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Ticket Scalpers Are Pushing for a Bailout. They Should Try Justifying Their Existence First.

The crowds enjoying their $79 seats for the low price of $550.EXPAND
The crowds enjoying their $79 seats for the low price of $550.
Mike Brooks

Remember Matt Colvin? That guy from Tennessee who saw an increased demand for hand sanitizer, surgical masks and disinfectant wipes, and decided to stockpile them and flip them for a profit? Remember how he was initially without shame at having taken on such an endeavor, so much that he agreed to a New York Times interview and even decided to make a sob story out of his inability to sell the 17,000 bottles of hand sanitizer he obtained?

That’s exactly what ticket scalpers are doing right now, minus the profoundly brazen act of putting people’s lives in danger.

Ticket resale sites such as StubHub are facing an economic crisis for obvious reasons: The coronavirus pandemic caused tours and mass gatherings to get canceled en masse, and without concerts, sporting events or festivals left to sell tickets for, “ticket brokers” (PR-speak likely coined to replace “scalper” for its negative connotations) have nothing to sell.

Now, if you were hoping to hear that ticket scalpers like StubHub will suffer, you’ll be pleased to know that ticket holders are inundating them with requests for refunds, but they don’t have enough liquidity to honor them. Since hundreds of high-profile events are either canceled or postponed, scalpers are sitting on pieces of paper and QR codes that are now worthless since there’s no experience customers can redeem them for. Sports leagues and ticket vendors such as Ticketmaster are unable to refund scalpers as they aren't affiliated with the third-party company.

The coronavirus has hit scalpers so hard that StubHub president Sukhinder Singh Cassidy said in a statement, “Given the unique circumstance surrounding coronavirus, we’re offering an alternative option. If an event is canceled, you have the option to receive a StubHub coupon, valued at 120% of your original purchase, so you can enjoy an event of your choosing in the future.”

For scalpers, the economic crisis reached its disastrous culmination when some prominent industry players considered reaching out to Congress and the White House to request "financial relief" (which is a PR-friendly euphemism for the word “bailout”). Gary Alder of the National Association of Ticket Brokers has been in talks with several ticketing companies on this exact proposal.

"The number of canceled events due to COVID-19, including some of the biggest that exist, has made it extremely difficult for those in ticketing (and live events in general) to stay afloat," Alder said to Billboard . "We would like to see ticketing and live events put in the same category as airlines, hotels and cruise lines when it comes to applying relief. Right now, the ticketing industry is essentially at a complete halt with no end in sight. Income for the people working in this sector and providing valuable services to consumers is essential and warranted."

I’m sorry, what “valuable services” are being offered by scalpers, exactly? There’s no real value that they offer to consumers whatsoever, especially considering that a ticket purchased directly through Ticketmaster or AXS is just as redeemable for an event as one purchased through a third party. In fact, it could be argued that they are actually detrimental to consumers since they make event access more restricted and make ticket holders pay more for no reason other than through the existence of artificial demand.

And for Alder to even insinuate that scalpers are any degree of Kevin Bacon away from airlines, hotels and cruise lines is laughable. The repercussions for the cessation of airlines are obvious — we wouldn’t be about to fly. The services provided by hotels are essential in their own right, and while cruises aren’t exactly a bread-and-butter industry, they nonetheless provide a tangible service to consumers.

Scalpers, on the other hand, do not, and consumers would barely even notice if they folded.

They’re the entertainment industry equivalent of Priceline, Trivago, Hotels.com and Expedia — if those four companies went under, the hotel rooms they sell wouldn’t cease to exist. By that same token, Live Nation and AEG wouldn’t stop booking and organizing shows, and sports leagues wouldn’t stop booking and organizing games. The services that scalpers provide are only valuable to the promoters since they are guaranteed sales and alleviated of some risk.

Some economists may argue in favor of scalping because, as they say, it works in a way that's similar to price gouging, which prevents overconsumption, by guaranteeing future supply serves the most interested consumers. (Though, in the case of catastrophe, side businesses like Colvin's can also have disastrous repercussions.) Higher resale values, they say, helps to allocate resources that are otherwise underpriced by directing the product to consumers who have a greater interest in it and are willing to pay more. The Mises Institute goes so far as to call them "heroes" who take a gamble by investing in cultural events that its own promoters will not.

But even if that's the case in a healthy economy, scalpers are so inessential that their existence is barely even justified then, let alone now. They join the ranks of third-party medical debt collectors in exemplifying just how much inefficiency you can create in the pursuit of getting your beak wet. The reason the idea of scalpers getting a bailout is “floating around” is because it doesn’t carry enough weight.

When the financial and automotive industries requested bailouts during the Great Recession, the mantra that was thrown around was “too big to fail.” That clearly doesn’t apply to scalpers, because in order to be “too big to fail,” your failure has to make people’s lives harder, not easier.

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