The Cleveland Indians Should Take the Long View and Not Punish their Season Ticket Holders

Isn’t it interesting that when teams are hot, some move quickly to raise ticket prices or restrict ticket holders’ rights? Yet when attendance is down, when seats are empty and concessions aren’t generating much revenue, the teams appreciate any help they can get to fill the empty seats.

The Cleveland Indians ranked third in the MLB for lowest attendance last season. Yet in a published response to my Op Ed expressing discontent with the team cancelling season ticket holder accounts, Tim Salcer, the Indians’ head of ticket sales (a newcomer to the industry) boasts how he plans to take greater control of ticket resale. And true to his word, I learned after his column was published about the cancelation of accounts paid for by ticket brokers.

In his response, Mr. Salcer goes out of his way to try and deflect the points I raised by noting my role as an advocate for ticket resellers. But the simple truth is that a competitive and open resale market is good for everyone interested in seeing lower prices and full seats at games - fans, resellers, players, and the teams. Case in point, it was pointed out to me that consumers paid less than the Indians’ box office prices on the resale market for almost every home game last season.

I’ve been involved with professional sports for decades, and I encourage Mr. Salcer to consider the value of a secondary resale market and professional resale companies in helping ensure fans are sitting in the seats at games. Even the less desirable games. Why? It’s simple. The team isn’t left to go it alone to pack the stadium. The secondary ticket resale system provides teams with a partner in ensuring fans are in seats. This is especially important for teams that rank low in attendance.

Ticket Holders – Season ticket holders and brokers have a financial stake in the games

Mr. Salcer neglects the fact that ticket owners, especially brokers, have serious equity in the games. They are investors with real skin in the game, and they carry the significant risk, considering the risk of an unsold ticket is transferred from the team to the broker when the broker pays the team full asking price. And while critics like Mr. Salcer are quick to point to examples where tickets were resold at a profit, they neglect the reality that many game tickets sell for less than face value. They don’t appreciate how many events come and go where resale companies take a loss. Upwards of 40% of secondary market tickets sell for less than face value!

State Attorneys Generals weigh-in, and they support a competitive secondary ticket market

State Attorneys Generals, including Ohio’s, last week announced an antitrust investigation settlement agreement with the NFL following an investigation into teams’ practices to constrain ticket resale on the secondary market. In fact, one of the Attorneys General stated in a press release, “My office will continue the fight for the right of sports fans and concertgoers by ensuring secondary markets are free and competitive.” Mr. Salcer might consider how his comment “we will continue to find ways to control the secondary market better in the future” counters the Attorneys General.

Cancelling ticket holder accounts is a bad team practice

We agree with Mr. Salcer that the Indians’ ticket sales department is not perfect, because it is egregious the team punished its most vested fans (season ticket holders who paid thousands of dollars for their tickets during the regular season), by cancelling their World Series tickets because the team could fetch more profit on those tickets.

Teams mistakenly focus on short term profit over long term success

Teams should take the long view when it comes to revenue. They should borrow a page from Harvard’s service-profit chain school of thought on customer loyalty and profitability. They would then realize that while spreadsheets might project fast profit today by cancelling accounts for games in high demand, or taking other steps to restrict ticket holder’s right to transfer or resell their tickets if they wish on a website of their choosing and at a price they are willing to accept, that doing the right thing by your customers (fans and brokers alike) will serve the team better over the long term. It will result in more fans at more games, consistently year over year. Otherwise you end up with a money grab today, and empty seats tomorrow.

Perhaps this is why I’ve noticed sales departments of many teams experience a high rate of turnover. These “turn around” crews may extract more profit at first, but when their computer models fail to accurately predict fan behavior, they end up in a new city with their same experiment ready to test (or suffer) on a different team’s crowd. Sadly, it’s less and less common to encounter ticket executives who appreciate the value of seasoned partnerships with companies that provide white glove customer service to the consumers they are putting in the seats.

Teams may not like it, but market facts are facts. Mr. Salcer says that it’s his top priority to “protect our fans so that they can purchase our tickets at a fair and affordable price.” Well, cancelling accounts and choking the resale market does the opposite. How do we know this? It has been reported to me that with the Indians’ demand-based pricing model (called dynamic pricing), tickets were on the secondary market for 95% of the 81 games at LESS than the Indians so-called “affordable” prices, including Opening Day. Fans and fans alone, armed with their wallets, dictate price tolerance for tickets.

Car dealerships, once paid their price, cannot prevent car owners from selling privately, going to CarMax, or AutoTrader. Why? It’s improper and an overreach. Mr. Salcer, the same goes for tickets.

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