Photographer: Christian Petersen/Getty Images

The Super Bowl Ticket Debacle Will (Probably) Not Happen Again

  • A short squeeze for last year's tickets left fans empty-handed
  • 'We'll just never allow that to happen again,' StubHub vows

The great Super Bowl ticket debacle of 2015 will not be repeated -- or so promise the companies at the center of a market that melted down last year, leaving fans disappointed, putting brokers out of business and prompting lawsuits.

In the 12 months since, popular ticket markets like StubHub, TicketNetwork and TiqIQ say they’ve changed their policies and practices to reduce speculative selling and ensure that this year, everyone who buys a ticket for the Feb. 7 game gets a ticket. Early indicators, including smaller inventory and a relatively high average get-in price of around $3,100, suggest that it’s working.

"We’ll just never allow that to happen again," StubHub spokesman Glenn Lehrman said in a telephone interview. "We were always very careful, but now we’ll be ultra conservative."

The market remains unregulated, and industry insiders acknowledge there is still a chance that fans could get burned or that ticket markets will take losses again. The risky short-selling at the heart of last year’s debacle is still happening in places, and a large amount of the available inventory remains in the hands of a few companies.

The Setup

To understand what happened last year -- and whether this time will really be any different -- you have to know that Super Bowl tickets are highly controlled and distributed privately. The National Football League allots 17.5 percent of the available seats to each Super Bowl team, five percent to the host, and another 1.2 percent to each of the remaining 29 franchises, according to the NFL. The final 25 percent goes to the league.

Very, very few of these tickets are sold directly to fans, usually via team lotteries. The rest go to team executives, players, coaches, sponsors, or media partners. Teams also set aside some tickets to sell to brokers, who turn around and sell them on the secondary market. No one knows how big this allotment is. One business insider estimated around 30 percent of a team’s Super Bowl tickets are sold to brokers, another suggested twice that proportion. The four remaining NFL playoff teams didn’t respond to interview requests from Bloomberg.

It’s the secondary market that broke down last year. Ticket resale sites make clear that ticket brokers sell on spec, agreeing to deliver a ticket they don’t yet have. The brokers either know they have tickets coming in the future, or they’re willing to bet prices go down, and they can fill the order by buying a cheaper ticket closer to game time.

Short-selling Super Bowl tickets hadn’t been a particularly risky proposition in years past. Prices for tickets on the secondary market tended to drop by about 25 percent in the final two weeks, earning a tidy profit for the speculators. In part because of the predictability, short sellers entered the market last year earlier and in greater numbers than ever before.

The Squeeze

At the same time, the actual tickets were concentrated with two brokers. Realizing they held the upper hand, they held back their inventory and kept prices high. At some times, even the cheapest tickets available cost more than $10,000. The shorts got squeezed. Some brokers went out of business, others backed out of deals.

The consumer-facing websites that facilitated these transactions found themselves in the public cross-hairs. StubHub paid almost $6 million to deliver seats to customers whose orders had broken. Others, like SeatGeek, TicketCity and Vivid Seats, filled what they could and refunded buyers’ money for the rest, which left some fans empty-handed on game day.

The Solution?

So what’s different now? Most sites are still letting sellers list tickets they don’t own, but they’ve gotten more selective. StubHub authorized 10 brokers, down from 25 to 30 last year, to list in the past few weeks, Lehrman said. Starting Thursday, the company required sellers to list only tickets with specific row and seat numbers, which is a way of weeding out short sellers. This is the earliest StubHub has ever made those requirements for the Super Bowl.

"We feel pretty comfortable that, if anything, we’d have to go into the market for only a couple of seats," Lehrman said. "And that’s pretty standard for us on every event we do."

TicketNetwork founder and CEO Don Vaccaro said he is personally approving all brokers who are allowed to sell Super Bowl tickets on their market this year. The company, which usually promises to refund a broken sale at double the price, is also for the first time guaranteeing entry for anyone who buys a Super Bowl ticket through their site.

New York-based TiqIQ instituted a vetting process for new sellers via phone and has compiled bank account information on the smaller vendors that use the market. About half the tickets currently listed on the site are on spec, which is clearly labeled for buyers, according to TiqIQ spokesman Chris Matcovich.

Last year TiqIQ successfully filled all five of its broken orders, at a total cost of around $10,000. That said, the site is still allowing some companies that failed to fill orders last year to list again on spec in 2016. Matcovich said he trusts those companies to avoid a repeat.

SeatGeek, an aggregator like TiqIQ, is in the same boat. Spokeswoman Amy Snook said a number of companies listing on SeatGeek, like TicketNetwork, their biggest, are now guaranteeing tickets. SeatGeek is also promoting its customer service phone line, which gives prospective buyers additional info on who’s selling and what their policies are.

The Signs

There are already signs that the 2016 Super Bowl market is healthier for consumers. The average resale ticket is listed right now for $6,100, with a low price of $3,100, both significantly higher than where tickets were at this point last year, according to TiqIQ. More importantly, there’s also less advanced selling and half the available inventory, signs that indicate both buyers and sellers are exercising caution.

"Some people don’t want to have any skin in the game because of what happened last year," said Matcovich. "If that happened again they’d either be out of business or hurting significantly."

The best check on the ticket market may be in place on Sunday, when the championship teams are decided. Most sellers are probably rooting for the Denver Broncos, led by an aging Peyton Manning, and Arizona Cardinals, two teams with big fanbases just a short flight from San Francisco. (The game itself is at the 49ers stadium in nearby Santa Clara.) The New England Patriots against Carolina Panthers would likely produce less demand and lower prices.

"What you’re likely to see over the next two weeks are truer marketplace dynamics," Lehrman said.

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