Last year around this time, I wondered whether Major League Baseball was beginning to regret its relationship with StubHub because of the bargain basement price levels at which many tickets were re-selling on the secondary market. According to the New York Post, at least a few teams, including the Yankees, have started to have some doubts.
Is StubHub changing the way fans buy tickets too much?
The reason the Yankees and others are reportedly questioning the league’s involvement with StubHub is because they fear that the third-party reseller is starting to cannibalize primary market sales. In addition, teams have become increasingly concerned that the low prices will encourage season ticket holders to let their subscriptions lapse. After all, why pay an inflated price for season tickets, when the same number of seats can be accumulated at a discount? What’s more, compounding the problem is the fact that season licensees are finding it increasingly difficult to recoup some of their investment by reselling a portion of their plan. This two-front assault on season ticket holders is causing many of them to surrender their seats.
In the New York Post article, the idea of a price floor was floated as a potential compromise, but it was noted that StubHub would not be amendable to such a proposition because it would contradict its corporate mission statement, not to mention leave it vulnerable other platforms. If StubHub won’t relent, teams who are unhappy with the deal could chose to opt out, but that also doesn’t seem like an attractive option. Because it would be almost impossible for teams to prohibit resale on StubHub, forfeiting the rights fee could come with little reward, especially when you consider there are several other independent third-party exchanges, such as Ticket Liquidator, that offer tickets at a steep discount.
Baseball’s only viable alternatives to StubHub would be either a licensing deal with another platform or an attempt to establish a proprietary one. Of course, the first option assumes there is a competitor with deep enough pockets to outbid StubHub, while the second is based on MLB’s willingness to make a large, uncertain investment. Neither alternative seems likely at this time, so chances are the two sides will reach some kind of compromise.
Baseball’s current contract with StubHub is up for renewal after this season, so stories about the sports’ dissatisfaction are undoubtedly part of renegotiation posturing. However, because baseball, with its large inventory of seats, is a key growth driver for StubHub, it can’t take the sport’s concerns lightly. Even though MLB probably isn’t in a position to make more money without StubHub as a partner, the ticket reseller can’t afford to find out. Besides, the disagreement really isn’t anything an inflated rights fee can’t mediate. If StubHub is willing to pony up exponentially more money for its exclusive partnership, and perhaps add a few restrictions like an earlier cutoff for game day sales, baseball’s concerns would probably go away. That is, until the next deal is up for renewal.
I disagree with the framing of this argument. The Post (and you to a certain extent) give equal shrift to both sides when it’s obvious to me that the MLB is in the wrong. For this reason, there is a side of this debate that you (accidentally) and the mlb (intentionally) are forgetting, premium games. Premium games are games deemed premium due to the game holding special significance (i.e. team celebrations or anniversaries, rivalry games or games with popular opponents) and therefore are priced accordingly. MLB teams (some) have been doing this for years. Stubhub sellers also mark up the prices in a similar fashion (on top of the original premium pricing. If season ticket holdership is declining due to the lower secondary market prices then premium pricing should encourage ticket buyers to buy season tickets or buy premium tickets from mlb box offices to avoid the risk of paying two premium game fines. This should at least make the loss negligible. The real issue isn’t a stub hub pricing floor the real issue is a combination of marketing, market size, territorial rights, team history and most importantly competitiveness. If the MLB is looking for someone to blame for the decline in season ticket sales look no further than the mirror. Leave Stubhub alone because soft salary caps (luxury tax, arbitration, slotting, and drafts), collusion, territorial rights and the nonexistent salary floor are the real culprits.
Not every team uses dynamic or premium pricing. The Yankees are an example. The price for a Red Sox game on the weekend is the same as an Orioles game on a Tuesday in April. As a result, those tickets sell at a premium well above face value, which means the Yankees are “underpricing” some of their inventory. Now, one response would be to use dynamic/premium pricing and jack those prices up. Similarly, the team could raise the price of its bleacher seats, which have the most resale value. Of course, if they did this, consumer advocates would scream bloody murder.
If the Yankees are going to underprice some games, they have a right to express concern about being undersold on marginal games. Similarly, StubHub has a right to resist. Neither side is right or wrong…it’s just business.
Finally, your implication that baseball is suffering from systemic problems is completely without any substantiation. Baseball attendance will approach record levels again this year, so there is nothing wrong with the health of the game.
Finally, unless teams threaten to revoke tickets from those who sell on StubHub, baseball’s next contract won’t have an impact on fans because they’ll still be able to use online brokers. The biggest effect will be on StubHub and the individual clubs.
Baseball is a dying sport. Only corporate buyers and grandfathers too old to know the real price of the even are buying the tickets. Those who are gifted the tickets don’t want to be bored for 3 hours, so they opt to sell the tickets. No one can change the fact that baseball is boring and no actual American wants to see it if not given the steep discount.
It’s a dying sport earning record revenues, not in only in terms of ticket sales but rights fees. I am sure the 70 million fans who attend games and the TV execs who pay out hundreds of millions are all wrong though. You obviously have your pulse on the industry, as demonstrated by all the compelling evidence you cited to support your opinion.
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