Yankees end relationship with StubHub

MLB officially re-upped their agreement with StubHub yesterday, and to exactly no one’s surprise the Yankees joined the Angels and the Cubs in opting out of the agreement. Instead, they’ll be using Ticketmaster as their official re-seller in a move that the team called “fan friendly,” which caused George Orwell to rise out of his grave in admiration.

Let’s be clear: there’s nothing fan friendly about this decision, and there’s not supposed to be. The Yankees have had StubHub in their sights for some time now, specifically because of the brand’s association with cheap tickets. The Yankees blamed this for their sparse and stoic crowds, but that’s ridiculous. As a basic matter of fact, lower ticket prices means higher demand for tickets, so if StubHub were really having that big of an impact it should be creating higher numbers at the turnstile, not lower. The “problem,” such as it were, is that the common fans awareness of StubHub as a destination for below face value tickets for non-premium games meant fewer people going to the Yankees and paying face value for those tickets, and apparently was leading some season ticket holders to wonder if they were being played for fools.

Making this decision even more appalling is the fact that StubHub made some major concessions to MLB in order to renew the deal, setting a minimum ticket price of $6 and increasing the blackout period to buying tickets to six hours before the start of a game.

So here’s the basics in terms of what this means: the upshot is that the Yankees will get a bigger cut of each ticket sold through Ticketmaster than they did through StubHub, and that fans looking for last minute tickets to a game will be forced to purchase them for face value from the team, instead of getting the actual market price through StubHub. The downside is that it’s going to get much more expensive, perhaps prohibitively so, for the prototypical average fan to get tickets to Yankee Stadium.

But at least all of that additional ticket revenue will get re-invested in the team.

34 thoughts on “Yankees end relationship with StubHub

  1. Mike

    Ugh, stubhub sometimes had some decent seats for not a bad price in the few days before a game. I guess Craigslist it is, which usually has some nice deals esp the day before from season ticket holders looking to desperately unload.

  2. jay_robertson

    so you can't get a ticket from StubHub until 6 HOURS before the game? AND there's a minimum price of $6 now?

    And that wasn't good enough for the Yankees?

    It's a good thing I don't live in the NYC area – if I did, I'd be pizzed. As it is – this will just keep me from seeing them when they come to play the Twins. I really don't see me driving 4 hours to see them if I can't even be sure of a ticket until 6 hours before the game.

    Say hello to more empty seats, Hank and Hal.

    • murph

      You have it backwards, you CAN get a ticket from StubHub until 6 hours before the game. Then sales are cutoff.

      • jay_robertson

        ah. duh…that makes more sense. Good – I can still TRY to get to a Twins game, then. Thing is, whenever the Yankees are in town, that is a "premium" game. While SH was selling tickets to, say the Royals, last year for $2, the Yankees tix were still going for $20 or more in the nosebleed section.

        Thanks for the help.

    • sam

      no – i think it means sale is cut off 6 hours b4 game starts – it was 2 hours.

  3. How do you know it's not a fan friendly agreement without the details?

    An important distinction needs to be made between season ticket holders and individual game sales. Both represent fans, but have very different interests. Because the Yankees make more money from the former, it's very reasonable for them to consider the concerns of those who are season ticket holders (for full disclosure, I have a partial plan).

    Even though fans buying individual games have benefited from the lower prices to certain games, the season ticket holder has been hammered by Stub Hub's algorithm, which gradually lowers prices until the sale deadline. This system greatly favors the buyer because the seller has an expiring asset. With tickets often still available at the box office, the buyer has no choice but to keep lowering the price or risk getting nothing. That might sound like fair market practice, but in most cases, sellers are not the sophisticated entities usually participating in supply and demand arrangements. In a real market, having so many small participants operating under an inefficient pricing model would lead to many going out of business. In the season ticket example, that means several licensees not renewing their subscription. That's why the Yankees had little choice but to address the StubHub issue by finding a secondary market that is more friendly to season ticket holders.

    Your assertion about StubHub's impact on ticket demand is also off base. StubHub is a secondary market. Lower prices on it increases demand for tickets already sold, which doesn’t add to attendance. In addition, lower resale prices detract from the season ticket license, potentially leading to cancellations. Finally, knowing that tickets can be purchased for cheaper leads to fewer individual primary sales. In other words, low prices on a secondary market cannibalize and even discourage primary sales.

    By no means is this an appalling decision, especially not until the terms of the TM platform unveiled. The Yankees have every right, in fact a responsibility, to protect the value of their season ticket licenses, and StubHub was causing erosion. According to my ticket rep, TM’s fees will be lower and the price protections will be stronger. That means season ticket holders won’t take a bath on re-sale. Will those looking to poach extremely tickets take a hit. Yes, but the system was heavily skewed in their favor anyway. What’s more, if TM does not live up to the fan friendly promise, tickets can still be listed on SH, just without barcode delivery.

    It’s easy to gripe about this deal, but if you really dig into the details (many of which will soon be revealed), I think it will be a solid compromise for the team’s different fan constituencies. At the very least, judgment should be reserved until all the facts are revealed.

    • BrienJackson

      "How do you know it's not a fan friendly agreement without the details? "

      Because it's Ticketmaster.

      ".Because the Yankees make more money from the former, it's very reasonable for them to consider the concerns of those who are season ticket holders (for full disclosure, I have a partial plan). "

      Conversely, the person who's shelling out the money for a season ticket plan is probably far less likely to have their purchasing patterns altered by the secondary market than the person looking for cheap non-premium tickets on StubHub.

      " the season ticket holder has been hammered by Stub Hub's algorithm, which gradually lowers prices until the sale deadline. This system greatly favors the buyer because the seller has an expiring asset. With tickets often still available at the box office, the buyer has no choice but to keep lowering the price or risk getting nothing. That might sound like fair market practice…"

      Um, probably because it is? StubHub's system more or less assumes that the seller prioritizes getting the ticket sold for some amount of money above $0, and so reduces the price to make it more likely to move the closer to the perish date you get.

      ". In a real market, having so many small participants operating under an inefficient pricing model would lead to many going out of business."

      But selling game tickets on the secondary market isn't supposed to be a business, so why should StubHub assume that it is?

      "In the season ticket example, that means several licensees not renewing their subscription."

      So drop the cost of the season tickets to reflect their actual value, if this is such a problem.

      "also off base. StubHub is a secondary market. Lower prices on it increases demand for tickets already sold, which doesn’t add to attendance."

      I think you're conflating ticket sales and turnstile numbers here.

      "Will those looking to poach extremely tickets take a hit. Yes, but the system was heavily skewed in their favor anyway. "

      Free market for thee, but not for me. Such as it ever was, such shall it ever be.

      • BrienJackson

        "Free market for thee, but not for me. Such as it ever was, such shall it ever be. "

        I guess I ought to expand on that a bit, because it's probably a bit too opaque as it is. What this arrangement amounts to, and what William is at least effectively defending, is a very rudimentary price fixing system. And who it will benefit, precisely, are the primary sellers who will theoretically see more business at a higher dollar amount (the Yankees) and ticket brokers who are looking to profit on the secondary market and now don't have to worry about being undercut by other sellers, because those other sellers have basically been told they aren't allowed to mark down their "products." This isn't a good deal at all for a season ticket holder who's just looking to dump a ticket he can't use, and would prefer to get 25-50% of the value back to getting nothing. Well, at least if you don't assume highly inelastic demand, anyway, but if that were the case tickets wouldn't be getting priced so far below face value in the first place.

        • First of all, I would again urge you not to describe it as a price fixing arrangement until you have seen the details. I am anticipating, based on my conversations, that it will include price protections, but those could be more simple mechanisms like earlier deadlines. However, even if a higher price floor is put in place, that still isn't price fixing because the tickets are not restricted to the TicketMaster platform.

          That technicality aside, StubHub is not a typical market for so many reasons, many of which I enumerated above. The secondary ticket market doesn't even come close to a perfect market, so any argument built on that premise is on very shaky ground.

          • BrienJackson

            "That technicality aside, StubHub is not a typical market for so many reasons, many of which I enumerated above. The secondary ticket market doesn't even come close to a perfect market, so any argument built on that premise is on very shaky ground. "

            I have no idea what that has to do with anything. No, StubHub isn't a "perfect market," whatever that is, largely because the ideal type seller isn't someone looking to turn a profit (for non-premium games). It's probably better to think of StubHub like a flea market or a yard sale where sellers are trying to turn things they don't want/can't use into some dollar amount above $0.

            But yeah, if you're trying to not take a hit on tickets you overpaid for as a first order of business, it's an incredibly bad deal for you. So what?

          • You're argument seems to be based on the fact that StubHub is a market system, so, being good capitalist, the Yankees should simply accept it. That's wrong. StubHub is a market skewed toward buyers. TM may wind up being a market skewed toward sellers. One is not more virtuous than the other.

            Also, the flea market analogy fails because the item sold is not "used", has provided no value to the original owner, and is not expiring. Also, the flea market doesn't provide transparency to the buyer without doing the same for the seller (i.e., buyers know how many tickets are available, but sellers have no idea how many buyers want them)

            Because the Yankees' main customers are season ticket holders, it makes all the sense in the world for them to migrate to a platform that helps restore balance in their favor. If the "average fan" now has to pay $10 dollars instead of $3, I guess you could also say "so what" as well?

          • BrienJackson

            "You're argument seems to be based on the fact that StubHub is a market system, so, being good capitalist, the Yankees should simply accept it"

            This is not my argument.

            " StubHub is a market skewed toward buyers."

            No, it isn't. I think what you mean to say is that the market for non-premium tickets is "skewed" towards buyers based on the fact that there are low demand for tickets, but that's true only because the seller has already paid more than the tickets are worth.

            "Also, the flea market analogy fails because the item sold is not "used", has provided no value to the original owner, and is not expiring."

            None of these things are true, save I guess for the point about the ticket not being used by the original owner, which is immaterial.

            "Because the Yankees' main customers are season ticket holders, it makes all the sense in the world for them to migrate to a platform that helps restore balance in their favor. "

            "Balance," in this case, being roughly translated into "getting a discount on premium game tickets and benefiting from a price fixing arrangement for selling tickets to crap games. "

      • Keith

        "So drop the cost of the season tickets to reflect their actual value, if this is such a problem."

        The Yankees actually increased some season ticket prices in 2011, citing the prices on StubHub to support the price increase. The problem was that they were focusing on "premium games," such as Red Sox or Mets games, ticket prices to justify an across the board increase to the price of tickets in the entire season ticket plan. The value of a random Thursday night game against the O's on StubHub was never any where near to the increased price of the ticket for the 2011 season, and these types of games make up the majority of a season ticket plan, whether full or partial.

        I am kind of on the fence as to how much I think it is the Yankees' responsibility to protect their season ticket holders by ensuring that secondary market prices remain high enough to allow their season ticket holders to recoup a reasonable amount for games that they cannot attend. As a season ticket holder you are basically buying in bulk, which has all of the same advantages and disadvantages as buying anything else in bulk, e.g. there may be a discount up front, but you run the risk that the product you purchased will expire before it is used.

        However, I can certainly imagine that it is favorable financially for the Yankees to have received ticket revenue for 30-40% of seats for games to be played in August and September in January, and therefore want to ensure that season ticket plans continue to be sold.

        The bottom line, is that in my opinion, unless you plan on actually using most, if not all, of the tickets from a season ticket plan, it just does not make sense to have a season ticket plan.

        • Here’s how you know the “looking out for season ticket holders” thing is BS: if that’s all you’re concerned about, why not offer a buy back option for a certain percentage of your games? Well, because you don’t actually care about whether or not your season ticket holders have to eat a loss on not being able to make a game, you’re just trying to gouge everyone else.

        • You've made several good points, many which too many fail to grasp. As you noted, the Yankees did raise bleachers and some uppers because those seats were purposely under-priced, and the secondary market proved this. The secondary market also proves that the Yankees under-price premium games (Sox, Mets, summer weekends), which could amount to 1/3 of inventory.

          For a few reasons, the Yankees have decided to maintain a static pricing model, so the idea that the Yankees should lower season ticket prices because midweek games sell for pennies on the dollar ignores all of the dynamics involved. Besides, one result of that action might be increased prices for the best games, which would further price out the "average fans" about whom so many are worried.

          Ultimately, the Yankees, and every team, need to balance the concerns of season ticket holders and individual game purchasers. With StubHub, the arrangement was extremely one-sided. Unless TicketMaster enforces a price floor at face value, non-season ticket holders will still have the chance to get cheaper tickets without any risk, not to mention access to other platforms.

          The devil may very well be in the details, but unless that proves true, the criticism voiced in this piece is either an oversimplification or an argument based on one-sided interest.

          • BrienJackson

            You realize you've just blown your whole argument apart, right?

      • Because it's Ticketmaster in not an acceptable answer if we are having a serious discussion. Until the terms are released, it is intellectually dishonest to brand them in any way.

        Similarly, you are making a leap by painting all season ticket holders with a broad brush. Not every licensee is wealthy. Besides, they are the ones making the commitment. If you ignore that season ticket holders have legitimate concerns, you are framing the debate.

        Your response to my description of what is not a perfect market ignores all of the economic fundamentals, so I am not sure how to respond to those.

        Finally, I haven't done a study, but I am guessing ticket sales correlate strongly to actual attendance, so if you cannibalize one, it will likely impact the other adversely as well.

        • BrienJackson

          I didn't realize I was characterizing season ticket holders as anything other than people who buy tickets to multiple games at once, but okay. As far as "legitimate concerns" go, fine, but I don't actually buy that "the ability to have the re-sale price of my crappiest tickets fixed" is, in fact, a legitimate concern.

          "Your response to my description of what is not a perfect market ignores all of the economic fundamentals, so I am not sure how to respond to those."

          I'm not sure what that's supposed to mean in the abstract. It seems to me that you're the one who has the basic economics of buying season tickets backwards.

          "Finally, I haven't done a study, but I am guessing ticket sales correlate strongly to actual attendance, so if you cannibalize one, it will likely impact the other adversely as well. "

          At the margins, the secondary market increases attendance so long as we assume that the sellers are people who won't attend the game and the buyers are people who will, which seems incredibly fair to me.

          • That's not a fair assumption because it assumes secondary buyers wouldn't purchase on the primary market and ignores the fact that reduced season sales may never be recovered.

            I get that you are dismissing the concern of season ticket holders. Maybe if I wasn't one, I would do the same. However, the Yankees can't disregard them. If you want to criticize them for supporting the value of their season ticket licenses, that's fine, but ignoring that those concerns exit damages the credibility of your argument.

          • I (tangentially) have NFL season tickets, so I empathize with the point. However, I do not lament the fact that I can’t sell my ticket to the Browns game for as much as I can sell Steelers’ tickets for second-hand, and advocate for the NFL to rig the system so that I can charge more for the least valuable tickets in my package.

          • Keith

            "I didn't realize I was characterizing season ticket holders as anything other than people who buy tickets to multiple games at once, but okay."

            Actually, but stating, "The downside is that it’s going to get much more expensive, perhaps prohibitively so, for the prototypical average fan to get tickets to Yankee Stadium," you have suggested that season ticket holders are not the "prototypical average fan" since season ticket holders presumably already have access to tickets to Yankee Stadium.

            Perhaps "average fan" was just too general, since it could encompass so many different factors, e.g. wealth, baseball interest, free time, etc, but by stating that the tickets would be too expensive for average fans you have implied (whether intended or not) that season ticket holders are wealthy. Unfortunately, everything is of course relative, so "average" especially when presented to a broad audience may have a different meaning from what was intended.

          • BrienJackson

            "Wealthy" is probably far too strong, but more affluent than average is fair to assume, I think. If nothing else, it stands to resaon that a season ticket holder has enough money to buy the season ticket package, plus a reasonable assumption that they'll be able to attend a large number of contests, meaning that they have set hours and/or don't have to worry about childrens' functions.

  4. Chris

    I don't see the big deal. The front office does something to calm the emotions of season ticket holders who they rely on for a majority of the higher end seats. For the fan who only goes to a few games a year, you can either pay face value or go the cheaper/riskier route of getting tickets off craigslist or scalp. The reactions on other boards makes it sound like "fans" are getting screwed over. Tickets are what they are. Pay or don't go. Some of the loudest complainers I have heard about ticket prices also admit to going to NFL games on a regular basis. Yeah, cuz the NFL is so cheap.

    • BrienJackson

      The NFL is not remotely an apples-to-apples comparison with MLB.

  5. JP1

    Well hey guys, this should mean more revenue for the Yankees. I bet they'll increase payroll to improve the product on the field! Right???

  6. getdownmoses

    They've been so fan unfriendly that I've only been to 1 game at the new stadium and I have zero interest in returning. Not that it's anything new but I can literally buy a 12 pack of beer for the price of 1 at the stadium, add to that the cost of a ticket where I can admire the empty box seats below…. no thanks. TV is fine

  7. forged

    Reading between the lines, this does probably help season-ticket holders when off-loading tickets (and not taking as much of a loss on those tickets). Fans looking for individual game purchases might be decreased due to increases costs with getting tickets. (Ticketmaster is not usually associated with being buyer friendly since they add their own charges to the tickets.)

    Frankly, I've been amazed with how much the Yankees have been asking for tickets in the new stadium. If the supply continues to exceed the market's willingness to pay, then they will eventually lower the price if they don't want the stadium to be only partially filled.

    Here's hoping that happens sooner than later.

    • BrienJackson

      My guess is that the Yankees are rationally pricing their tickets at the point that maximizes revenue (which is below the point at which the stadium sells out), then cynically exploiting the expectation of sellouts for sporting events to claim that something is wrong with the system, and the fix of course involves increasing their revenues even more.

      • Keith

        Exactly! It would be foolish to think that that Yankees' business machine has not determined how to balance attendance and ticket prices in order to maximize revenue. Remember, for all that we get invested in baseball, and other sports for that matter, it all boils down to an entertainment business, with business being the operative word.

        • BrienJackson

          Most live entertainment businesses, however, prioritize selling out over maximizing revenues. At least for major events.

  8. Georgie

    TM or Stubhub? Who cares? Look, the Yankees are now run by the Business Admin 101 crowd. Why pay so much for a ticket to see a team not built to win it all. The 2013 Yankees will be lucky to win 90 games – perhaps their master marketing plan is promoting geritol and AARP?

  9. Jon

    Is the Stubhub market for the 12.12.12 concert skewed to the buyers? I think not! The prices on Stubhub reflect the strong demand for the event. The Yankees have their own $5 ticket specials every season, they need to look in the mirror for who to blame for the race to the bottom. Have the Yankees agreed to stop selling $5 ticket specials. Why should they allowed to sell at $5 if no on else can.

  10. Derpy

    Why is it that New York teams hate it so much when their fans go to games? It's like their primary motivation is to repel as many fans as possible.

  11. Tony

    First they built a "moat" around the deluxe seat just to remind me that I am not worthy of ever sitting close to the field. It is the one most deliberate "caste" system structure in our country. We must have a moat to keep the peasants away from the wealthy. Now they take away the only way I can afford to go to a game. Thie "new" Yankee fan in attendance is not the people who were in the old stadium. Another era of sports has gone by the boards.

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