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Friday, October 20, 2006

Tigers Understand the Difference Between the Law and the Spirit of the Law

Yesterday, Howard Bloom at Sports Business News notes that the pennant-winning Detroit Tigers have been exploiting a rather wide loophole in the State of Michigan and City of Detroit prohibitions on ticket resale. While “scalping” is prohibited both by state law and municipal ordinance, tickets can be resold if the team itself is doing the re-selling. The Tigers, exploiting this loophole, have created a web-based ticket exchange which allows season-ticket holders to sell their playoff / world series tickets above face value. The Tigers claim a 10% fee for the service of matching buyers with sellers. When I checked this morning, tickets could be had for Game 1 of the Series for between $550 and $5500 a ticket. Bloom writes:

If you can't use all of your postseason tickets, you can make them available to other Tigers fans with this efficient and easy-to-use service. As a full season ticket holder, you post your available unused tickets and name the price you want for each ticket.

Buyers can view and select the tickets that meet their game, price and seat location needs. The Tigers Ticket Office conducts the transaction from season ticket holder to purchaser to ensure a safe and secure exchange.

All payments are made directly to the Tigers. Tickets are e-mailed to the buyer and they are able to print their tickets at home. If a potential postseason game is not played, the Tigers Ticket Office will refund the purchase to the new ticket buyer. It's that easy!

* * *

The Tigers make it very clear, the rules are very different at the home of the 2006 American League champions -- Season Ticket Holders may charge a price above face value for their tickets. . . .

The obscenity only begins with the Tigers creation of a Ticket Exchange board. Selling tickets above face value is illegal both in the City of Detroit and in the State of Michigan. However the Tigers are working within the bounds of the law because the law doesn’t apply to tickets sold by Tigers. World Series tickets are being sold well above face value through eBay, StubHub, Razorgator and all of the usual suspects. However, none of those would be considered legal in Detroit or in Michigan. And the Tigers, and here’s the real kicker – collect 10 percent, the Vig, the Juice, their cut of the pie.

The Tigers Ticket Exchange is one perverse example of how the Tigers are leveraging their first World Series appearance in 23 years. . . .

The Tigers may not be doing anything legally wrong, but morally and ethically the Tigers are setting an example that is embarrassing on every possible level to Major League Baseball.

Sports economists have dealt with the policy consequences of scalping in a number of blog posts and articles. Some have argued that legalizing scalping (or, as its proponents might argue, legalizing the resale market for tickets) would increase the supply of tickets and thus lower the price, although the debate continues. And as criminal law students are no doubt aware, criminal statutes (or municipal ordinance) must be interpreted strictly because of their harsh consequences for alleged offenders. This principle of statutory interpretation has been applied before to anti-scalping laws, as Greg noted here.

Still, there’s something about the Tigers Ticket Exchange that strikes me as unfair and leads me to sympathize with Bloom’s position. After all, just last year the City of Detroit was insisting it could arrest people for selling or buying tickets at or below face value. That law was struck down as unconstitutional; still, the idea that the same city that thought it was okay to lock someone up for buying a ticket on the street below face value would create an exception big enough for a fleet of Little Caesar’s delivery trucks to drive through seems to be just another piece of evidence of the power of well-heeled special interests in municipal affairs. Two dozen people have been arrested in Detroit for scalping since the playoffs began. Yet the Tigers will collect $550 on that $5500 ticket. Fair?

-- Posted by Geoffrey Rapp @ 10/20/2006 12:46:00 PM -- Comments (2) -- Post a Comment

2 Comments:

A recent NY Times article (last Thurs or Fri) discussed Ticketmaster lobbying the states to outlaw resales of tickets among fans (through e-Bay, etc.), and to allow Ticketmaster to have the exclusive portal for fans to resell tickets (with fees paid to Ticketmaster, of course).

Two states, Connecticut and another one (can't remember) have adopted the legislation already, according to my memory of the article.

ChapelHeel -- 10/24/2006 10:34 AM

I personally like letting the marketplace do its thing. Let's assume the real goal is preventing clearinghouses from buying up all the tickets and reselling them at a higher cost, thus skewing the market. Can't we come up with better ways to address this than arbitrarily limiting someone's right to sell their property?

And while I can't say I blame the Tigers for exploiting this loophole, it does seem unfair that they have a legislatively-created monopoly around this market now.

Another option for working around this might be for the Tigers to set the face value arbitrarily high but sell the tickets to the holders at a "discount". My landlord did something similar for a rent-stabilized apartment in NYC - they couldn't get the regulated rent price, so they offered a 15% discount - but preserving the right to later go back to that higher price.

And TicketMaster is in my "Axis of Evil". Like the public would benefit at all from giving them another monopoly. (My favorite is that I still have to pay the non-refundable fees for canceled concerts, which works out to be 40% of the ticket price anyway. In other words, they get $40 for a concert THAT NEVER HAPPENED. Someone sick Spitzer on them so they don't have time to go after more monopolies.)

Tim Marman -- 10/26/2006 1:28 PM