That said, the frequency of queries our office fields about "the face value" from customers is a constant reminder that people are very much concerned about the mark-up brokers charge on their tickets. Generally there is a correlation between the face value of a ticket and the market value when it is resold, but there are many instances where the face value is obviously irrelevant, and in the remainder of cases it is at least practically irrelevant. The market value is the price the market will bear; how much the customer is willing to pay, and if that's ten-times the face value or one-tenth the face value, it really makes no difference. Where it does make a difference is within the psyche of the consumer. Nobody wants to feel ripped off, and we all (or most of us) enjoy getting a deal. If we score a coveted pair of Toronto Maple Leafs tickets at below face value, well - we're likely to brag to our friends about it. Conversely, if we pay 5 times the face value, then we're liable to harbour bitter feelings towards those "damn scalpers", possibly suffer from buyer's remorse, and generally feel like we got ripped off.
You'd be hard pressed to find another retail business where the consumer concerns themselves so much with the cost of the product being sold, as we find in the realm of ticketing. I like to use the example of buying a pair of underwear at Sears, or The Bay, where you're likely to spend $20 or more on a decent pair of brief's that cost what, $3, maybe as much as $5? The mark-up or gross margin in most retail operations is much higher than what you'll find at your standard ticket resale operation, but the fact that the product cost is unknown elsewhere and very obvious with tickets, creates this hyper-awareness of consumers on our alleged profits. The reality of course is very different, as we will delve into later in this dissertation.
People too are very emotional about their tickets, and our industry, while a multi-billion dollar one, is still a grey market at best in many people's minds. Even while primary ticket sellers like Ticketmaster now own ticketing resale businesses (ie. TicketsNow), and primary market franchises have affiliations with other secondary market ticketing businesses, such as Major League Baseball's affiliation with StubHub. Most legitimate ticket brokers have evolved from their days of hawking tickets on the street, into sophisticated operations employing university grads, and paying their taxes. We take credit cards, provide invoices, and contribute in meaningful ways in our communities, and yet we still can't shake the stigma of being a "ticket scalper".
There are some good concrete examples of where the face value is obviously irrelevant, and one of these is when tickets have a face value of $0.00 or $xx.xx. In my experience, these tickets are often premium of VIP type tickets, and their cost is anything but $0! They often come with expensive club memberships (ie. Chairman's Suite tickets at the ACC), or costly subscriptions (ie. VIP membership at Molson Amphitheatre), or from big dollar marketing affiliations (ie. you buy a Super Bowl ad for $2,000,000 and you get a couple of free tickets to the game). In all of these cases a broker has paid an infinite amount over the "face value" and the consumer is also paying an infinite amount over face value, but their infinite amount will likely have a bit of profit built in for the reseller!
There are also cases where the exact same tickets for the exact same event have different face values. Consider buying Toronto Maple Leafs tickets from TicketMaster, where the price of a "Purple category" ticket (something in row 12 or higher in the upper level) will come in at nearly $80/ticket, while the face value that is printed on a season ticket holder's ticket will be closer to $50. Using the same example with the Toronto Maple Leafs, the matter is further complicated because the season ticket holder's invoice cost, or actual price, is normally less than the amount printed on their tickets. This discrepancy between the face value printed on a season seat holder's ticket and one bought from the box office is even more pronounced for certain events, like MLB baseball, where the discount given for buying a full season (80+ games) is very hefty in certain markets. So the box office window price could be double that of the exact same seating locale of a season ticket holder's seat. So what is the "face value" really?
One of the rational reasons that ticket brokers exist is thanks to gaps between price pints from primary sellers. If you consider the Air Canada Centre seating chart below (Exhibit 1.), you can tell that certain sections are in a more preferential location to the stage than others. For example you would probably prefer to sit in Sec 109, than Sec 107. And if you were sitting in Sec 109, you would mostly likely want to sit lower down in that section, say in the first 10 rows or so. The market value of an event ticket is very much depenedent on these seeminly miniscule variations in seating quality, and it's just not possible for a primary seller, whom is very "volume oriented", to have hundreds of price variations for a given event. So they may price seats in Sec 107-109 and 118 - 120 at a premium price point, and then seats in 101-106 and 121 & 122 at a different price point, with seats behind the stage 110-117 at a 3rd price point, and then maybe the upper level has 2 or 3 of its own price points. If we consider the sections noted above, and you have a ticket in Sec 106, Row 1, and it is on the aisle of Sec 107, would you prefer to sit there for $200, or in Sec 107 Row 28 on the aisle of 106 for $200? Most people would pick the seat in row 1, and yet that ticket might have a face value of 1/2 that of the seats in Sec 107 Row 28.
Exhibit 1.
For a few more examples, using the Toronto Maple Leafs and their ticket pricing metrics, please see my ariticle entitled, Secondary Ticket Market 101.
On the secondary market, it is estimated that 40% of tickets are sold below face value (G. Adler, NATB) and any broker who has been stuck with very high priced inventory that they cannot sell at even 1/2 of face value knows how frustrating it is to hear only complaints from very high demand events. If you consider that the face value on Montreal Canadiens vs. Toronto Maple Leafs tickets on a coveted Saturday night, is the exact same for a pre-season match up vs. a lackluster opponent on a Tuesday, you can see how the face value seems pretty irrelevant; most of the time - to us. To me, it is the most perfect real life example I have seen of "the market" in action: its perfection is a function of many variables, the opponent, the day of the week, the seating location, the limited supply, and the expiring nature of the product. It works for the broker when events "go big" and it knocks the wind out of the sales when an event "tanks".
Just about time for a Timmy's - I wonder what that cup of coffee costs? Ahhhh... it doesn't matter, I'm willing to pay my $1.35, and just Face... The Facts.
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