Resale Prices: What Goes Up…

Resale Prices: What Goes Up…

This article is a follow-up on a concern often expressed by readers and friends alike that for one reason or another, a particular concerts ticket prices will not come down because everyone want tickets to that show! Most recently, I have been asked specifically about Lady Gaga and Taylor Swift. During my research, which was a few years ago, I observed resale ticket prices on the internet for more than 150 concerts over the course of a two year history. Of those, only a handful of concerts had cases where average prices did not fall and in no case did average prices go up. I feel confident in stating that, as a general rule, resale ticket prices will fall from the day the tickets first go on sale.

In further illustrating this point, I asked my colleagues at SeatGeek to prepare two graphs charting average resale ticket prices for two John Mayer concerts from February of this year. The first show took place on February 24th in Boston – a town that has a huge college population and enough Mayer fans to create a lot of demand on both the primary and secondary market. The second show I picked was the first of two concerts Mayer performed at Madison Square Garden on February 25th. I chose this show because Madison Square Garden is a very popular venue and because the city has a vibrant resale market which significantly increases speculation (people buying for the explicit purpose of reselling tickets for a profit). So, everyone wants a ticket, supply is short and prices are high, right? Not really.

In the below charts (courtesy: SeatGeek.com), ticket prices are represented by blue and red lines. The blue line is average resale ticket price over time without any controls on price. In both cases, average price starts at about $120 per ticket ($20-30 above face value including fee’s) and proceeds on a roller coaster ride with a nice crash in the last five to seven days. I often recommend buying resold tickets in this time frame because the crash consistently seems to occur in the five to seven days leading up to a show. I will propose why this is the case in a moment.

The red line is average ticket price excluding tickets sold for more than $120. I control for price to rid the analysis of highly priced tickets (usually the best) that tend to skew the average price which helps us see a more consistent average price. Some people are willing to drop $500 for a pair of front row tickets at anytime and those ticket resales skew average prices upward.

Notice the bump in average price in the five days leading up to the shows? That is you and your friends realizing a week before that they don’t have a ticket and they are all running to the resellers for tickets – but this does not have to be you! If you are looking for values, be brave and wait out the storm. I specifically suggest looking for resold tickets on the 3rd or 4th day leading up to an event. Referring to my article titled SOLD OUT?! Three Strategies for Getting Tickets, I would concurrently pursue strategy 1 and 2 on these days until I found the tickets I wanted.¬†For example, I bought two tickets for the February 24th Mayer show for $92 each from TicketMaster the day before the show. As the chart illustrates, average prices were at or below $90 on that day, so the resale market was no better or worse than the primary market. Strategy 1 just happened to work for me so I did not have to revert to a reseller – however I did have to wait quite patiently.

John Mayer, TD Banknorth, February 24, 2010John Mayer, MSG, February 25, 2010

For those who want a little more information on why prices tend to drop in the final days leading up to the show, I have three proposals.

1. Resellers want to get ticket out of their inventory before they have to sell them to street scalpers or otherwise toss them out, so they price to sell.
2. People like you and I bought too many tickets for friends who don’t show and we are now selling them at face value on eBay and Craigslist, which arbitrages the higher prices that resellers seek.
3. The combination of one and two creates enough supply to support the demand wildly high prices are not supported.

TicketMaster would like to think that they are participating in the arbitrage by selling tickets at the last minute, but I think the number of people who know to look on the primary sellers website is not sufficient to have an influence, but it is nice for those in the know!

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