Have you ever wanted to go to a sporting event or concert and after realizing the event is sold out and went into shock at how much the ticket was selling for in the secondary market? If you have been there, you are not alone. You have realized the potential profits in the ticket broker business.
On the surface it seems like an easy enough business to get into. Low barriers to entry, one can slip in and out of the market as one desires, potential for big profits – these are all true and are good reasons to become a ticket broker. Just like every other business, there are risks involved – what happens if the tickets do not sell? How do you maintain a large inventory and not loose track of everything? What are the best places to sell? What are the best tickets to buy? A few wrong decisions can become very costly.
Many would-be-entrepreneurs will simply never enter the ticket broker business. The moniker of “scalper” keeps them away. Somehow “scalper” has become equivalent to “used car salesman” or “Enron energy trader”. It has a perception as a slimy profession. Out attitude is let it stay that way. It only keeps people out of the industry. One thing that hurts the existing people in a business is when there is a flood of new entrants into the marketplace. The scalper perception keeps people out of it.
Speaking of scalping, why is this bad? How did people get the idea that all mankind has an inherent right to purchase tickets from the place of origin? In the US we have capitalism. Think back to your economics 101 class and the supply and demand lecture. Sport and entertainment tickets are a perfect example of a perfect market, which is where the price of the supply is solely affected by the demand. Prices for a Hannah Montana ticket are way more than a Foghat ticket.
When someone buys a house and resells it, we call it flipping houses. If they are good at it they get a cable TV show. How come they don’t call it house scalping? Which one really has more impact on the average Joe?
Back to the business. You are convinced that there is money to be made. The first order of business is deciding what to buy. This is not always so hard. If Madonna is announcing a tour, there will be demand. The hard part is knowing who is announcing their tours and when the tickets go on sale. This can be a time-consuming task.
Someone who knows a bit about current music has enough knowledge to know what tours are going to be popular or not. This is not rocket silence. We spend a lot more time investing in discovering what is coming up for sale than we do on the decision on whether to buy or not. This is an important point. If ticket brokering is you business, you need to spend more time deciding what event to buy and not discovering what events you can buy. More on this later.
The next part of being a ticket broker is deciding where to sell. There are many options and you keep getting new ones. Stubhub and eBay are good starting points. eBay you pay a bit upfront and if you have a large inventory, you need to invest in third party software to help out. Also with eBay, if you have a problem with a customer, you have to solve it. One cranky and unreasonable person can suddenly cost you 20 hours of your precious time. When you consider that, is the 15% Stubhub charges seem expensive? Does the Stubhub 15% charge sound expensive when you can sell some tickets for 25% more than Ebay?
Let’s not forget about the ticket coop site. TicketNetworkDirect and others list your ticket on hundreds of sites and charge fewer fees per ticket. FanPrice has a different system all together because they let the buyers quote a price they are willing to pay.
The reality is most ticket brokers use a combination of all these channels to sell their inventory. They choose the channel based on time to the event, time of the year and nature of the event.
A few examples:
o NBA Tickets make great Christmas presents and you can get some premium prices by listing them on eBay one to three weeks before Christmas
o The best price you can get on an MLB ticket is in February on Stubhub right after the tickets go on sale to the public.
o If you are days away from an event, recover any cost you can from Fanprice
o Never stand in front of a stadium saying “I got two”. This is the worst use of your time.
The next big item to consider is whether the seats you are about to buy are worthy of the secondary market. For a World Series game, every ticket is a good ticket. For a Madonna concert, maybe not. Top 10 rows on the floor are going to command a high dollar. Nose-bleed seats you will be lucky to get rid of. Just like in real estate – location, location, location. We do not buy a ticket for every opportunity we get to buy one, not even for the biggest events. We do our homework and figure out what is a good seat to buy in a specific stadium and what is not. Half the time, we do not buy anything because what is offered to us is not any good and we will not be able to sell. Presale Passwords
When you start getting more and more inventory, an efficient operation becomes an important item. When you are buying fifty to one hundreds transactions a week, you cannot waste time. The time window for buying good seats is small. Presale codes are essential. Presales enable you to buy tickets before the general public. These seats are often, but not guaranteed, to be better seats.
Sounds easy enough, but how do you get all the presale codes. They come from multiple places – credit card companies, stadiums and fan clubs are just a few. Just like with trying to find out what is coming up for sale, you need a good and reliable source for presale codes. Without these lifelines, your ticket brokering business will flounder because of lack of supplies.
There is an approach to the ticket brokering business that is helpful. There are several events every year that everyone has the potential to buy tickets for. These select events enable you to make thousands of dollars on each transaction. We base out business on positioning ourselves to purchase these tickets. Our goal is to make a decent return on many events through out the year (15% – 25%) and capitalize on these high revenue events that can bring in up to an 800% return.
Being a ticket broker can be a very lucrative business. Any business comes with risks. The more you know about the industry, the more likely you are to make the correct decisions and stay profitable. It is always a good idea to learn from those who have been there. Take the lesson from their mistakes as opposed to making the same one yourself.
One also needs to find quality sources for on-sale information and presale codes since these essentially determine the quality of your supply chain.