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These brokers deal in sports tickets — and risk

Businesses such as StubHub and Barry's Tickets fill a gap in the system, and the likes of USC and the Lakers acknowledge this secondary market's usefulness.

August 04, 2013|By Diane Pucin
  • Finding the best seat in the house isn't always as simple as buying a ticket from your favorite team.
Finding the best seat in the house isn't always as simple as buying… (Robert Lachman / Los Angeles…)

Dale Rech, an avid USC football fan who lives in Florida, decided a few years ago that he wanted to attend USC's game at Notre Dame. Rech dived into the secondary ticket market, choosing StubHub. He was willing to pay a premium.

"The seat I ended up buying had about a 300% markup," Rech said. "To me it was worth it. And it was a good seat."

Skip Elefante, a Tustin businessman, regularly deals with StubHub and other secondary ticket marketers to both buy and sell tickets. He sells his tickets for what he paid and sometimes sees his ticket go for well over market value. Sometimes he sees his ticket go unsold.

"Either way, I'm out of the risk business," Elefante said. "That's what the secondary market is for."

Secondary markets are mostly Internet sites such as StubHub, TicketExchange by Ticketmaster or Barry's Tickets, which advertises heavily on Los Angeles sports talk shows. They buy from ticket holders, mark them up and sell them over the Internet.

There's no question the safest — and most common — way to buy a ticket to a sporting event is to go directly to the team.

But that's not always easy or even possible if the team is historically good and most of the tickets belong to season-ticket holders. Those cost thousands of dollars, even for upper-level seats, and who has that type of cash or even wants to attend every home game of their favorite team?

Then there are those guys, almost always guys, who stand in front of the arena waving two, four, six, tickets in your face. "Got four, want four?" they'll say not too loudly, but loudly enough to get your attention. Such transactions feel shady and are sometimes illegal and the purchaser has no way to knowing if the tickets are legitimate.

It's no fun forking over a couple hundred bucks, getting to the door and being told the tickets are fake.

And wouldn't you know it? You've already paid for parking.

The something in between is the secondary market. There is even an organization, the National Assn. of Ticket Brokers, that gives its seal of approval to secondary market sites.

Some teams are upfront and deal with specific vendors. If you buy a USC football season ticket and know you can't attend all the games, USC urges you to sell to StubHub, one of the largest marketers.

For two years, Major League Baseball had a similar deal with StubHub, though now it is left to individual teams to make their own deal or not.

Marianne Jennings, a professor emeritus at the W.P Carey School of Business at Arizona State, has done several studies on the secondary market.

She said the market is a natural outcome of the fact that teams underprice tickets.

"The primary market is invariably underpriced," Jennings said. "But the team or concert sponsor makes money on ancillary things such as parking, concessions and souvenir sales."

Fans who seem puzzled when ticket prices rise and fall daily on sites such as StubHub, Ticket Exchange, Ticket Liquidator, SeatGeek and FanSnap, shouldn't be surprised, Jennings said.

"It's a little like the airline ticket market," she said. "You could be sitting next to a guy who paid $200 for his ticket and you paid $400.

"That's the market being itself. It's transparent and it's a free market. It's up to the fan to do research and make a rational decision."

Jennings also said that the brokers who work for the secondary markets have particular talents.

"There is no 'usual' markup," she said. "The ticket broker is the real risk absorber in the whole system.

"They purchase in the primary market at the going rate and use their experience to figure out what demand will be. If they are wrong and a team's fortunes shift, they absorb the loss.

"Many brokers buy season tickets for dog sports teams to have them for when they might have winning years. Brokers are often the bread and butter for sports teams in their lean years. Brokers are really risk-takers."

Some teams are beginning to act almost as their own secondary ticket brokers.

For example, Stanford football is doing something it calls "dynamic pricing."

Cardinal spokesman Kurt Svoboda said that tickets for the Notre Dame, California and Oregon games will be sold using this system.

From Aug. 1 to 4, Stanford will sell tickets to those games for $115 and every three days the price will drop $10 until Aug. 12 when they will cost $85. After that, Svoboda said, "Tickets will sell at a certain market price. We're trying to make this a predictable model that is extremely transparent."

Jack Groetzinger, a Dartmouth graduate and a co-founder of SeatGeek, a ticket liquidation Internet site, said he got into the business because "I was inspired because there was an apparent dearth of market data being used to determine what the true price of tickets should be."

As recently as 10 years ago, teams didn't want us to exist," Groetzinger said. "More recently they've embraced the secondary market. It's very much a reversal."

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