[Author’s note: I wrote this article in March but decided to momentarily shelve it. It criticized legislation then being discussed by Baltimore city council that would cap at 15% the amount Ticketmaster could charge for service fees above a ticket’s retail price. Ultimately the legislation was amended to remove that cap, effectively maintaining the status quo. The reason, said a legislative aide for Councilor Carl Stokes (who favored the cap), was because of intense lobbying by Ticketmaster. Here is the article as originally written. For updated information on the issue, here’s a Baltimore Sun article.]
If you buy numerous Baltimore Orioles tickets in March for the series this September against the Yankees, and the O’s have a successful season, chances are you’re in for a windfall. Because while these tickets now cost around $20, you’ll be able to sell them that week for several times more, to fans counting down to the playoffs. But don’t do this outside the stadium, or anywhere else in Baltimore, for that matter, because then you’ll be breaking the law–or at least one that’s enforced assuming you’re not Ticketmaster.
This city law prohibits reselling events tickets for over .50 cents of the listed value. It was written in 1948 to prevent price-gouging for Navy football games, and has since applied to tickets resold by citizens, but not by Ticketmaster, a national distributor. Instead this company, which serves everything from Baltimore’s major stadiums, to its nightclubs and opera halls, tacks fees onto its sales.
But in 2011 the company was sued, on grounds that it violated this anti-scalping law, by a man charged a $12 fee for a $52 concert ticket. After a state court ruling, the law was brought before Baltimore City Council, which suspended it—for Ticketmaster, at least—and mandated new legislation to be written. The goal of this legislation, said Councilor Bill Henry, should be to increase the law’s maximum fees to “either $5 or 10% of the value of the ticket”, and to finally enforce it on Ticketmaster. Another councilor said this legislation was needed for consumer protections, which she believed were violated by the company’s fees. Not elaborated on, though, were the potential unintended consequences of this limit, which could actually increase ticket prices in Baltimore.
To understand how, it’s worth noting the role now played by Ticketmaster and similar companies. While technically third parties, they have become the de facto box offices for many venues, and are responsible for the advertising, selling, and mailing of tickets. This is desirable to venues who find modern marketing to be overwhelming, and who want their customer bases broadened. And it is why the ones in Baltimore oppose these fee limits: because by reducing Ticketmaster’s profits, such limits may cause the company to jump town, ultimately hurting their own bottom lines. After all, much of Ticketmaster’s fees are rebated back to the venues tax-free. And the fees really have not been “added” anyway, but are what venues themselves would charge if conducting their own sales. In fact, were smaller venues forced into this because of Ticketmaster’s absence, it would likely increase fees, by duplicating a process that Ticketmaster has already hyper-streamlined.
But this hasn’t prevented Councilor Henry, who proposed the fee-limit amendment, from still advocating Ticketmaster’s exodus from Baltimore. While he did admit during an interview that the opposition shown by venues has “resonated with me”, it didn’t outweigh his other priorities, like raising taxes. The city could do this annually by a half-million, he said, if it ended these rebates, and redirected the money to a ticket’s listed price instead. He also castigated Ticketmaster out of a commitment to localism.
“If we already have a law in place that effectively makes it harder for a big, multinational to come into Baltimore and compete with smaller, local resellers,” he said, “why on earth wouldn’t we defend that?”
One reason is that eliminating such competition could raise prices—which he agreed might be true. But this amendment, he continued, was about other goals, “not about making the ticket prices cheaper.”
What the amendment will also not be about, at least to anyone with the internet, is enforceability. Tickets today, after all, can be sold for any price whatsoever on websites like Stubhub and Ticket Network. An amendment that regulates them locally will, like with other government attempts at price-fixing, just be exploited for political influence, and hurt certain companies over others. For example today the law favors Ticketmaster over street scalpers, but because of this injustice, may soon be reversed to hurt Ticketmaster itself, in favor of other multinationals. And while the law’s added taxes and expenses should little effect the Orioles, who sell millions of tickets annually, it may prevent certain niche venues from staying afloat.
The best solution would be to abolish the law altogether, and let venues—and citizens—determine how tickets are priced and sold themselves. But this may be too much to ask for councilors like Mr. Henry and others, who have spun a web of faulty logic and ulterior motives around their own mistrust of the market.