Tuesday, November 4, 2008

The Criminal Side of Ticket Sales

Whether it's Aussie rules football, hockey, rugby, cricket, Major League Baseball playoffs or of course, the Super Bowl, seems like someone, somewhere is scalping – or "touting" as the Brits say – tickets, earning a quick buck and depriving real fans of being able to get seats to big games.

Free market advocates love to tell us how the sale and resale (and resale and resale) of tickets at prices well beyond their face value is really a mechanism for determining the real value of the ticket. What they don't tell us is the adverse effect this has on sporting events as well as the general entertainment industry, including the proliferation of fraudulent operators who are often part of wider criminal operations.

The recent monumental study by the British Parliament (House of Commons Committee on Culture, Media and Sport) of well over 200 pages and dozens of interviews draws a gloomy picture indeed. The report clearly outlines how the resale of tickets at inflated prices puts them beyond the reaches of audiences for whom they were intended, including team supporters or fans who follow a particular artist.

Profits taken by the secondary market also have direct and indirect effects on the organizers and promoters of sports and entertainment events: they rarely see one penny of any of the resales of tickets, and real fans and supporters also then become discouraged from even trying to get tickets to major events in the future. Tickets become in this well-known scenario the purview of only the wealthy and connected.

And there are the counterfeiters…the latest victims were 500 Texas Tech football fans who were scammed this last weekend at perhaps $200 each, (that's a quick $100,000 of almost pure profit), depriving them of the opportunity to see their beloved Red Raiders beat for the first time in nine years hated rival Texas 39-33 in an unbelievable last-second finish.

While the free market advocates have an interesting theoretical argument regarding the most efficient way to allocate tickets, the fact is that many if not all college and professional sports teams are for the most part also public entities – they most often play in arenas and stadiums that are financed in part or in whole with your tax money and mine, and they almost always also enjoy other benefits granted to them through the public domain.

Many states in the US have simply thrown up their hands in despair as to what to do with regards to the secondary market, while many other countries are looking for new and innovative ways to deal with the problem. The growing criminal activity around the sale of tickets to major events only makes solutions to this issue more pressing.

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