Convergence of Primary, Secondary Ticketing Markets Contributing to Troublesome Trend

Convergence of Primary, Secondary Ticketing Markets Contributing to Troublesome Trend

Multiple baseball teams set records for single game ticket sales revenue during the 2024 playoffs. 

That achievement is the byproduct of strong demand for MLB’s postseason product and a savvy –albeit debatable– ticket sales strategy intended to recapture revenue leakage.

Clubs recognize that “fans are agnostic to where they get their tickets and have started making pricing decisions for both the primary market, which they obviously control in full, and large portions of the secondary market, which is a mix of the organization and other sellers,” one BI executive said.

That is why the two have moved more in concert with one another this fall than typically seen.

But while the blending of ticketing markets is enabling teams to maximize gate receipts, it is also contributing to a potentially troublesome trend across sports: loyal fans are getting priced out.

“The short-term gain that comes with overcharging your core fans is juxtaposed with the long-term problem that creates with fandom in general,” the club exec said.

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To be clear, there is nothing inherently wrong with dynamic pricing. 

In fact, “during the regular season, when tickets are sold at market rates, it can provide teams with a lot of flexibility,” the BI exec said.

The conversation begins to become more complicated once the postseason rolls around and if/when those same organization use the functionality to gouge their most passionate fans on playoff tickets–as the record setting teams did.

“Because at the end of the day, that's all this really is,” the exec said. “You're in the postseason, can the organization maximize profitability amongst an emotionally irrational customer base? It’s not all that different from charging people $50 for a pack of hand sanitizer during a pandemic.”

Of course, these are for-profit businesses and attending a game is not a life and death matter. So, where that line is remains unclear. 

The bigger issue appears to be that rights owners across pro and college sports are allocating growing portions of their ticketing inventory to secondary market brokers. How many seats depends on the team and its risk profile.

“The Dodgers will have a different profit or revenue-sharing model than the Marlins,” the exec said. “The Dodgers have HUGE upside in the playoffs. So, they might be willing to break even during the regular season. The Marlins do not have that luxury. They have to create a little money over those 81 home games.”

The approach enables teams to unload tickets in bulk, to be more flexible with pricing (including upwards on postseason inventory), and to retain a limited headcount in their sales departments. 

But unfortunately, the brokers’ incentives are not always aligned with the organizations’ best interests. 

“Their goal, like most companies in America, is to make money,” the exec said. “It’s not their job to worry about the long-term health of these franchises.”

That’s not good for fans, particularly those looking to attend postseason games on a budget. Or for season ticket holders wanting to be part of a ‘community’.

Fans expect that "if they sit in the same seat for 81 games, they’ll become friends with their seat neighbor,” the exec said.

But that is happening with less frequency as organizations allocate more seats to brokers, and it negatively impacts the season ticket holder experience.

And the truth is, it’s not without drawbacks for the team either. There is a certain, yet undefined, risk in trying to squeeze every dollar out of a brand’s most loyal supporters (without delivering added value).

Remember, most sports franchises do not compete for championships year in and year out. If fans feel as if the organization abandoned them when the team was good, they may not be willing to support it when the on-field product isn’t.

Some owners don’t understand there are repercussions to gouging fans. 

Others “believe they can make their money this year and continue to make money for as long as they want into the future’,” the exec said.

And a portion simply aren’t concerned with how decisions made today might impact the club decades down the line. Making money in the short term is of greater importance.

Smith Entertainment Group chairman “Ryan Smith, who has reduced F&B costs and made local broadcasts available without a pay TV subscription, is young compared to many of the other owners. He'll still own the club in 30 years," the exec said. “Most won't.”

There is some additional nuance influencing owner decisions on ticket sales and distribution. 

“If a team doesn't have a consolidated broker, mom and pop brokers will buy up the playoff tickets and sell them at a markup anyway,” the exec said. “It’s really hard to keep them out.”

Naturally, most owners feel that if anyone is going to make margin on their product it should be them.

However, that reality shouldn’t give clubs carte blanche to take advantage of fan emotions–particularly, if they’re not going to be transparent about it. 

And the reality is many are hiding their ticketing practices. There’s a reason no one has reported on the postseason sales records referenced.

The blurring of lines between ticketing markets clearly hurts loyal fans. But it’s also fair to wonder if the players are getting short-changed by the convergence of primary and secondary too. Remember, they’re entitled to 60% of postseason gate receipts.

In theory, the best solution would be for teams to simply curb for-profit resale (as done in other countries). 

But there are likely legal issues with that approach and it’s not necessarily in the season ticket holders’ best interests, either. Many fans buy packages with the intention of selling a portion to cover the cost of the remainder. Season ticket sales would likely drop without the option of unloading some.

So, that isn’t going to happen.

However, sports properties could begin to offer more pre-sales (think: fan must attend X number of games during the regular season to purchase postseason tickets) and make seats acquired via that process non-transferable.  

They won’t make as much money in the short-term. But the strategic pivot will help to ensure their most loyal fans remain under the tent for the long-haul.

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