rich, also, to see an implied threat against purchasers of EBay tickets as well. Once Cricket Australia has sold the tickets, they are the property of whoever owns them, and the owner has the natural right to use them, sell them on EBay, or use them as Christmas decorations if they so wish.
It is disappointing, but not entirely surprising, that the CEO of a private commercial organisation such as Cricket Australia does not know, or understand, the basics of property rights.
Perhaps the people organising the sale of tickets for major sport events could take a leaf out of the book of budget airlines and increase the price as the date gets closer, rather than putting all the tickets on sale at once at a single price.
Oooh, how terribly intimidating! I bet that’s made all the scalpers think twice.
This issue is a tough one that the UK Govt is trying to deal with, particularly in the build up to the World Cup.
Tickets are being sold by online touts for up to 1000% of face value – this mark up is obviously market value for the tickets because they still get sold out. But FIFA, the ticket issuing authority don’t want to deny ‘the loyal supporters’ of football from attending by jacking the prices up that high. What happens is that people who can pay the price go, and in a lot of cases, those people aren’t the loyal supporters.
Of course one of the reasons the tickets are priced sky high is because so few are released to the general public – most go to sponsors. Of course demand is always going to be high when stadiums can only fit 40 thousand (the WACA for instance) and there are hundreds of thousands who want to attend.
I don’t understand why eBay is the second choice. Why not sell all tickets at auction?
If the scalpers are selling legitimate tickets and people are willing to buy them what is the problem? Its called the free market…high demand= high prices.
Scott,
From what I gather from its website, Cricket Australia isn’t a ‘commercial’ enterprise in the same way ordinary businesses are. There seem to be charity-like objects to promote cricket etc – it doesn’t seem to have shareholders seeking profits. Profits from professional cricket is presumably ploughed back into other parts of the game.
The tickets are indeed property, but the property here is simply rights under a contract – and CA is entitled to freely set those terms as long as those terms are fairly communicated at the time when the contract is entered.
One of the terms CA is free to set is: ‘this ticket cannot be transferred’. Lots of commercial contracts have that term, so why can’t CA have that term in its contracts?
CA surely can include this term for whatever reason it likes (e.g. to ensure tickets are affordable so that genuine cricket enthusiasts and kids – the future of the game – can get in to watch), as long as those reasons aren’t inconsistent with its overall objects.
Here in England, some sports still give genuine enthusiasts priority by distributing tickets through clubs, giving regular participants first bite – Wimbledon still works that way, and fair enough.
CA is entitled to expect the customer to comply with the terms it sets and is entitled to take action if there is a breach – e.g. declare the ticket null and void.
This is hardly anti-market thinking here.
Cricket Australia could easily have made it a condition of entry that each purchaser identify the ticket bearer at the time of purchase, with transfer restricted to being processed by themselves, such as how FIFA have tried to manage the ticket release for the World Cup. Each ticket could be labelled and identification required upon entry. This of course would not stop sponsor tickets from getting traded, but since these are not the tickets the organsing committee are guaranteeing for the “true fans”, it is there right to sell/issue them to whovever they want. Of course this has costs associated with it that would need to be passed on to the punters.
A ticket is merely a contract between the ticketholder and the organiser, with many restrictions. Cricket Australia would be within their rights to restrict onselling of tickets, if they are willing to enforce it. It is disingenuous to argue about scalping after the gate is open and the horse has bolted, but another case of “being seen to do something”, but all part of the marketing.
Tickets for sporting events could be auctioned off, but sport is a balancing act between attracting loyal fans and maximising profit on ticket sales. After all, one of the key elements of attending a sporting event is the atmosphere of the crowd itself. Price tickets out of the reach of those who make the atmosphere happen, and you won’t attract the corporate sales that make the most money. Scalpers and touts are a nice compromise, with the organisers able to demonstrate that they are serving the “true fans”, and those that are willing to pay able to get tickets, without any additional cost to the organiser.
Even if a scalper is charging a 1000% mark-up on tickets, that is only the market value under those circumstances of scarcity (ie. a sold out event). If all tickets were auctioned or sold to onsellers, it is unlikely that the prices would reach as high at the initial stages. The airline principle applies, people sitting in identical seats who have paid vastly different prices. Unfortunately the demand for sporting events is high and scarcity extreme (after all there is only one Ashes Sydney test match or one World Cup Final) and there is a limit to how early tickets can be released.
Following on from Adrian and Brendan, the small print on tickets for sports events will prevent their on sale. What force this has in law I don’t know, but the clause will be there.
What would hack me off is if Cricket Australia tried to fill their boots by flogging an inordinately large allocation to the corporate troughing crowd. The recent Champions League final is a case in point. The Stade de France has a capacity of 80,000. The finalists (the gallant Arsenal and a bunch of swarthy catalans) could each have sold out the stadium on their own, so UEFA decided to allocate 20,000 tickets to each club. Gee, thanks. In case any lawyers are reading, I have no idea if the rumours are true that Sepp Blatter Inc. handled the sale. The upshot is that on the Champs Elysees on the day of the game I saw £3500 handed over for a single ticket.
Yeah yeah, I know, market forces and all that. But when you’ve supported your team by going to games all year long and this happens, it makes you want to register your displeasure by reaching for Beretta’s finest.
Scott is perpetuating the damaging myth that all capitalists/libertarians care about is maximum monetary profit. Sometimes, that’s not at the forefront of people’s minds; a generous understanding that there is no direct correlation between fabulous wealth and having an interest sports is what’s at work here. Of course, the law should stay out of it, but the avarice of the touts should be criticised heavily.
Cricket boards should have the freedom to sell their tickets to their games at affordable prices if that’s what they want to do.
It is quite reasonable for the event promoters to sell their tickets with whatever pre-conditions they wish (for example a ‘no re-sale’ clause or even a ‘must bring a dead turtle in order to be admitted on the day’ clause). However if they did not do that, they really have no business telling people what to do with an very resellable asset (a ticket) that they have paid for.
The obvious market based solution to exhorbitant scalpers prices is to increase seating.
Mike,
Not as simple as that. There is a practical upper limit to the size of an audience beyond which the folks at the back only see a collection of ants scurrying about.
And another thing. If they reduced the allocation of seating to corporate sponsors and raised prices (tickets for the e.g. the World Cup are frequently pretty cheap but you have to jump through hoops to get them) then there would be a more sensible allocation of tickets and the income could be the same.
I can’t help but think a lot of people are being turned off corporate sponsorship with this year’s WC because it’s thrown up some anomalies. The official beer of the tournament is Budweiser – in Germany! I’m not speaking out against the market or asking for regulation, quite the reverse. It’s just that too much corporate sponsorship, and particularly “inappropriate” sponsorship will eventually get the punters backs-up.
Of course, the law should stay out of it, but the avarice of the touts should be criticised heavily.
No on both counts. As Perry points out, the sports grounds or sports organisations have wide discretion in setting the terms they like for their tickets. But that is a matter for the law, to what degree their terms are enforceable, and how they can enforce them. (Seeking an account of profits from the person breaching a no-resale provision presumably; and maybe voiding a ticket that had been transfered.)
I don’t think a ticket-tout is to be criticised for avarice – only, if he himself buys a ticket with the intention of breaching the condition imposed on the purchase, for fraud.
I do think that sports organisations and the legislatures who suck up to them as a matter of panem et circenses are to be criticised if they involve the criminal law – as has happened in Britain. It is here a criminal offence to deal in soccer tickets, tickets for the 2012 Olympics, too, and there’s continual pressure from various interests to use public muscle to regulate other private transactions of a similar nature.
The same groups who want us all to pay taxes to control ticket prices for their convenience, and stop entertainment (which is all sport is, folks) being funded by those who want to watch it, insist that we pay through public subsidy for, and put up with great nuisance without compensation from, events such as the Olympics.
I agree: I did not elaborate properly in my first post. If a seller applies restrictions on the use of the ticket before it is sold, then of course that is to be upheld in the law. All I meant was that touts shouldn’t be legislated against in principle. Perhaps that goes without saying, but samizdata is a paranoid place: I would expect people to assume that I was calling for the outlawing of touting by expressing disapproval of it. 😉
I do disagree with this. I believe in capitalism, but I reserve the right to disapprove with someone making money without earning it. Someone who contributes a product or a service to the economy rightly makes money, but a tout contributes absolutely nothing. They are not like retailers: they are not making tickets more conveniently available to the public. I can’t see what service they are doing, other than one to their own avarice. If I’ve missed part of their use then I will withdraw my objection. Capitalists don’t have to approve of every non-state-involved method of making money by default.
Now, just to reiterate, this is a personal distaste, not a call for legislation. Just so we’re clear!
Why should tax money be used to help a sports team or league control who uses its tickets? If a league wants to make its tickets non-transferable, it can certainly do so with technology for identification of the purchaser and user, at its own expense. Getting the courts involved is ridiculous. Who’s being damaged?
As to the non-productivity of touts, getting a ticket to the person who wants it most, as determined by the money he will pay, is hardly non-productive. In fact, it can be seen as practicing the most admirable virtue. Government-enforced ticket pricing is no more defensible than rent control.
Ham,
What you are describing is a commodities futures market. In the commodities market, what is being traded is profit and risk. A farmer will presell a share of his crop to reduce the risk of being paid low prices if consumer demand is lower than expected. The speculator prebuying that crop is gambling that the consumer demand will be high and it can be resold at a profit. In this case, the speculator IS earning it. The speculator is being paid to take the risk out of the transaction.
This benefits both the producers and the consumers because the producer is assured of a sale at a known price well in advance, and the consumers are assured product will be available if they really want it bad enough.
It’s interesting that such a market has sprung up spontaneously in event tickets. I know at the Olympics, speculators sometimes get burned unloading tickets at a loss.
If the (ticket) speculators are not sustaining enough risk, then that’s the (ticket) producers failure to price appropriately. The reason they aren’t (pricing appropriately) is that event organizers are attempting to manipulate who attends events by playing with ticket prices. It would be better if they openly admit they are attempting to control who attends, and then go about it differently.
Someone who contributes a product or a service to the economy rightly makes money, but a tout contributes absolutely nothing.
They are market-makers and distributors, both of which are normally considered services. However, it strikes me that you ae perilously close to a work theory of value there. Or, worse, the idea that “the economy” is an entity with goals distinct from those of the participants in it. Which is just nonsense. What things are worth in monetary terms is what others are willing to pay for them. There are two parties in a transaction, each of whom is better off by it or there would be no exchange.
Otherwise the soccer stars in the World Cup are “contributing” no more than those who stay at home and play in disregarded reserve games. Would you say that they don’t deserve their millions? I would say abstract desert doesn’t matter: I couldn’t care less how skilled they are at what they do, but millions do, and are prepared to pay to see it. They contribute the pleasure that others take from what they do, regardless of the amount of application it takes them to achieve it.
This is not entirley true. There are debenutures on sale for both Center Court and Court 1 and these tickets are allowed to be resold. A tote will buy a pair of first day tickets for £750 and tickets for the final for about £1,800. What they can sell them for or what they will sell for on ebay is currently unknown, but some are selling there now.
I have a brother who sells concert tickets on ebay who is often confused by some of the nonsense arguments that have been put forth above. He recently told me how the NME (a music paper) was criticising ebay ticket sellers for “charging” exorbitant prices and that the “real” fans were not able to get a look in.
Firstly ebay sellers do not set prices. Only buyers can set prices and if they are willing to pay a huge figure for a ticket then that ticket must have an even bigger value to them. Secondly the “real” fan question…. if I had a band and was going to play at a big stadium, even if I made nothing from the ticket sales, I would be excited as hell to know that everyone out there was willing to pay a much higher price than the face value of the ticket to come and see us. And these people are not “real” fans???? What else could they do to demonstrate how real they are?
Ham,
The touts provide liquidity to the market, taking a risk and allowing a more accurate view of the value of the tickets.
The more perfectly liquid the market, the more accurately prices are aligned with what buyers are willing to pay.
Touts do not provide liquidity to the market. They get in before fans to hoover up as many tickets as they can, they pay foot soldiers to queue up for time after time and they make multiple registrations. What they do, therefore, is exacerbate the shortage of an already scarce product. They then break the law and stiff whoever wants a ticket by charging vastly inflated prices for a product which was never intended to be sold at such prices. It is absurd to merely put it down to market forces, shrug your shoulders and explain it away as capitalism. It is not capitism, it is a polite mugging.
I have not pondered this deeply but I think Pete is correct that they are not really providing liquidity in the way a futures market does (as there is not ‘carrying cost’ and resale is not an actual objective)… however he is quite wrong to describe touting as polite mugging as no force is involved and neither are they (usually) breaking any laws.
What the tout is doing is assuming RISK on behalf of the event promoter (i.e. the risk of unsold seats). Admittedly in the case of a very popular preformer or major sporting event, this is a very small risk indeed but that is a legitimate market function provided they are not violating any terms and condition regarding resale.
Perry, I’m having some difficulty following your chain of thought.
Part of my confusion may come from my American perspective and not understanding “tout”(Link) in this context.
The only difference I can see in speculating in event tickets and speculating in corn futures is that the ticket ‘producers’ are not doing a very good job of setting their opening price. It’s much like an IPO where the price is set artifically low and favored traders get first dibs at that price. In securities exchange, I think that is illegal if done deliberately.
The ticket is of course my physical property to dispose of as I see fit. The access to event seating which it represents may have some other contractual status. For sporting events in the US, the general understanding is that the “ticket brokers” who advertise on the radio are entitled to their “service charge” but if you can’t stay for the game and try to unload your tickets out front of the stadium you will be busted.
A ticket tout is a synonym for a scalper.
Liquidity is needed in a futures market but not in a ‘ticket’ market for many reasons… such as the lack of a hedging requirement in a ticket market and little need for ‘on demand’ buying and selling. ‘On demand purchase’ is already provided by the original seller and unlike a commodity, no true alternative supply exists because an event is not fungible (unlike coffee from Brazil or Kenya, you cannot hedge using a Madonna concert ticket against a Test Match ticket). Unlike futures speculators and brokers, who add value in a great many ways, it seems the only value a ticket reseller brings is risk transfer (i.e. he adds some value to people underwriting the event but none to anyone else than I can see).
What the tout is doing is assuming RISK on behalf of the event promoter (i.e. the risk of unsold seats).
Actually, he’s also assuming risk on behalf of the eventual ticket-buyer, by creating a situation where the buyer can purchase at a price at any time, rather than relying on getting tickets by chance at a fixed price.
No, not really. The same ticket would be available from the promoter if the ticket tout had not purchased it first and made it available via himself, so it does not change availability, just price. You may still miss out if all the tickets get purchased by other people regardless of who they got them from (direct or via a tout|) so the same element of chance remains for the end user looking for a ticket.
It is the promoter whose risk has been reduced (beacuse he has been paid for that seat even if the ticket tout fails to find someone to sell it on to).
Perry,
Last night I answered your answer with some opinions and another question. I really worked on the comment. It was complicated so I rephrased it several times and ways.
After it was perfectly (or almost) comprehensible, I hit the ‘Preview’ button. Except, … I didn’t. I hit the ‘Refresh’ button. Doh!! Please, somebody out there tell me I’m not the only one to ever do this?
I was so mad at myself, I quit and went to bed. Today I can’t remember much of the comment except that it was to the effect that an attempt to manipulate the audience profile was the only reason that originators were not selling at prevailing value and therefore the only reason a full futures market couldn’t apply.
Fungibility is as valid for ‘December wheat’ as ‘Madonna at Venue’. 20,000 tickets similar enough to be exchangable.
Hedging is also appropriate in a market where ticket price float makes sellouts likely and one could hedge a Madonna@Venue against another Madonna@Venue bought or sold at a different time/price. Incidently, Wisconsin Green Bay Packers home games have been sold out since 1960. There is an active market complete with a ‘pit’. Some interesting stories here, and here, and here.
My comment last night seemed to make more sense at the time, but what did I know? I was confused enough to hit ‘Refresh’.
Most of the free market comments here are making a category mistake – the market for the tickets in question is not a free market and is not meant to be one. Tickets are limited by rationing and not by price (ability to pay). There may be many reasons for doing it this way and it seems to me it is the preogerative of the event organiser to decide these things.
An example might be an event only open to say doctors. Doctors are invited to the event and offered to purchase tickets for $50. It might be that a medical liability insurance person would like to go to the event and may thus try and buy the ticket for $500 on ebay. It seems clear it is within the rights of the event organiser to limit their entry based on the criteria they pre-choose.
In the case of some sporting events the pre-qualification is being a fan. This is why you may have to be a member of a club (rugby internationals in the UK) or may have to join a long queue. You still get charged but the prices are set affordably. That the event organisers want to encourage “real fans” is their decision – touts try and usurp that.
This is different to the sometimes useful service of touts selling theatre tickets where they are often taking on risk and providing liquidity (spare ticket / need an extra ticket etc).
Why’s it diferent Chris? Why do you think there are “true fans” in sport, but not in theatre? If, as once did, I attend a rare performance of the fragments of Marlowe’s The Massacre at Paris on a ticket reserved for theatre students is that not, too, a choice for the event organisers?
I don’t think anyone here disputes the right of event organisers to set audience admission criteria in addition to possession of a ticket. What some of us are questioning is (a) whether general bans on ticket re-sale are legitimate, either by particular organisers or by law, and (b) assuming a given resale ban is legitimate, why should it be a matter for the criminal law where no one suffers force, fear or fraud?
It is nonsensical to assert that because supply is discrete and limited that there can be no market. On the contrary, it is limitation in supply that gives rise to a market. And “free” in “free market” is not the same as “unconstrained” or “frictionless” or “perfect”; it is freedom as the opposite of slavery, not as the opposite of stiffness. The question is whether the market is legitimate and ought to be legal or not, to which us free-marketeers answer: “yes, more or less” which is a value judgment, not an economic one.
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Why’s it diferent Chris? Why do you think there are “true fans” in sport, but not in theatre? If, as once did, I attend a rare performance of the fragments of Marlowe’s The Massacre at Paris on a ticket reserved for theatre students is that not, too, a choice for the event organisers?
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I agree in this case, however in my experience theatre tickets sold by touts are sold at lower than the box office price and are often the tickets that are sold to students. A walk round Picaddily circus in London will give evidence for this.
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whether general bans on ticket re-sale are legitimate
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If you want to allow organisers to constrain the ticket sales by something other than price then they must be allowed to ban re-sale.
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either by particular organisers or by law,
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When you buy a ticket you are entering into a contract. In the same way when you purchase a piece of software you are agreeing to a license. Software licenses are upheld by law why shouldn’t ticket sales? Arn’t both just examples of intellectual property?
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assuming a given resale ban is legitimate, why should it be a matter for the criminal law where no one suffers force, fear or fraud?
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It would seem that when you make an agreement upon purchase not to resale the ticket that resale is fraud. If you buy prescription drugs and then resale them the criminal courts will also get involved. The idea that we have a right to resale any good/service we have purchased dosen’t hold up to reality and enforcement of these rules is exactly what the legal system is there for.
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It is nonsensical to assert that because supply is discrete and limited that there can be no market. On the contrary, it is limitation in supply that gives rise to a market.
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Yes, but these event organisers are trying to define the rules of the market not based on price but on another factor (time for example).
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And “free” in “free market” is not the same as “unconstrained” or “frictionless” or “perfect”; it is freedom as the opposite of slavery, not as the opposite of stiffness. The question is whether the market is legitimate and ought to be legal or not, to which us free-marketeers answer: “yes, more or less” which is a value judgment, not an economic one.
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I understand your point but freedom works the other way.Shouldn’t the event organiser have the freedom to prevent their tickets from being resold to people they did not choose to sell them to in the first place.
You can do this with software licenses (e.g. ones that are priced per company employee etc) why not sports tickets?