The great Super Bowl ticket debacle of 2015 will not be repeated – or so promise companies at the center of a market that melted down last year, leaving fans disappointed, putting brokers out of business and prompting lawsuits.
In the 12 months since, popular ticket markets like StubHub and TiqIQ say they’ve changed their policies and practices to reduce speculative selling and ensure that everyone who buys a ticket for the Feb. 7 game gets a ticket. Early indicators, including smaller inventory and a relatively high average get-in price of around $3,100, suggest that it’s working.
“We’ll just never allow that to happen again,” StubHub spokesman Glenn Lehrman said. “We were always very careful, but now we’ll be ultra conservative.”
The market remains unregulated, and industry insiders acknowledge there is still a chance that fans could get burned or that ticket markets will take losses again. The risky short-selling at the heart of last year’s debacle is still happening in places, and a large amount of the available inventory remains in the hands of a few companies.
To understand what happened last year – and whether this time will really be any different – you have to know that Super Bowl tickets are highly controlled and distributed privately. The NFL says it allots 17.5 percent of the available seats to each Super Bowl team, 5 percent to the host, and another 1.2 percent to each of the remaining 29 franchises. The final 25 percent goes to the league.
Very, very few of these tickets are sold directly to fans, usually via team lotteries. The rest go to team executives, players, coaches, sponsors, or media partners. Teams also set aside tickets to sell to brokers, who turn around and sell them on the secondary market. No one knows the size of this allotment.
One business insider estimated around 30 percent of a team’s Super Bowl tickets are sold to brokers, another suggested twice that proportion. The four NFL playoff teams that competed in the conference championship games didn’t respond to interview requests.
It’s the secondary market that broke down last year. Ticket resale sites make clear that ticket brokers sell on spec, agreeing to deliver a ticket they don’t yet have. The brokers either know they have tickets coming in the future, or they’re willing to bet prices go down, and they can fill the order by buying a cheaper ticket closer to game time.
Short-selling Super Bowl tickets hadn’t been a particularly risky proposition in years past. Prices for tickets on the secondary market tended to drop by about 25 percent in the final two weeks, earning a tidy profit for the speculators. In part because of the predictability, short sellers entered the market last year earlier and in greater numbers than ever.
At the same time, the actual tickets were concentrated with two brokers. Realizing they held the upper hand, they held back their inventory and kept prices high. At some times, even the cheapest tickets available cost more than $10,000. The shorts got squeezed. Some brokers went out of business, others backed out of deals.
The consumer-facing websites that facilitated these transactions found themselves in the public cross-hairs. StubHub paid almost $6 million to deliver seats to customers whose orders had broken. Others, like SeatGeek, TicketCity and Vivid Seats, filled what they could and refunded buyers’ money for the rest, which left some fans empty-handed on game day.
So what’s different now? Most sites are still letting sellers list tickets they don’t own, but they’ve gotten more selective. StubHub authorized 10 brokers, down from 25 to 30 last year, to list in the past few weeks, Lehrman said. Starting Thursday, the company required sellers to list only tickets with specific row and seat numbers, which is a way of weeding out short sellers. This is the earliest StubHub has ever made those requirements for the Super Bowl.
“We feel pretty comfortable that, if anything, we’d have to go into the market for only a couple of seats,” Lehrman said. “And that’s pretty standard for us on every event we do.”