New Jersey suit: Super Bowl tickets improperly not sold at face value

by Walter Olson on January 9, 2014

A lawyer representing a fan has sued the National Football League for allegedly breaking New Jersey state law by making just 1 percent of Super Bowl tickets available to the general public at face value. A section of the state’s Consumer Fraud Act reads, “It shall be an unlawful practice for a person, who has access to tickets to an event prior to the tickets’ release for sale to the general public, to withhold those tickets from sale to the general public in an amount exceeding 5% of all available seating for the event.” (But does “person [with] access” refer to the original event organizers, or only to middlemen who acquire tickets for resale?) The lawsuit “says it’s on behalf of all ticket buyers who have paid more than face amount for their tickets, along with anybody who couldn’t afford to buy tickets in an exorbitant secondary market, but who still wanted them.” [NJ.com] More: the NFL made me do it! [Abnormal Use]

{ 16 comments }

1 Mike 01.09.14 at 11:08 am

Abusive ticket-selling practices (e.g., holding tickets back from direct sale, and tolerance of endemic scalping) in the music business never made any sense to me until I considered the possibility that this is simply a way to take profits off the books in cash. For that to be the motivation, of course, there would have to be kickbacks going all the way back to the featured artist/performer/sports team.

2 Mark Phaedrus 01.09.14 at 11:48 am

This one seems like it should be thrown out in a heartbeat, on the basis of the ‘if there are two reasonable interpretations of a law, choose the one that doesn’t lead to absurd results’ canon of statutory interpretation.

By definition, the organizers of an event have ‘access to tickets to [the] event’ whenever they choose. So if this law applies to event organizers, the moment the organizers decide ‘okay, let’s hold this event’, they are immediately obligated to sell 95% of the tickets. (And what if they haven’t yet made up their mind whether or not to host the event in New Jersey? Do they not have to sell the tickets until they make the decision on the site, or does eventually deciding on New Jersey make the whole thing retroactively illegal because they didn’t release the tickets earlier?)

3 John Rohan 01.09.14 at 12:32 pm

This is a rare case where I am rather somewhat sympathetic to the plaintiffs in this suit. The way concert and event tickets is sold is ridiculous. They should just raise the price to the fair market value, and sell all tickets at that price. That would eliminate all these secret perks, backroom deals, shady insider deals, and cash off the books business.

4 TexJudge 01.09.14 at 1:24 pm

I see absolutely nothing wrong with ticket scalping. Attending sporting events, concerts and the like involves no constitutional rights nor an essential item like medicines, ice. building supplies or food at the time of a hurricane or other natural disaster. This matter should be dismissed with costs imposed on the plaintiff.

5 Ron Miller 01.09.14 at 5:21 pm

TexJudge, I think ticket scalping should be perfectly legal. I love StubHub. But I also think states should have the right to make any law that they want.

6 Jazzizhep 01.09.14 at 6:24 pm

John,

Who decides “fair market value”, I am always partial to allowing a buyer and seller to determine fair market–be it scalper or the NFL. If one believes the price is too high there is a simple remedy.

Also, the “backroom” deals you speak involve the NFL giving tickets to sponsors, advertisers, employees etc… Which of these do you wish to disregard? Should we make it illegal for a party to offer perks to their customers? Under your rule, should I be fearful of offering free tickets to my customers? Or do you mean only really big and profitable companies cannot offer free tickets?

7 gitarcarver 01.09.14 at 10:57 pm

To some extent, I think this should come down to “who owns the building?”

According to the fine intellectual source of information Wikipedia, MetLife Stadium was built by the Giants and Jets with team money, but is administered by a commission established by the New Jersey Senate.

If that means the building itself is a private building, then as far as I am concerned the Jets/Giants/NFL can do whatever the heck they want with the tickets and no law should be able to tell them otherwise.

However, on the other hand, when the stadiums / arenas / venues are funded by public funds, then the public should have a say in the administration of the building and the dispensation of the tickets.

8 Allan 01.10.14 at 12:08 pm

The reason I oppose scalping, in general, is that the money from scalping goes to the scalpers, rather than the performers. Say a concert of a popular singer is held. The tickets cost $X and the performer gets y% of the $X. But the venue decides, for $1 million, to sell all the tickets to a scalper, who can make a good profit. The venue makes 100% of the $1 million, while the act is left in the cold. That is wrong (but, then again, the performer can contract to prevent this). In addition, this could lead to corruption by high level managers. (I could see those managers buying a block of tickets and pocketing the money personally).

On the other hand, by holding the event, the venue is taking a risk (not selling tickets). It passes the risks off to scalpers. The result is that the venue gets paid, regardless of ticket sales, and the concert goers get their concert for the amount they paid. If the scalpers did not act as insurers, perhaps there would be fewer events (because the venues or performers do not want to take the risk of lower ticket sales) or ticket prices would generally be higher for all events (to make up for low selling events).

In sum, I have some qualms about scalpers. But they may be helping to make more events available and make the market more efficient. I just wish all of this would be out in the open so we could actually see how the market works and really tell if there is graft and corruption, or whether it is actually improving efficient markets.

9 gitarcarver 01.10.14 at 3:57 pm

On the other hand, by holding the event, the venue is taking a risk (not selling tickets).

I used to sign contracts for venues. The venue gets paid no matter what. There is no risk for the venue as it is going to get paid. Furthermore, the venue gets a cut of whatever is sold in the venue. That means whether you buy a hot dog, adult beverage, souvenir, CD, t-shirt, etc, the venue gets a cut of that.

So if you have a concert with an artist who brings in their own merchandise with their own people to sell it, the venue gets a cut of th0se items sold no matter what.

The bottom line is that the venue is going to get paid and make a profit no matter what. The more popular an event, the more money they will make, but they are not taking a risk at all.

10 Allan 01.10.14 at 4:33 pm

OK, then. The venue is good as far as profit goes. the promoter is taking the risk. But there is still room for graft and corruption if an employee for the venue or the promoter is entitled to hold back tickets and sell them to a ticket dealer of their choice.

11 DensityDuck 01.10.14 at 4:49 pm

Allan makes a really good point about the money from a scalper’s overhead stays with the scalper, rather than going into the pool that pays the performers. And that is an important consideration in this Brave New World where performers are supposed to make all their money from performing, rather than selling recordings.

12 Ron Miller 01.10.14 at 6:02 pm

For such a conservative site, I’m amazed at how many people are so worried about someone “getting over” in the free market economy. Someone mentioned the state should have a say if they partially funded the stadium. Well, if the states wanted a say, they should include that in their contract to agree to build the building. They should have no right to interfere if they don’t.

Someone else expressed a concern for the poor performance who are not benefiting from the high prices. Well, they know that selling out quickly has value that helps them further their brand. How do I know this? They could always charge more if they wanted to do so.

The Yankees were tired of scalpers getting so much money for their tickets so they jacked prices up like crazy a few years back. There was no one buying those seats and it looked creepy watching the games on television. I think they did the right thing to maximize their profits by making the prices reflect the real value. But they went to far in what they though the tickets were worth and they paid the price both in revenues and in PR (because everyone noticed it).

13 gitarcarver 01.10.14 at 7:06 pm

DD,

I don’t think that Allan’s point is “good” at all. The performer sets the price of the tickets to cover his costs and make money. Whether the performance sells out due to the tickets being sold to the public at face value or whether “scalpers” or other interests buy the tickets up at face value, the performer makes the same money.

Arguable, the risk takers here are the scalpers as they buy tickets on the basis that they can sell them for more than the face value. If they buy all the tickets and the performance does not sell out, the venue has made money they wanted, the performer has made the money they wanted and the scalper is the one losing money.

Allan,

I am not sure where there is “graft or corruption.” Doesn’t the performer get the money they want from the face value of the tickets? If promoters want to steal tickets from performers and sell them, they don’t need scalpers to do so. They can just sell them on eBay, Craigslist, etc. At the end of the day, there is an accounting that says to the performer “this is the number of tickets that were sold and here is your money.” Failure to account for the tickets (ie stealing them) is different from scalping.

14 Allan 01.13.14 at 11:24 am

Gitarcarver,

The graft and corruption I refer to does not come from the actual companies who promote the event or own the venue. It is their employees, who could take a bribe to take the the tickets and sell them as a block to scalpers. The aggrieved party would be the company.

If the scalpers paid the company itself a bonus, I would agree this is not graft or corruption.

15 gitarcarver 01.13.14 at 6:49 pm

Allan,

I am not sure that you understand how controlled the tickets are in this day and age. Gone are the days in modern venues where an outside company prints tickets. Companies can tell you who bought what ticket, how and when it was paid for. It would be very difficult for a block of tickets to be “stolen” without it appearing on the tracking sheets for sales as there is no money for the seats.

However, assume that you have an employee of ticket company that steals the tickets and sells them to a scalper (without the money going back to the company.)

That would be a theft of property, the same as if the employee stole a case of canned corn from a grocery store.

We have laws in place that prosecute such actions and it is my opinion that we don’t need to have specific laws targeting specific businesses.

16 Timothy Horrigan` 02.03.14 at 10:11 am

I agree that those Super Bowl tickets are expensive. I seriously considered making the six-hour drive to the big game this year, and was dissuaded by the four-and five-figure ticket prices. But I don’t agree with Mr Finkelman that those tickets were too expensive. Last night, I saw on my TV (in between the commercials) that every seat in Met Life Stadium was full.

In January 1983, I was a student at the Marshall School of Business at USC. Super Bowl XVIII was held at the Rose Bowl, which is 16 miles up the Harbor Freeway from the campus. The host committee had a few remaining seats in the upper reaches of the end zone to fill, and they quietly offered tickets a few days before the game to business-school students. I turned the offer down, because the price was way beyond my budget. That price was $75, which now seems ludicrously low. In 1983 and 2014 alike, the stadium was full of fans who were happy to pay the ticket prices, and the rest of us were able to enjoy the game on TV.

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