Red Sox Ticket Policy Keeps Sellout Streak Alive With Resellers

They’re called the Fenway Faithful with good reason. On July 18, Boston Red Sox fans streamed into Fenway Park for the club’s 600th consecutive sellout, a record run in Major League Baseball that began in 2003. Players, coaches and principal owner John W. Henry, a commodities hedge- fund billionaire, marked the occasion by tossing 600 commemorative baseballs into the stands.

So you’d think Red Sox seats are impossible to score. Wrong. About 20 percent to 30 percent of tickets trade on what’s become baseball’s hottest secondary market, according to the club, making seats available for every game. Usually that means paying a big premium over face value. But for some games, even when resale prices fall below face value, tickets end up in the trash, Bloomberg BusinessWeek reports in its Aug. 2 edition.

Craig A. Depken, a professor of economics at the University of North Carolina at Charlotte, says the team’s practice of keeping ticket prices lower than what fans are willing to pay helps fuel the streak. The team can unload all of its seats, knowing that many will be resold. The risk of being stuck with unsold tickets shifts to resellers.

The official prices “help protect the streak of sellouts, and the sellouts are a great selling point,” said Depken.

The team doesn’t contrive sellouts as a marketing tactic, says Red Sox Chief Operating Officer Sam Kennedy. Official prices are kept below market value to keep them affordable, he says.

Jim Holzman -- owner of Boston-based broker Ace Ticket Worldwide Inc., the biggest reseller of Red Sox seats -- says he’s happy to do his part for the streak. Before this year’s first game, he owned 40,000 tickets to games, mostly from season pass holders eager to make a profit on a portion, or sometimes all, of their seats. His 38-employee company resells them at a further markup through its own local ticket stores or online.

Rainy April Nights

Circumstances don’t always cooperate. When games fall on cold, rainy April evenings, Holzman says he can get stuck with “hundreds and hundreds” of unsold tickets. The same thing happens for some games in late September if the Sox are playing poorly and are out of contention. Still, no matter how many tickets wind up in the waste bin at Ace and other brokers, the team can claim a sellout -- and the streak goes on.

New Englanders have a long-running love affair with the Red Sox and the ballpark John Updike famously described as a “lyric little bandbox.” Septuagenarians Barbara and Alan Miller have held season passes for 43 years.

Red Sox Nation

“Oh, I’m a crazy fan,” Barbara says, from her seat four rows away from the home team’s on-deck circle. The bond the Sox enjoy with their fans has grown even stronger since 2004, when the club claimed its first World Series championship in 86 years. They won it all again in 2007.

List prices of tickets at Fenway this season average $52.32, second-highest behind the Chicago Cubs, according to Team Marketing Report. But tickets trade at an average of $89 on the online secondary market, the highest in baseball, according to SeatGeek.com, a forecasting website. Ace is asking $1,435 for its best seats, which carry a $250 face value, to an Oct. 2 game against the New York Yankees.

Kennedy says the team tries to limit the flow of tickets to the secondary market. Season tickets are capped at 22,000 of the 37,000 seats in baseball’s smallest park. Buyers can’t purchase more than eight passes for a single game, and the club holds back a few hundred tickets for sale on game day.

Red Sox management has resisted the one move that could knock the wind out of the resale market: raising list prices.

Obligation to Fans

“The reason there is such a robust secondary market is because we don’t price our tickets at the absolute maximum dollar amount,” says Kennedy. “Our ownership feels a responsibility to keep tickets as affordable as possible.”

There may be other factors that make underpricing easier for management to swallow. For starters, the organization recaptures part of the profit taken by resellers. MLB promotes StubHub, a unit of EBay Inc., whose website provides a marketplace for buyers and sellers. Part of StubHub’s commissions on MLB tickets flows back to the teams.

The Red Sox in 2007 struck a separate deal with Ace, the only one of its kind in baseball. The arrangement lets the broker use the Red Sox logo and call itself an official partner of the team. Ace agreed to pay an undisclosed sum for promotional space inside Fenway Park.

Economist Andrew Zimbalist, a professor at Smith College in Northampton, Massachusetts, says the deal helps the Red Sox preserve the scarcity “buzz” around the streak.

“It means when people go to cocktail parties and say they’ve got tickets, the people listening are jealous,” he says.

The policy helps the team hedge its bets. For the Oct. 1-3 series against the Yankees, Holzman has been buying tickets since before the season started. If the Sox remain in the pennant race, Ace will make a big profit. If the team is out of the playoff chase and the weather turns nasty, demand could collapse -- and Holzman could lose millions.

“I’m taking some risk off their plate and putting it on mine,” he says.

To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net

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