The internet is transforming many businesses and none more than the business of the ticket tout. The spiv on the street corner has been displaced by the personal computer, facilitated both by general auction sites such as Ebay and by specialist ticket exchanges.
But the increased size and efficiency of the secondary market has upset event organisers. Nothing illustrates the deep-seated hatred of the middleman more clearly than the ambivalent public attitude to ticket resale. Every opinion poll indicates that people disapprove of touts but believe people should be able to buy tickets if they want them.
So last week Andy Burnham, the UK’s secretary of state for culture, media and sport, appealed to resellers to refrain from exchanging tickets for “crown jewel events” deemed to be of national importance, such as Wimbledon and the FA Cup Final. If such voluntary regulation failed, he said, the government would consider legislation.
Mr Burnham emphasised the need to ensure that those who attended events were “genuine fans” and he was right. The organisers have not only a legitimate interest but also a positive duty to see that their seats are filled with the thousands of enthusiasts who have waited all season to see their heroes triumph. The presence of the Queen adds to the atmosphere but minor celebrities and friends of the chief executive of Mastercard, for example, do not. The roar of the crowd, not the clink of champagne glasses in corporate hospitality tents, makes great sporting events memorable occasions. It is not only just, but also necessary to the health of sport, to favour genuine fans over investment bankers, corporate fat cats and sports administrators.
What Mr Burnham did not explain, however, is how a prohibition on the resale of tickets would achieve that result. If you go to a “crown jewel” event today, you see large numbers of investment bankers, corporate fat cats and sports administrators. Moreover, almost all of these people received their tickets not by the efforts of ticket touts, but through an official allocation from the event organisers.
If you are trying to impress a client, you are unlikely to take the risk that he will be turned away when he proffers a dodgy ticket. On the other hand, the people who have paid through the nose on the black market are mostly genuine fans. There is no clearer way of demonstrating that you are a genuine fan than paying £500 from your own pocket for a ticket.
Of course, there are also many genuine fans who could not contemplate paying £500. And there are many genuine fans who would dearly love to attend the event but would even more dearly love £500. An economist might reason that someone who would not want to buy a ticket at £500 would want to sell one if he were offered £500 for it. This is sufficiently true for the secondary market to continue regardless. So I forecast that Mr Burnham’s appeal to voluntary regulation will fail. This is probably the safest prediction any economist will make for 2008.
Wherever there is sufficiently strong demand there will be supply. That is the lesson of prohibition, of the failed war on drugs and millennia of disapproval of gambling and prostitution. Attempts to suppress the markets do not eliminate the trade but push it into the hands of criminal elements. Licensing and regulation usually achieve better results.
There is no good solution to the problem that there will always be many more people who want to go to great sporting events than there are seats. But, as so often, market- oriented policies are probably the least bad outcome. The present systems of ticket allocation have much more to do with the maintenance of networks of patronage than the carefully targeted allocation of seats to Mr Burnham’s “genuine fans”. Politicians – and journalists – who do not accept bribes but are very susceptible to schmooze, are particular beneficiaries of such patronage. They are easily recruited to support the status quo.
But there are some issues that politicians would do well to keep out of and the conduct of the FA Cup Final is one. That this will not happen is another safe prediction.
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