`LeBron Arbitrage' Proves Losing Bet Even as Knicks Wins Give Hope to Fans
Some New York Knicks season-ticket holders may dream of lost chances for a million-dollar payday when LeBron James brings his basketball talent and arena-filling allure to Madison Square Garden tomorrow.
Offseason speculation that James, the National Basketball Association’s reigning two-time Most Valuable Player, would sign with New York allowed the Knicks to sell out season tickets for the first time in nine years. Sellers flooded the secondary ticket market after James instead chose to join fellow All-Stars Dwyane Wade and Chris Bosh with the Miami Heat, who play the Knicks in New York.
The Knicks, led by forward-center Amar’e Stoudemire, had an eight-game winning streak snapped last night with a 118-116 loss to the Boston Celtics and have a 16-10 record, six seasons since their last playoff berth. While the Knicks’ success has kept the secondary ticket market from crashing, the speculators aren’t profiting like they planned.
“It was not a question of whether you could sell them, it was a question of how much above face you could sell them for -- every game,” said Rob Stolker, an independent venture capitalist from Holmdel, New Jersey.
Stolker and two partners bought four Knicks season tickets at $87.50 apiece for each of the 41 home games and three exhibition games early this year and then doubled down on their bet, grabbing another four at $74.00 each the week before James announced his decision in July. Stolker said his group invested $28,512 overall, and he expected each investor to lose a few thousand dollars.
“We always knew there was a risk that the 28 grand would turn into 20 grand,” Stolker, 40, said in a telephone interview. “If he was there for 10 years and they ended up winning a couple of championships, we thought we could turn this into $1 million or $2 million.”
Nick Ragone, a 40-year-old executive at a public relations firm in New York, now shares a pair of Knicks season tickets with three friends.
“One of the Einsteins in my group figured, ‘Lets play a little LeBron arbitrage, buy low and hopefully sell really high,’” Ragone, a Knicks’ fan who has used his share of the tickets to take his 6-year-old son to games, said in a telephone interview.
Harvey Wexelman, now in his eighth year as a season-ticket holder, upgraded to two $250-a-game seats from $100 seats in anticipation of James’s arrival. Wexelman uses the majority of the tickets to promote his Manhattan insurance brokerage.
“We all just dreamed about the possibilities of the ‘What if,’” Wexelman, 37, said in a telephone interview. “I’d finally make back all the money I spent on season tickets all these years, and it would have been unbelievable for business.”
On July 8, the dream ended. James held an hour-long television show called “The Decision,” and revealed his plan to “take my talents to South Beach and join the Miami Heat.” He spurned the Cleveland Cavaliers, where he played for seven seasons, as well as New York, which had made trades and cut payroll for two seasons to try get enough space under the league’s salary cap to lure the six-time All-Star.
Steven Kritzman, a sales manager for the music website Pandora.com in New York, also bought into that speculation, grabbing four $74 Knicks seats in early June.
After watching James’s “Decision,” Kritzman sent a text message to a friend in Miami whose family has courtside Heat tickets, saying: “Your seats just quadrupled in value.”
Kritzman, 39, said he gambled on the possibility that a James-led run to the NBA Finals may yield at least $25,000 from just the conference and league championships, where seats might sell for up to $1,000 apiece.
Instead, he’s broken even. Kritzman said he spends about 15 minutes daily managing the tickets on reseller StubHub and the Knicks’ TicketExchange. His most profitable sale was tomorrow’s game, which went for four times the $74 face value.
EBay Inc.’s StubHub has seen a 34 percent increase in Knicks’ ticket-sales volume this season, according to Glenn Lehrman, a spokesman for the company. Through 11 home games, the average price was $67, $9 lower than the same point a year ago.
Lehrman, in an e-mail, attributed the price decrease to “the combination of summertime LeBron speculators who have flooded the secondary market, along with a watered-down early season schedule.” Going into last night’s game, the Knicks’ opponents had a combined 192-269 record. Miami is 19-8 after a 101-95 win against the Cavaliers last night.
The Knicks sold out nine of their first 11 games this season at the 19,763-seat Madison Square Garden after filling the building 26 times in 2009-10, according to the team. More than 4,000 new season tickets were sold this season.
After starting 3-8, New York has won 13 of its past 15 games behind Stoudemire, an All-Star and free-agent signing this year whose nine straight games scoring at least 30 points is a Knicks record.
At times during the recent run its “sounded like the Garden again,” said former Knicks coach Jeff Van Gundy. New York went to the playoffs 14 straight seasons between 1987-88 and 2000-01, twice reaching the Finals.
“They’ve done more with less than any NBA team this year,” Van Gundy, now an ESPN analyst, said in a telephone interview. “It’s showing just how good a general manager Donnie Walsh is and what a good coach Mike D’Antoni is.”
While the team has yet to bring much prosperity to season- ticket holders, the future might get brighter. The Knicks remain in talks to trade for Denver Nuggets’ All-Star forward Carmelo Anthony or may sign him during the offseason.
For now, the investment is paying off in an opportunity to watch winning Knicks basketball for the first time in a decade.
“Every time we went to a game, we’d leave at halftime and go to dinner somewhere in the city,” Wexelman said. “Now I stay for the games.”
To contact the editor responsible for this story: Michael Sillup at email@example.com.
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