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Secondary Ticket Brokerage Market Executive Summary

In perfect market conditions, a ticket for a basketball game that is limited in supply would be sold for the highest price that the market can purchase. However, to establish a fan base, teams sell the tickets for less than the market value creating an excess demand. The excess demand of tickets in the market has influenced the proliferation of the secondary ticket brokerage market. The secondary ticket brokerage market, is a supply-and-demand-based free market that resells tickets purchased from the primary ticket market at more than double the face value.[1] A ticket brokerage study showed that brokers are earning high profits from premium events and premium seating and gaining control in the event ticket marketplace.[2]

The ticket brokerage market that comprises of internet sites such as StubHub, traditional ticket brokers and individuals selling tickets outside of venues is a $5 billion-dollar industry.[3] The ticket brokerage industry has benefited from the digitization of tickets as fans demand mobile tickets to transition from paper tickets. As the millennials are increasing the demand for live performances, the ticket brokerage industry is also experiencing a boost in sales. The industry is forecasted to grow at an annualized rate of 2.7% and is projected to reach $5.8 billion in 2021. The industry’s online services are expected to increase to 12.2% in 2021.[4]

Vertical Organization

Who is Who in the Secondary Broker Industry
The major players in the industry have significant roles in events, shows and concerts and set prices for consumers to pay.

  • Artists/Performers
  • Agents
  • Promoters
  • Venue Operators
  • Ticket Agencies
  • Broker
  • Ticket Resale Platform

The promoter organizes the concert tour or other event, negotiates the artist’s contract with their manager or agent, and leases all the venues where the concerts will take place. Live Nation and Bowery Presents are promoters in the industry. Venue operators such as a Performing Arts Center or Madison Square Garden are responsible for providing a facility for the concert or event, establishing the seating categories and earn a percentage of the service charges, processing fees, and any add-ons to the ticket price. The vendor or agency such as Ticketmaster, provides the primary market sale and delivers the tickets to the brokers via a website or mobile app. The broker purchases the tickets from the vendor and resells the tickets at a markup. The ticket resale platform are platforms or websites such as StubHub and Vivid Seats that resell tickets.[5]

Main Activities

  • Sell concert tickets
  • Sell sporting event tickets
  • Sell arts and theatrical performance tickets
  • Sell children’s and family-themed performance tickets4



Secondary ticket brokers sell sporting events for events such as the NBA, MLB and NHL games and sell concert tickets for concert tours.[1] Secondary ticket websites make tickets available for all the major concerts, events, and games.[6]

Similar Industries

  • Convention and Visitor Bureaus in the US: This industry includes stores and kiosks that sell tickets for events
  • Musical Groups and Artists in the US: This industry comprises of performers and composers of music
  • E-commerce and Online Auctions in the US: This industry focuses on providing retail goods and services via the internet
  • Concert and Event Promotion in the US: This industry creates, controls and promotes live events and performances.4



For further detail, please visit the second article in this series, outlining M&A valuation and venture capital investment trends in the online, secondary ticket brokerage market.

Citations

[1] The National Basketball Association (NBA), Major League Baseball (MLB) and National Hockey League (NHL)

[1] Clark P. Kirkman, WHO NEEDS TICKETS? Examining Problems in the Growing Online Ticket Resale Industry, 61 FEDERAL COMMUNICATIONS LAW JOURNAL, 739-764.

[2] Mark S. Gottlieb, Ticket Brokerage an Industry Study, ACCOUNTANTS, CONSULTANTS & BUSINESS VALUATORS, (2011), http://www.msgcpa.com/.

[3] Eric Schroeder, Josh Fisher, John Orbe & John Bush. A Brief Overview on Ticket Scalping Laws, Secondary Ticket Markets, and the StubHub Effect, 30 ENTERTAINMENT & SPORTS LAWYER. 1, 26-32 (2012).

[4] Nick Petrillo, IBISWorld Industry Report OD5447 Online Event Ticket Sales in the US, IBISWORLD, (2016).

[5] Eric T. Schneiderman, Obstructed View: What’s Blocking New Yorkers from Getting Tickets, https://ag.ny.gov/pdfs/Ticket_Sales_Report.pdf.

[6] Chad Burgess, Guide to the Secondary Ticketing Market, SEATGEEK, (Mar 21, 2017), https://seatgeek.com/tba/articles/secondary-ticket-market-and-resellers/.

Jennifer Abban contributed to this report.

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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.