Sunday, March 15, 2009

How The Yankees Profit Off Of The Secondary Ticket Market

Everyone is probably aware of the issues that we have had with the Yankees' handling of ticket sales for the 2009 season. Rest assured, as soon as the on-sale is over, we will spare everyone the around the clock coverage. For now though, something else has become apparent that needs to be written about.

As we have noted many times, the Yankees have made the business decision to cater to their full-season clientele in regard to ticket sales. Whether it was in the relocation, or availability of pre-sales and private workouts, those fans are taken care of. At face value, it seems like the honorable thing to do - the people who spend the most money get the best perks. However, looking a bit deeper reveals the Yankees full motives.

Back in 2007, a deal was struck between MLB and Stubhub, promising every team a cut of the profits from ticket resales on Stubhub's site. The Yankees are privy to this lucrative deal and have adjusted their ticket sale strategy to reflect it. Since the relocation process for the new Yankee Stadium began, it has been clear that the Yankees were attempting to "de-fragment" the stadium, meaning that they would move more people to full-season plans. Besides serving the obvious purpose of simplifying the rest of the ticketing process, this is an obvious way of positiong the team to secure more profits for each ticket sold over the course of the season.

To understand this idea, one needs to think about the following: who is more likely to sell a ticket to a Yankee game on Stubhub? Would it be the full-season ticket holder trying to figure out how to make it out to 81 games per year, or would it be the partial plan holder just happy to have a ticket plan? Obviously, full-season licensees are more likely to resell tickets in order to recoup some of their investment when they inevitably can't make it out to select games.

In the past, the Yankees were unable to profit from the secondary market that inevitably develops. The team was happy to collect their sold out gates and brag about huge attendance figures. When the deal was struck with Stubhub back in 2007, it changed the landscape of ticket sales for sports organizations. An entirely new revenue stream was created for the team, and it was done in a way that would not ruffle any feathers or receive any negative press. The majority of fans selling their tickets on Stubhub understand that there are significant commissions cutting into their bottom line, but likely don't realize they are glorified brokers for the team. Even if they do understand the logistics, they don't care because the Stubhub system is so well-designed and easy to use.

With each passing day, this "conspiracy theory" makes more sense. Why wouldn't the Yankees allow full-season and 41 game plan holders the first crack at purchasing more tickets via a pre-sale? These people are likely to view the opportunity as a well-deserved perk to their ticket plan that they must take advantage of. In their eyes, the new stadium means that people will be pining to see a game, especially the premium ones. The dollar signs light up in their eyes since they have already been stretched thin by their investment in the team. They are able to rationalize that if they lay out a little more money (and time, since they are now ticket brokers), they can recoup some costs and cut into the large investment they made to secure full-season tickets.

While the full-season licensee are buying up more and more tickets, the Yankees are laughing their way to the bank. They are employing their most loyal fans as ticket brokers and are double-dipping on the profits that they take from them - once for the initial sale and once via Stubhub. The PR campaign surrounding ticket prices in "half of the stadium" remaining at their old Yankee Stadium prices was all smoke and mirrors. The Yankees have made sure that most, if not all of these "cheap" seats will be sold out by full-season ticket licensees whether it be in the relocation process or the many pre-sales. When the Yankees commissions via Stubhub are counted at the end of the season, they are sure to have made more than face value for the seats, without having to do any extra work.

A quick glance at the Stubhub page for 2009 Yankee tickets reveals that more tickets are available for Yankee Stadum than any other venue, and most of the tickets are available in the Bleachers and the Grandstand. Looking deeper, many April and May games are selling for below face value for the "cheap seats" and the Yankees are fine with that. The team has guaranteed their initial cost of $12, $20 or $25 sales for those "same price as least year" seats, and are also collecting whatever undisclosed commissions that Stubhub is paying them. Once the weather warms up in the summer, the Yankees commission will only increase, as their ticket brokers season ticket holders will be able to raise prices.

Full-season ticket holders will probably read this instinctually defend their purchase, claiming that the Yankees are not taking advantage of them. Sure, if the tickets are resold on Ebay or Craigslist, or to co-workers, the Yankees aren't going to receive their piece of the pie. However, based on the sheer number of tickets for sale on Stubhub, it appears that most people are being used. They have foregone their chance to cut the Yankees out of the picture due to the fact that the Stubub system is so convenient. Stubhub has introduced a completely electronic ticketing system, so the full-season ticker holder broker on Stubhub doesn't even have to go through the sometimes stressful excercise of sending tickets through the mail.

The casual fan should not direct their ire at full-season ticket holders when general public on-sale day comes and there are very few affordable tickets available. Keep in mind that most of these licensees did not purchase the plans to profit off of their fellow Yankee fans. Their logic in upgrading to full-season was that they were guaranteeing the best value seats in the new Yankee Stadium, and they were locking in full playoff rights. To these people, selling tickets on the secondary market had little to do with profiting off of the average fan, and everything to do with recovering some of their investment in full-season plans.

The best suggestion we can give to the casual fan looking to attend a few games at the new Yankee Stadium is to be patient. The United States is still struggling through one of the deepest recessions in recent memory, and discretionary spending is lower than ever. While the secondary ticket market is sure to heat up in the summer when tourists (even in smaller numbers than in the past) come to the city, there will still be deals to be had.

The game-plan should be to scoop up some bargain tickets in April and May when full-season ticket holders are willing to take losses on their tickets due to factors such as cold weather and school still being in session. Let the tourists buy up the expensive summer games on Stubhub. If the urge to see a game happens to strike in the summer, go on Craigslist the day of the game and wait out some good deals. There are always people who have to unload tickets at the last minute and are willing to sell for face value or below. Also, don't forget to check out ticketmaster.com on the day of games for face value tickets, or even go up to the stadium to see if standing room only tickets for $20 are available.

There is only one way that Yankee fans can make the team pay for this non-transparent revenue stream, crafted to inconvenience the most loyal fans: not buying the full-season plans unless you plan on going to the games. The Yankees have their hands in the primary and secondary market, so think before you become an unpaid ticket broker for the richest franchise in all of sports.

19 comments:

Bronx Baseball Daily said...

The thing that has always pissed me off about stubhub, is that it's basically modern ticket scalping that the team profits from. So in the past guys doing it for themselves on the streets were breaking the law, today the team's are getting a cut and nobody has a problem with it.

Great article.

Anonymous said...

I look at it the other way. I am using the Yankees. After selling the about 55-60 games last year I went to 20 something for FREE! So you can say the Yankees are using me, but I basically got a 20 game flex plan for free. Who is using who?

Ross said...

Think of it this way - you are an extension of the Yankee corporation. I did not want to call out people like you since I am a fellow season ticket holder. Selling the tickets is your right.

I guess whatever "free" games that you are getting is your pay from the Yankees for being a ticket broker. I also think that the days of raking in profits so impressively are over with the increased full-season ticket holder base (more people trying to do the same thing as you) and the recessionary economy. We shall see.

coffeewithian said...

Excellent post.

One thing which you missed is that in 2006, before the StubHub deal, the Yankees actually REVOKED season ticket holders who sold on StubHub. Then they became partners.

The sad thing about this is that it has created a legal loophole. Some states have resale laws, others don't. However, when purchasing MLB tickets through StubHub, you are technically buying from the team, so the tickets can be marked up higher than face.

Anonymous said...

I disagree. This year will be a HIGH profit year. I have already sold 4 tix to both Cubs games for about $880 and sold 2 of my 4 tix to OD and took home after fees and price of the tix $700. So before the season really begins that is a profit of $1580 and took my son to opening day.
Redsox and Mets tix are going for 3 times the value and Phillies tix and July and Aug weekend games are going for 2 times their value.
I have sold more then 35 games so far all face value or above.
Next year will be the year for FS tix holders to watch out for. and I will then have to find 2 people to split up my plan.

Ross said...

The free market rules, I guess. Something about selling tickets that much above face value rubs me the wrong way, but perhaps I am just some sort of socialist?

Anonymous said...

But why does it rub your the wrong way?
Do you complain when you by jeans from Macys? They bought them wholesale and marked them up 150%in price.
Do you complain when you buy a watch for $500 when the jewler bought it for $200 on wholesale?
What is the difference?

Bxboy said...

I had a full season plan a few years back and it was too much trouble. I felt like I was moonlighting as a ticker broker. Too much work to only break even on tickets sold. I sold 60 of 81 games.

This season sellers will do better with the Cubs games and the first regular season game in the new stadium.

Still, selling 60 individual games is a pain. 60 separate listings to be entered on stubhub, monitoring prices, executing sales 60 times. It is a pain in the neck.

I switched back to the 46 game plan and was much happier. I can sell 25 games to friends and call it a day.

Ross said...

There is no difference - I just guess I don't have it in me to be the middle man like that. You are like a real estate broker! It is business, no doubt about it. The Yankees should just stop touting their affordable ticket prices. They have built a culture than encourages resale for whatever the market bares, and they influence the market to bare higher prices utilizing scare tactics and clever marketing.

You are not doing ANYTHING wrong, but I just don't like the shady way the YANKEES go about things. Lonn Trost is all over the place bragging about how cheap tickets are. Yea, Lonn, that is because you sell those cheap tickets in bunches of at least $5,000, then those ticket holders hock them for double on the open market. A very small percentage of fans ever have the chance to get those great prices, and the rest of the casual fans are paying obscene prices.

I guess there isn't really a solution to this. It is simple supply and demand. If you guys are able to resell for that much more than face, why shouldn't you? The problem is, eventually the Yankees will get MORE greedy and will want more than just their stubhub commission. They will raise the prices of the cheapest tickets even more and the cycle will continue.

I guess my main beef here is just with the Yankees claiming affordable ticket prices. That being said, I don't want governmental intervention as I discussed a couple of weekends ago after the NY councilmen were introducing an "affordable ticket bill."

Anonymous said...

HYPOCRITES ! IS ALL THAT NEEDS TO BE SAID....
3 years ago they take away season tickets listed on StubHub and now the NYY partner with StubHub
guess thats the world we live in now, liars and spinners and guys named Levine and Trost

Javagold

Anonymous said...

The Yankees arent hypocrites. Its the NY State law, that permits people to sell tickets legally. If you have a gripe call your State Senator, not the Yankees.
Legally the Yankees cant take away your tickets for reselling them.

Anonymous said...

Anon. is right. It's not the Yankees fault. MLB made the deal w/ stubhub, not the yankees. All teams do it except the Red Sox. Mass. is i think the only state that still has scalping laws.

Ross said...

Just because MLB signed that deal did not mean the Yankees had to turn their season ticket sale strategy completely upside down and totally cater to full-seaon while doing everything possible to de-fragment the stadium.

Doing that actually made the relocation a more tedious process. The only reason they did it was so they could squeeze more money out of full-season sales and guarantee more double-dipping with Stubhub sales.

Anonymous said...

i have no problem with anyone reselling their tickets, never had HOWEVER i have a problem with teams , leagues and corporations (ie Ticketmaster) who have said that brokers are basically the scum of the earth and then in the last 2-3 years these same HYPOCRITES (previous post is correct) do a 180 and do everything in their power to steer thier fans to the secondary market

PS to say nothing of the outrageous $850, 500 and $350 face value tickets

Anonymous said...

Another real tragedy here is the 1,500-foot rule (i.e., the rule that street scalpers can't operate within 1,500 feet of Yankee Stadium).

Anonymous said...

These teams and leagues did a 180 on reselling tickets b/c state laws were changed which left teams powerless.
If you want to blame anyone, blame your lawmakers in every state but Mass. They passed bills through their respective state senates to make selling tickets LEGAL and teams, leagues and corps. were left helpless

kevin said...

Yes it was our great ex governor Elliot Spitzer that signed this into law.

Anonymous said...

Here is the Yankee Presale rules fot the 19th and 20th.
http://newyork.yankees.mlb.com/nyy/ticketing/sth_preonsale.jsp

Virginia Janet said...
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