Touts are just the ticket

Ticket touts perform a fantastic service. They help everyone get what they want. Trust the dinosaurs of the Left to want to hammer working class initiative

Ticket touts at Arsenal
Andrew Gibson
On 10 March 2014 14:21

A Labour MP in Wales who seemingly has never had a job outside of politics is the latest in a long line of legislators who have proposed that property rights be undermined and that the working class be denied an earning opportunity that in a different guise is left open to the middle classes.

Step forward Nick Smith, MP for Blaenau Gwent. Earlier this month Smith proposed in the Commons that restrictions be placed on the activities of ticket touts, and in particular on sales of tickets for the Rugby World Cup.

It is an old argument laced with snobbery and lazy thinking. Smith said that touts drained money out of sports and cultural activities, and prevented “real fans” from getting tickets.

In reality, sporting bodies benefit from the touts’ purchases. They get their asking price and they get it quickly. Often, touts misjudge the market and lose money -- but the sporting body still gets its desired return. The touts profit is in return for bearing the risk that the sporting body has de facto devolved to them.

And it is not true that “real fans” miss out. Who could be more committed than a punter willing to pay more than the ticket’s face value?

Touts provide a real service. If you buy a ticket and then your circumstances change, sell it to a tout. If you suddenly find yourself at a loose end, buy a ticket from a tout at the last minute.

I often leave Brixton tube station to the loud sound of touts offering to buy “or” sell tickets to gigs at the Academy – could any music be sweeter than the sound of a free market satisfying the needs of customers in such an immediate way?

But the arguments for touting are stronger still.

Sales and marketing departments should maximise their profits through differentiated pricing systems. For numerous reasons, different customers will pay different prices for the same product.

For example, Ed Miliband might pay a fiver for a Rubik’s Cube, whereas I would pay no more than 5p for that toy. The goal of sales staff is to identify these different levels of willingness to pay and to meet them with variable prices.

So, the well paid executive with an expense account can have a hospitality suite. The financially stretched worker can have a season ticket with a discount. Pensioners, children and students are deemed “concessions”.

If a pricing structure was efficient there would be little secondary market. The existence of a secondary market reveals that the pricing has been incompetently handled, and thus it is the sport’s administrators who are “costing the game money” – not the touts.

Pricing a product or service is not a moral act. It is a discovery process. “Just how much will the market bear?” A street-wise enthusiast from Brixton is often better attuned to the market than a career suit who benchmarks prices safely against what was charged last time. Touts expose incompetents.

When the middle classes act as go-betweens engaging in arbitrage they are called “brokers” or “agents”. Dealing in shares or bonds or property they buy low and sell high, serving both willing seller and willing buyer. This is not a market failing, it is a market feature and a very welcome one. The same applies to ticket touts.

Smith did make a good point that today many touts use computer technology to bid swiftly for multiple tickets. But that is simply the touts’ reaction to the sales method. It is for the suits to look again at their sales and pricing practices in the round.

Smith’s arguments were rebutted by Philip Davies, the feisty Tory MP for Shipley. Davies noted that the OFT had found that a secondary market in tickets worked in the interests of the consumer.

Davies also defended the property rights of ticket holders. He noted that ICM asked people to agree or disagree with the statement: “If I had a ticket to a sporting event, concert or other event that I could no longer use, then I should be allowed to resell it” -- and 86 percent of respondents agreed with that defence of private property.

The Government should not erode the rights of ticket touts. It should go in the opposite direction and designate fewer “competitions of national significance” where ticket brokerage is restricted.

Nick Smith described touting as “parasitic”. But as noted above, sometimes middlemen call the price wrong and lose money.

For example, the Parliamentary Estate buys food and beverages and re-sells it at a loss, thereby transferring money from taxpayers to Parliamentarians. Let Mr Smith set his sights on that failing market, and any parasites he might find there, and leave our ticket brokers be.

Andrew Gibson is an occasional contributor to The Commentator

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