Getting into the Ticket Broker Business–Sell tickets for fun and Profit
Okay, let face it. You’re here because you just paid three times the amount printed on the ticket. You are thinking, why can’t I make a couple hundred bucks for less than five minutes of time? So were asked if we knew anything about this business. And the answer is No. But that will not deter us from putting up an article. Let us know what you know about the ticketing/scalping business. People in this business do not want to give up their secrets; and there seems to be a lot of businesses that are in the business of getting you into this business. We also have a page about becoming a travel agent. This is about selling event tickets–sports, concerts and special events. Besides the fact that it seems like a cool business to be in, we must ask:
Why does the Ticket Broker Business Exist?
Think about it, your favorite band or sports team could hold an auction, and try to get the most they could out of the fans. They would use something along the lines of a sealed bid system where you would pay the second highest bid if you won this is known as a Vickrey auction. Or use other schemes to get the most they could out of each fan. The optimal auction structure is beyond the scope of this article. But anecdotal evidence suggests that they leave a lot of money on the table.
The biggest battles between ticket brokers who want to re-market the tickets and show promoters have taken place in the NY area. In 1997, New York recently felt it was necessary to limit ticket brokers to a 40% profit, and that’s why many of the biggest brokers moved across the river to Jersey. In January 2012, it was alleged that evil scalpers used super computers to cheat fans out of their right to see The Boss; and now NJ law makers are trying to ban ticket brokers from using fast computers. The ticket wars imply that re-marketing tickets can be a very profitable business. And many other jurisdictions have put limitations on excess profits or “scalping”. Also there seems to be a lot of people in the business making good money.
Some possible reasons why event promoters just don’t get the most they can are:
- Fairness — Many sports and bands try to appeal to the common man. If they advertised high prices it might alienate them from their fans. It’s better to let a few tickets go at low prices, and let the fans become angry at the “greedy scalpers” than the see the band or sports team as the greedy ones. (Yea this no longer holds water with sports. Recently, sports teams have not worried about seeming so greedy as the fans have demanded million dollar players be signed to the roster. The average Joe cannot take his family to see an NFL game and pay the rent int he same month.)
- Scarcity as a marketing tool. If the event will be a sell out, it will raise the interest of people.
- For some reason, TicketMaster seems to totally dominate the initial sales of event tickets. We are not sure how one company can be so dominant. Some ticket brokers make their money off of Ticket Master’s pricing mistakes. They buy low on Ticketmaster and resell. Ticketmaster has been buying it’s rivals. It recently bought its biggest rival Live Nation which had been making agreements with venues to be the primary ticketter. According to an agreement with the US Department of Justice, they have to let a couple of other companies, AEG and another company compete for the initial ticket sales or Venue Business. (wired mag article) Even if another company wins a contract with a venue, there will still be a monopoly on initial sales. Below where it says Ticketmaster, read Ticketmaster or company that has won the contract with the venue. Usually it’s Ticketmaster.
A Reader let us know about this Planet Money’s report on Kid Rock’s “war” against scalpers. Mr. Rock makes some good points regarding overpriced tickets, but he also supports ticket brokers by keeping the price of his tickets fair. The report also talks about the bots that were used to scoop up tickets and one company made 25 million dollars–before they were caught.
Where do you get the Wholesale Tickets?
There seem to be two sources of tickets. And based on what we have read many ticket brokers source tickets from both the national data base and by hunting them down.
Secondary Source Tickets
From what we have read there is a Super Secret main Broker Database. As you can see below, it’s not that secret. The way this works is that all the main sites including the big ones like Stubhub have access to this data base. They advertise tickets and mark them up from the sites. The second the customer buys the tickets, they order them from the sites. We found advertisements from people selling the broker business like BecomeATicketBroker.com that could get you hooked up with this data base. They even offered a turn-key website solution and a market level marketing deal where you get paid to bring more people into their system. We figure that they make a mark up over the data base’s prices–otherwise they would just market the tickets themselves and keep the entire markup. Or they are making you a broker on their system such as Ticket Evolution (see below). To be honest, we are not sure what’s going on; but be cautious of any business that keeps the source of their ticket a secret until you pay up.
All these data bases allow you to see the underlying prices offered, so you can also sell over the phone for buyers who don’t shop on-line or believe they can get a better deal talking to a real person. And according to a 2005 press release on the National Association of Ticket Brokers, one ticket broker said that about 80% of the tickets sold come from the data bases. He also said that ticket brokers use it to unload tickets they bought but cannot sell to retail customers. There seem to be three main ticket data bases or ticket exchanges or data bases. These list tickets for sale, and you can put a mark up on the tickets. When you sell each ticket, you get to keep the difference.
The main ticket exchanges are:
Event Inventory According to their website they have the largest, most extensive secondary market ticket database in the world. And they allow you to sell via a custom websites or through a “plug in” that you can put into an existing website.
Ticket Technology and Special Order System SOS These are both operations of the biggest secondary ticketing service Stubhub which claims to be the world’s largest ticket marketplace. The first service offers you real time access to members inventory. You can sell this via a website, or over the phone. The second service is for non real time access to members inventory. It is not clear if SOS have better deals that other brokers are trying to dump. Each service costs $125/mongh, and both allow you to sell through their network to other brokers. There is another $60 charge to accept credit cards, shipping charges for sending the tickets to your customers, and some other charges for data access.
Ticket Broker Website/Database Access Solutions
Once you have connected with one of these networks, you can have a website set up to mark-up the ticket prices and present them to the public. Companies such as venuedatapro.com and becomeaticketbroker.com have a turn-key solutions that hook into a given database/ticket exchange. Another example of a web technology company that hooks into multiple databases is Ticket Evolution This website bills itself as a place where brokers can go to interact, transact, quote and sell tickets at the changing pace of the events themselves. It offers a complete solution including instant internet web set-up. The cost to set this up is $3,000/year or $300/month. (We found this 30 min video designed for people who bought their system. It explains how there software works, but it also shows you what you can accomplish with their system.) This service is not an exchange service, they hook into 14 Exchanges, including Stubhub’s, to get a larger selection of tickets. It seems to have the most up-to-date web technology including mobile apps and “fan view” where you get a photo of what how you will see the event from a given seat.
Buy tickets your self and resell
To get the best deal on tickets, you buy tickets yourself from the primary supplier — Ticketmaster, and the box office. If you are willing to stand in line; and pounce on a good internet deal this might work out. But it’s a bit of a risk. You might loose money if the event is not as popular as you thought it would be. You can re-sell your tickets on e-bay, craigslist, Stubhub, TicketNetwork, through old fashion advertising or through the data bases and business websites discussed above.
Another possibility is to buy season tickets for a team you think will do well. Then sell off the tickets game by game. And if your team makes it into the play-offs, ca-ching. According to an article in Smart Money, Stubhub reports that 60-70 percent of sport tickets on the site are from season ticket holders; and they quoted the CEO of RazorGator who said that season tickets can easily double or triple in value (He could be a bit bias.) Teams do put some restrictions on the resale of season tickets, but based on this article, they do not seem to have a way of enforcing their own rules.
Use for additional inventory It might be worth it to sign up as an affiliate just so you can have access to additional inventory. For instance, if you sell out and don’t have access to additional tickets, you could walk your customers through purchasing tickets from an affiliate site and cash in on the tickets.
You make money by knowing the market better than Live Nation Entertainment Company’s TicketMaster (or the other Venue retailer.) They may set a lower than “market” price to sell out the event. But it’s risky. You are putting your money on the line. And you will either be stuck with the tickets –maybe not a totally bad thing–or reselling them at a discount to what you paid. So it’s not like you will loose all of the money you invested in tickets.
Again, you need to know your market. What bands will be hot, and promote their appearance a the week before the show. Bands will do this even if it is as sell out. Likewise, it’s good to know which sports team will do well. Everyone like to root for the winning team. And if it’s the home teem, that’s great. They will pay extra to see if they make it into the play-offs, and pay big bucks for those post season tickets. But often the tickets are sold way before fan interest has peaked. You have to know when the tickets will go on sale and predict if people will be willing to pay a lot for them.
This is where being a fan pays off. If you think that the Ducks will go all the way next year or if the Jonas Brothers will release a kick ass album and support it with concerts; this is valuable information. If you are not sure what sport the Ducks play or never heard of the Jonas Brothers you might want to stick with reselling tickets on the data bases discussed above.
It also helps if you know the venue; and can advertise the benefits of the seats you hold. For instance, you might sat “only 150 feet from the stage” rather than “seats 45, 46, 47, and 48, in Row AA of Section F.”
Websites like Event Experts (link not working) say they can give you the insight on what to buy and how much to sell them for. They have an advise plan starting at less than $32/month. (This might be a ghost site. There website crashed, but there are more sites doing the same thing. )
Other sites claim that they have access to special passwords to get pre-sale tickets on-line from the venue’s box office. We are doubtful about these claims.
Become the Ticket Monster
Tickets, Tickets, Tickets, Me Need Primary Source Tickets
If you know what you can sell, you must DOMINATE the primary ticketing source (usually Ticketmaster) is to become experienced with the way the site works.
Research when tickets will go on sale. A few minutes before the sale, log onto the site. Click the refresh button again and again until you can buy tickets. There will be a ton of people buying tickets so their site might slow down. Thus it’s important to just go to the block of seats you want and buy them as fast as you can.
Know the Site. Practice buying tickets so you know the process. This will also allow your computer to pre-load and large graphic files. So it can go through faster when you need to buy. Fill out the forms so that if you browser has an auto-fill feature, you are ready to go and you do not have to type in all your info. You can also open multiple browsers on your screen and be prepared to enter slightly different buyer info in each order.
To keep the primary ticketing sources looking good, they have put in safe guards to appear that they are helping out Six-Pack Joe who wants a fair shot at getting seats for his family. You will see those distorted letters and numbers and have to type them into that stupid little box. This is to prevent an automated computer program from buying all the tickets. There will also be a limit on the number of tickets you can buy.
The only way to get around this is to have a group of people buy for you when tickets become available. Another issue is that the primary ticket seller may hold back ticket and put them on their site at a later time. So check back with the site. Note You may also have to stand in line to get tickets.
Don’t forget about fan clubs. Many bands have fan clubs and will release tickets to their club members.
Establishing Your Creditability
Even if you can score a good cost on the tickets you buy, you will have problems reselling the tickets if people do not think you are a legit business. There has been fraud in the industry. People have paid cash for thickets that turned out to be counterfeit. To establish your credibility you need to:
- Establish a professional website. People will check out your website to see if you are legit. When they see an ad on Craigslist, e-bay, … they will check out your website.
- Have a business address. Even if you don’t pend a lot of time in your office, people will feel more comfortable dealing with somebody who has a real office. And it does not have to be in the high rent areas. All you are trying to do is show you have an “real” business. They will google your address, and if it’s your apartment or it’s in one of those post office box places, they will be able to figure that out. It used to be that you could just rent a P.O. Box and make your address Suite 205 instead of P.O. Box 205, but with google maps people will figure that out. And with the virtual offices (They consist of an answering service, mail drop, and a room you can rent by the week.) people will figure that you are a fly-by-night operation. The rent by the week executive office suites and virtual offices won’t fly either. Most of your customers will want to get the tickets by overnight delivery, so you don’t actually have to spend a lot of time in your office.
- Get a city business license and join at least one Chamber of Commerce. The Chambers are just like businesses that make their money off of dues. It’s about as difficult to join a Chamber as it is to become a CostCo member. You can shop around and join Chambers in other cities. You might also want to join the Better Business Bureau (BBB), it costs a bit more then joining a chamber; but it’s basically the same deal as the Chamber. If your check clears, you are a member. They don’t do an extensive background check. Be sure to put up this info on your website. People will feel safe dealing with you if you say you have a business license, are a member of the local Chamber of Commerce, and possibly the BBB. You can state you have a good record with the later organizations.
- Accept Credit Cards. This gives people real security because if they buy a bogus ticket they know they can reverse the charges. See our links section for a low cost way of doing this. Also, if you only accept Pay Pal or cash, people may think that you are fly-by-night.
When people are looking for tickets, they want to save money. So they will turn to sites like BackPage and Craigslist. It’s free to advertise on these pages, but it’s important that the buyers are taken to a credible page. They don’t want to buy fake tickets from some guy who does business out of his van.
- SeatGeek http://seatgeek.com/brokers/about This is a popular referral service. The aggregate info and give the buyer a great user interface that allows them to compare ticket prices from different brokers. When a user clicks on tickets that you’ve listed on their site, you pay a click fee currently based on this equation
Cost per click = 0.84 *(0.006*basket + 0.3*ln(basket) – 0.6) , min = $.04/click, max = 1.68% of the average price for the event.
basket is the cost of the tickets, and ln our friend from hight school math the natural log function.
They will need to verify that your a legit business, and check you out before you can get started.
Ticket Broker Resources and Education
National Association of Ticket Brokers charges $1075/year. Joining this group would be another way of establishing credibility , all be it an expensive way, and they allow you to network with other brokers and have a national website that allows you to sell tickets to public. The association’s main focus seems to be focused on lobbying efforts. They also have a complaint procedure that allows unsatisfied customers to vent.
Ticket Broker Regulations
According to Wikipedia, Scalping laws in California only apply if you resell tickets at the venue; and the California Department of Consumer Affairs does not require a separate licence to get into the Ticket Broker Business. You need to check with the city you plan to do business in if they have any restrictions on ticket brokers, and get a resell permit from the state of California. Click her to see our regulation compliance page for more information
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