Sports Law Blog
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Thursday, June 08, 2006
Ticket Reselling, Price Controls, and Red Sox-Yankees Games

Thanks to attorneys Matthew Saunders and Bryan Stroh (one of my former softball teammates at UVA Law) for passing along an interesting story by Bruce Mohl of the Boston Globe concerning ticket scalping: A Massachusetts court has allowed a consumer to sue a ticket reseller for charging more than $2 above face value for Red Sox tickets. The defendant, Admit One Ticket Agency, was reselling a Red Sox-Yankees ticket with a face value of $80 for $500. As we all know, tickets to Red Sox-Yankees games are probably the most coveted tickets in Boston. Although Massachusetts law on ticket scalping prohibits the reselling of tickets for more than $2 above face value, the state's Department of Public Safety, which licenses ticket resellers, chooses to not enforce the law, claiming that its limited resources are better directed towards matters of public safety.

Admit One's attorney, Joel Beckman, argues that the law has no business regulating the price of tickets to baseball games: "Even in Boston, I don't think you have a right to attend a baseball game." Beckman also argues that the plaintiff, renowned consumer activist Colman Herman, never bought the ticket, and thus was not injured. In response to that argument, Judge Mark Coven finds that Herman may have been injured by his inability to purchase the ticket expect at an inflated price.

This will be an interesting case to follow. Should the market dictate the cost of tickets available on resale, or should the law create a price ceiling? And if you think there should be a ceiling, should there also be ceilings on tickets resold to other entertainment events, like concerts or plays? Or should the law only institute price controls on matters of public necessities, like certain utilities and medicines?


I get the same feeling when I think about the enforcement of anti-scalping laws as I get anytime government decides it knows what's best for two people willing to engage in a consensual exchange. It's rather amazing how little knowledge of rudimentary economics our decisionmakers apparently have.

"He also ruled that Herman, though he suffered no monetary loss, may have been injured by his inability to purchase a ticket except at an inflated price." How can you describe the market value of something as inflated? Am I injured because I find the face value of $80 to be inflated and won't pay it? How else are we to allocate scarce resources if not to adjust price? Perhaps the Red Sox and Yankees should play as many times as it takes so that the stadium won't sell out. I'm sure they have a 50 game series in them.

I have friends who are lifelong Steelers fans and had anti-scalping laws been enforced, they would not have been able to attend Super Bowl 40. Similarly, I wouldn't have been able to see Radiohead last week. They played a 3,500 seat theater in Philadelphia and charged $41 a ticket. Their typical tours sell out 20,000 seat outdoor amphitheaters. Could they possibly not have forseen me paying $150 per ticket on eBay?

The best way to sell tickets to popular events is through a dutch auction. This would eliminate most scalping because the price paid would reflect the total marginal cost/benefit of those who wanted to attend.

If nothing else, ticket speculation should be considered legal form of investment.

Anonymous Josh -- 6/08/2006 11:35 PM  

I guess this will continue to be a never-ending dilemma both for the people who try to regulate the problem and the people who could potentially be affected by the regulation. As far as I am aware of, there have been some small steps taken to prevent scalping for bigger and perhaps more international sporting events, such as putting the name of the buyer of the ticket on the actual tickets…etc. but given the number of people who enters the stadium and given the fact that the games can not be delayed for broadcasting purposes, the scope and the practicality of such enforcement for anti-scalping laws will continue to be problematic. I am far from being an expert on the anti-scalping policy, but given the variability of different anti-scalping laws across different states (or even countries) and given that we now have those expensive ‘packages’ where the tickets are sold with hotel stays and other entertainment options, the regulation would be extremely difficult, if not, impossible. I guess the dutch auction suggested by Josh (above) might be one way to do it, but the ticket prices would be way higher than what already is considered to be an expensive ticket for average Americans…or foreigners who live in the US, like myself. This, I would think, would not create good public relations for the professional and armature sports (like the FIFA or the NCAA). Every time I try to think about this issue, I feel like I keeping going in the same circle and never get anywhere…


Anonymous Sokki -- 6/09/2006 3:41 AM  

This presents an interesting issue of two markets. In the primary market, the professional sports franchise needs to sell their tickets at a below market value price to maximize their cumulative profit, ensuring that the average family (and their kids - the next generation of fan) can come to see the team play. In the secondary market, you have scalpers/ticket resellers who realize that professional sports franchises undervalue their tickets and act rationally to seize that value for themselves.

In an effort to combat this, professional sports franchises have begun to charge "premium" prices for particular games. But this does not ensure that the supply of tickets will meet the demand.

But for government and the courts to intercede into this market seems absurd! Who, exactly, needs protection from scalpers/resellers? If a scalper values a ticket for a particular game at Value X, he does so because he believes a consumer will also value that ticket at Value X. The only entity that "loses" is the professional sports franchise...and as discussed above, this is an acceptable short-term loss to secure long-term gain through fan support.

Blogger The Author -- 6/09/2006 9:49 AM  

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Blogger Satchmo -- 6/09/2006 10:28 AM  

Also, interesting blog post regarding the Seattle Mariners and scalpers.

Blogger Satchmo -- 6/09/2006 10:32 AM  

What exactly are the benefits of anti-scalping laws? The way I understand it, they exist for several reasons:

1) Owners don't see the extra profits. That said, people still attend the games, purchase concessions, park their cars, and buy merchandise. If the demand is there, the owners will still make profits.

So even though the owner might not get "market value" on revenue for his own ticket, he is the one who set the opening ticket price (which necessarily, cannot be at "market value" for places like Fenway), and he's still taking profits from the presence of scalped ticket holders.

2) To keep scalpers from being a public nuisance. This applies to both scalpers outside venues and scalpers who will jam phone lines when tickets go on sale to buy up as many tickets as they can.

But if the presence of scalpers is directly related to demand for tickets, why shouldn't they be allowed to make a profit?

Is the law just trying to create an additional clause on the contract between the ticket holder and the franchise?

Am I grossly mistaken in this interpretation?

The Holder - Must purchase the ticket at face value, unless the Franchise allows a discount or other rate, and can transfer the rights of the contract, but may not make a profit off that transfer. Can elect not to attend the event, which voids the single-use ticket and does not give the Holder right to claim a refund or ask for replacement ticket.

The Franchise - Must provide entrance into event to ticket-holder. Event must take place (if it doesn't the Franchise has the obligation to refund or provide an alternate ticket to a like event). Has the right to enforce stadium policies. Has the right to tell ticket holder to vacate premises upon completion of the event. Has the right to display and use image of attendant at sporting event, etc. etc.

3) To keep scalpers from driving up ticket prices by monopolizing availability. Although I don't think this was ever the primary reason for instituting anti-scalping laws, since scalpers have never joined to form a single monopolistic entity (right?), isn't this the underlying fear?

To a certain extent, I suppose this (price inflation, not monopolistic behavior) is what we're seeing in high-demand events like baseball at Fenway Park.

But this is also partially due to extremely high demand and the large amount of season tickets sold, to either individual or corporate entities, which then reduces individual game availability and drives up value of tickets. And incidentally, season tickets are a large source of scalped tickets - it says as much in the article - season seat owners can never go to all the games, or give away all the tickets.

So couldn't the scalping and price inflation be the team's fault for providing so many season tickets? Could you argue that if you sell so many season tickets, scalping is the natural and inevitable result?

Also, last year, for some reason, scalpers were claiming that Mass. anti-scalping law didn't apply to events in Boston. Something about the city licensing events. Was this loophole ever closed or addressed?

Blogger Satchmo -- 6/09/2006 10:52 AM  

Sounds like MLB clubs don't like someone else getting the premium ticket price. We know they have influence over legislators. Probably gave them some free tickets to premium games to grease the wheels.

More importantly: Josh, you saw Radiohead? Whatever you paid was worth it.

Blogger ChapelHeel -- 6/09/2006 11:58 AM  

Personally, I think they should reach a compromise here. Tickets are a hot commodity, and ticket brokers ensure that, albeit at an increased price, fans can get tickets without getting lucky or waiting in line. On the other hand, $80 tickets shouldn't skyrocket to $500 for a regular season game. Especially when the Yanks and Red Sox play on National TV 30 times a year and each and every one of them is on ESPN. Ridiculous.

Blogger Adam Best -- 6/09/2006 4:54 PM  

Adam Best:

If an individual is willing to pay $500.00 to see a game (any game) why not?

Anonymous Richard Mock -- 6/10/2006 12:44 PM  

Thanks for these outstanding comments.

I tend to agree with those of you who find governmental price controls on baseball game tickets to be an odd public policy. While I think there are justifiable instances of price controls, I don't think entertainment options--even on resale--are examples of them.

Moreover, and as a matter of public policy, there are probably better mechanisms for getting tickets into the hands of lower- and medium-income persons than price controls on ticket resale (e.g., facilitating direct sales from team to consumer; lotteries with targeted recipients).

Blogger Michael McCann -- 6/10/2006 1:37 PM  

I don't believe in government price controls on anything. The market will determine the price paid for everything.

People will pay the price for the things they want.

If the judges argument is valid, then my inability to buy a mercedes injures me b/c I can only buy one at an inflated price.


Anonymous Stephen -- 6/10/2006 3:19 PM  

Mike - your point about lotteries is interesting - in the past, Broadway has conducted lotteries for good seats at cheap rates for shows in high demand - the best example is Rent, for which die-hard fans would line up daily to just have a chance at one of the tickets.

Lottery tickets are distributed the afternoon of the show, and a lottery is held for the two front rows of the theater. These seats are always reserved for the lottery.

Winning individuals are given the option of purchasing the seats at extremely low prices - $15-$20 apiece, if I remember correctly.

Why haven't we seen similar actions in sports?

Blogger Satchmo -- 6/10/2006 7:16 PM  


You raise a very good point about the role of government, although I believe there are instances when price controls are sensible, such as in providing medicines and other forms of health care to people in need. But tickets to Red Sox games seem quite distinct from medicines (unless, perhaps, they were world series tickets and the team hadn't won a world series in 86 years!).


It is an interesting question why we don't see these types of lotteries in sports. I need to give it more thought, but there could be a good post there.

Your comparison to Broadway shows is very intriguing. Maybe it has to do with the relative cultures of Broadway booking agencies and sports teams? I'm not sure. It's an interesting question.

Blogger Michael McCann -- 6/11/2006 10:46 PM  

Prof. McCann,

In response to your comments about the lotteries, many of the World Cup tickets have been sold to the lottery winners who entered to the winners of the lottery. I am in Germany doing my internship at the moment and I personally know of people who got the tickets through the lotteries. There seem, though, some downsides to that proposal which I wanted to share since the idea was brought up. I’m not sure if the benefits outweigh the costs, but I think it’s worth asking the question.

Also, I heard on the CNN In ternational (the only TV channel I can understand in Germany) that may of the tickets in the black market comes from the corporate sponsors who, sometime, gets tens and hundreds of tickets in return for their sponsorship in cash or in kind. Those tickets usually don’t come with any identifiable information of the ticket holders and inevitably get to the hands of the scalpers…or so as I heard.

Anonymous Sokki -- 6/12/2006 4:40 AM  


Thank you for that information. In the next week, I plan on writing a post on ticket lotteries, and the info you provided will be very helpful. It will be interesting to further examine how they work in Germany and other countries and why they haven't caught on in the U.S.

Also, I hope your summer internship at the International Paralympic Committee in Germany is going well.

Blogger Michael McCann -- 6/12/2006 8:08 PM  

I think they should reach a compromise here. Tickets are a hot commodity, and ticket brokers ensure that, albeit at an increased price, fans can get tickets without getting lucky or waiting in line.

Blogger Elena Smithson -- 8/18/2014 8:23 AM  

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