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One if By Land, Two if By Sea, and Zero if By Competing Ticket Exchanges

The Patriots are coming, the Patriots are coming! The New England Patriots professional football team recently sued StubHub, an online company that facilitates the resale of event tickets. The Pats are even mounting a Tom Brady-like offensive against some of its biggest fans – season ticket holders.

But who are the true “Patriots” here? Aren’t they the fans that just want the freedom to buy game tickets for their favorite team (or sell them if they can’t attend)?
E-commerce websites like StubHub help these buyers and sellers.

Gone are the days of having to go to the event and purchase a ticket from some gruff, shady character. StubHub and eBay offer a safe (and often guaranteed) experience for buying and selling tickets. But in case you haven’t noticed, venues and teams will often prevent these resales – just look at the small–print restrictions on the back of the next game ticket you see.

Most consumers don’t know that teams won’t let them sell their tickets to others – even to friends and family. Some states have laws that regulate scalping, but even these are mostly ignored by law enforcement officials that have greater priorities.

I testified on New York‘s ticket scalping law at a hearing before the state’s Consumer Protection Board. In New York, the market for event tickets is a morass of complexity and corruption, and cries out for the kind of competition and transparency that e-commerce can provide. In 1999, state Attorney General Elliott Spitzer shined a bright light on the shady underground market in New York City, where most high-demand theater and concert tickets are diverted by industry insiders using “corrupt” and “unfair” methods. Based on the Attorney General report, New York’s legislature liberalized the ticket scalping laws last year, making it legal (at last) for you to sell your ticket at up to 45% over face value.

E-commerce makes the secondary market for tickets more transparent. And that’s likely one reason why teams themselves have created a website for reselling tickets. The Patriots have a ticket exchange site here.

Creating an online ticket exchange for the resale of your own tickets is also good for business. The team forces its fans to use only its exchange, and allows for only one price – face value. A rule setting face value may seem egalitarian until you read – again in fine print – that the Patriots take ten percent of the ticket price as its cut for
requiring fans to use its site to resell tickets. As a result, fans can’t even recoup all of their costs.

It’s time to embrace an open market for ticket reselling. At the hearing in New York, I recall Jeff Fluhr, StubHub’s CEO, citing stats showing that an open market is the true egalitarian force for consumers of sporting events, theater and concerts. On the StubHub website, tickets for some events sell for more than face value, while others sell for less. Overall, most ticket prices sell below the total purchase cost, which includes the price of the ticket plus those “convenience” fees we all hate to pay.

It’s easy to see then why the Patriots are against open-market exchanges like StubHub. If the Patriots were to have a really bad season, they wouldn’t be able to command $500 for a family of four that sits in the lower level. But if the Patriots are sacking fans with high face value prices, the team shouldn’t simultaneously be preventing them from using competing ticket exchanges. This practice should draw flag for a blatant “holding” penalty. And it’s not StubHub that should be penalized – it’s the Patriots.