Saturday, 19 February 2011

Rugby World Cup

I'm scheduled for Martin Devlin's show on Radio Live this afternoon to talk ticket scalping. If the econ department had ever had a vote on "most likely never to appear on a national sports programme", I'd probably have made the finals. Lack of knowledge about rugby probably helps me here though - I can make hypotheses behind the veil and see what the rugby expert says when I talk to him on the show.

Here are some things I want to know, and hope to find out this afternoon.
  • What proportion of seats for the quarter-finals, semis and finals are allocated via the lottery rather than through the international pool?
    • The more that go through the lottery, the greater the potential revenue losses from underpricing and the greater the benefits of scalping
  • What proportion of folks getting a lotto ticket will be invited to buy a finals ticket? Is it completely random draw, or is there some algorithm running in the background that tries to match folks up with the ticket they'd be most likely (or least likely) to want to get? Will we ever get stats on the number of lotto invitations extended and the proportion that were accepted?
    • The worse the match between the "invitation to buy" and the buyer's preferences, the fewer the number of acceptances we'll have. Consequences depend on what happens with the rejected invitations. If the stats never come out, that's probably not a good thing.
  • Suppose I win the lottery but am given the chance to buy a ticket either for a game I don't want to see or for one that's more expensive than I'm willing to pay. What happens to the ticket I turn down? Does it go back into the lotto pool? Does it go into the set of normal-priced tickets or into the set for hospitality packages?
    • If it goes back into the lotto pool, potential losses are higher. If it goes to the international pool, where profits are higher, that reduces losses but also perhaps explains the bizarre lotto set up where you kinda think you've got a shot at a ticket, but you can't tell in advance for which game or at what price level. In this latter case, it strengthens support for my "the whole thing's a sham" hypothesis; in the former, it weakens it but also increases the benefits of scalping.
  • Suppose I buy a ticket at regular prices for the semi-finals, but the team I wanted to see there gets knocked out in the quarter finals. I'm in deep despair; I can't leave the house, never mind go to see the team that kicked my guys out of the semi-finals. How can I sell my ticket without the buyer worrying that it's counterfeit? Is there any kind of legitimate resale market like StubHub or TicketExchange? If not, why not? The absence of one of these reduces the amount I'm willing to pay for the ticket in the first place in the same way that I'm willing to pay more for an airline ticket that allows cancellations.
Again, I'm behind the veil here. But suppose I were the RWC organizer and I were organizing things. How would I set it up if I knew I had to give the appearance of having some seats available at low price for regular Kiwis, but I wanted to minimize losses at the same time?

I'd run the lotto for lowish priced seats for the popular games. I'd make sure that people couldn't choose in advance what price ticket or what game they'd be offered the chance to purchase. I'd make it really hard for them to on-sell that ticket so they decline the offer [prohibit on-selling at higher than face value]. I'd then run a background algorithm that made it more likely that folks who bought the cheapest seats for games were given the chance to buy really expensive tickets that they probably couldn't afford - ideally in another city. So folks buying cheap tickets to games in Invercargill would get the option to buy expensive seats for final games up on the North Island. Then when they turned me down, I'd put those tickets into hospitality packs or make them available to international tour operators. Voila! It looks like locals have a fair go at tickets for the good games, but most of the seats actually wind up being sold at market prices.

Maybe Martin Devlin can tell me how close actual practice is to how I'd be doing things were I in that spot. Again - I want the lowest possible losses for RWC because the government's on the hook for it one way or another. If it's the case that the veneer of broad access is what maintains support for what's likely around a half a billion dollars in total combined subsidies for the world cup though - I'd sooner peel that veneer back a bit (if it is veneer).

Strange country, New Zealand. I do rather a lot of work on topics like alcohol, minimum wages, voter knowledge - all using NZ data in an NZ context - tumbleweeds roll by. Niko Kloeten from the NBR calls me up Wednesday morning asking for the standard econ view on ticket scalping. I emailed him a few paragraphs a half hour later. Got a call that afternoon for TVNZ's breakfast show that afternoon for the next morning, then Larry Williams's Newstalk ZB drivetime show Thursday afternoon, and now this.

Folks coming in from Devlin's show would probably find these sets of posts of interest. Each one will bring up the posts with those tags.
Otherwise, hit the "greatest hits" links over at the top on the right to see the more typical fare here. And who knows. Maybe someday Seamus Hogan will start blogging here again, in which case you might expect more sports economics posts.

Update: Martin thinks the lotto tickets stay in the lotto pool if they're turned down. Would be interesting to know for sure.

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