Supply and Demand Superbowl - 22 The Milken Institute Review

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Unformatted text preview: 22 The Milken Institute Review Aneconomistgoesto Supplyand Demand 23 Second Quarter 2001 T The hardest ticket to get this year was for Super Bowl XXXV. Though the game proved to be a blowout, thousands of fans who were desperately seeking a seat to the spectacle were shut out. One can learn a lot about economics from studying the distribution and pricing of Super Bowl tickets. Herewith, my reports on what I learned from taking my father, Norman, to the game and conducting an infor- mal survey of 316 fans with the aid of four interviewers. The most obvious fact about Super Bowl XXXV was that the price listed on the tickets either $325 or $400, depending on the section of the stadium was well below the figure that would have balanced demand with the fixed supply of seats in Raymond James Stadium in Tampa. As a consequence, there was tremendous excess demand. The National Football League held a lottery for the rights to pur- chase 500 pairs of tickets so ordinary fans would have a shot at going to the game, and it was inundated with 36,000 applications. (The odds of being admitted to Princeton are a lot better.) On game day, at least 1,000 frustrated fans displayed ticket wanted! signs outside the stadium, and ticket holders told stories of being offered as much as $5,000 as they ran the gauntlet. List prices were set by the NFL commissioners office in conjunction with the Super Bowl Policy Committee, which consists of a handful of team owners. Tick- ets were rationed as follows: The league kept 25 percent, distributing them to the media, advertisers and others. The two teams got 17.5 percent of tickets each, most of which they distributed to their season-ticket holders through lotteries. The host city got 8.35 percent of tickets, and the other teams in the league divided what was left. Roughly three out of four states and many municipalities regulate the resale of tickets. Nonetheless, a secondary market for Super Bowl tickets operated by scal- pers, licensed ticket brokers and online auctions quickly sprang up. A week before the Super Bowl, tickets on Yahoo! Auctions, for example, traded for $1,500 to $3,500. Although the Tampa police aggressively discouraged scalping, the prohi- bition was easily skirted. For example, someone in a state that outlaws the resale the SuperBowl By Alan B. Krueger ap/wide world photo 24 The Milken Institute Review of tickets can still purchase a ticket from a broker in a state that allows resales because the states cannot regulate interstate com- merce. In addition, although eBay eventually requested that all tickets posted without accompanying amenities be withdrawn, it still permitted auctions for tickets that had been packaged with something else a hotel stay or a plane ticket....
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Supply and Demand Superbowl - 22 The Milken Institute Review

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