The National Football League season has kicked off with a bang and once again, ticket prices are higher than ever. Fans who pay anywhere from $50 to $250 for a single ticket may grouse about the price, but Dan Elfenbein, Ph.D., a professor at the Olin School of Business at Washington University in St. Louis said teams routinely under-price their tickets and online ticket scalpers are enjoying the benefit.
That teams sell tickets at prices that are far lower than their market value may seem to contradict economic logic. But, Elfenbein said, scalpers sell tickets for far more than fans do, which indicates that the market is willing to pay a lot more than teams ask. On average people buying NFL tickets from scalpers online pay about 50 percent more than ticket’s face value for scalped tickets. Markups are even higher in a number of markets, like Green Bay and New England, Elfenbein said. Yet it makes sense that owners don’t jack up ticket prices even more.
“With that kind of a markup on the street, the owners are leaving lot of value on the table,” Elfenbein said. “But by keeping the tickets below market price, the owners are more likely to fill the stadium, creating more opportunities for concession sales. And, parking troubles aside, people really seem to enjoy going to full stadiums — the excitement level is that much greater. On the flip side, since most NFL teams have received some sort of public funding for stadium construction or other services, raising prices to levels that the market would support might cause people to rethink the use of public funds.”
Elfenbein is an assistant professor of organization and strategy in the Olin School of Business at Washington University. Elfenbein’s conclusions come, in part, from a study he conducted on the impact anti-scalping laws have on people selling regular season NFL tickets online. He examined more than 100,000 transactions processed by e-Bay and more than 100,000 “ask” prices for tickets sold via Ticketsnow.com, a leading Internet-based ticket reseller.
Although technically illegal in many states, ticket scalping online is quite hearty. Elfenbein says scalpers selling tickets to games in states with anti-scalping laws were able to command higher prices and higher mark-ups over face value than in states without those laws. Yet at the same time, anti-scalping states didn’t see as much online trading.
Elfenbein says, it’s relatively predictable how much over face value a ticket will cost. “There’s a distinct pattern to how much more fans are willing to pay for a ticket depending on when it’s sold during the season and how well the team is doing. But it also depends on which team we’re talking about,” Elfenbein said. “It really tells you a lot about the psychology of being a sports fan. In the data that I’ve looked at, being 6-4 rather than 4-6 raises the price that a fan is willing to pay by about $24 on average.”