New Era In Sports Tickets: Auction To The Highest Bidder
I've just started to watch the Cubs season ticket auction on the team's web site. If you haven't heard, the Cubs created 71 new seats at Wrigley and today, they started auctioning them off on a season basis.
The seats are appropriately sponsored by the Chicago Board Options Exchange are the opening bids were at about $17,000 per seat (about $210 per game), with the lots being offered in chunks of two, four and five seats.
I figured something like this was coming, after the Cubs pioneered a ticket brokerage and prevailed in a legal case challenging their ability to do so. And by the time this auction is over, I have a feeling that other teams will try this to the extent that they can do it without facing the wrath of anyone who is on their season ticket waiting list.
We're still far from the entire industry taking on airline pricing, but I believe that auctions like this will be the new way that teams will be able to realize the secondary revenue that has been pulled in from scalpers and brokers.
Here's my interview with Michael Lufrano, senior vice president of community affairs for the Cubs and the team's general counsel.
Rovell: First, tell me about the sponsorship of these seats with the Chicago Board Options Exchange?
Lufrano: The CBOE is a great partner and they understand markets and they’re a Chicago institution. Of course, we think the Chicago Cubs are a great Chicago institution, so it was a natural partnership. We’ve been able to build 70 new seats, they're terrific seats--our bullpen box seats right between the Cubs dugout and the Cubs bullpen -and we know we have a huge demand for season tickets. So to be able to marry all of those interests, partner with the CBOE and create an auction – the first ever for season tickets--is a tremendous thing for us and we thought was a great thing to do.
Rovell: It's been harder and harder for teams to find untapped revenue. Describe the strain that is on the Cubs.
Lufrano: We try and compete in the NL Central and win that division every year and if you look at each of the other teams in our division has a ballpark that’s been built since the year 2000. So they all play in brand new facilities, we play in a 93-year-old ballpark and trying to do what it takes to keep Wrigley Field historic and traditional, but also to modernize it and allow to compete with some of the newer ballparks just in our division alone creates pressure to generate revenue. Now, we’re privileged. We have a unique fan base and play in a unique park, but each year we compete with parks that have new fan amenities, new suites and other things that help generate revenue for them and we try and due the same while maintaining the historic tradition of Wrigley Field.
Rovell: Will we one day live in a world where all the tickets are auctioned?
Lefrano: We could certainly sell more season tickets today than we do. There’s a great demand for season tickets, but we limit that because by selling day of game tickets we give every fan a chance and more fans a chance to go see games at Wrigley Field which we want to see as well. So I think there’s a mix and these 70 seats, they're new seats, they’ve never been sold to anybody and so this is the right time to try the auction and see how it works.
Rovell: There's been a lot of debate over whether the fan that buys a ticket to a sporting event owns the seat or leases the seat. In other words, some teams claim that if you sell that seat, you've lost your rights. Where do the Cubs stand on this issue?
Lufrano: I know many teams sell a Personal Seat License, where they give you a package of rights when you buy that. But for us, every ticket for admission to our ballpark is just simply a license to see the game.
(Note: Based on this answer, I'm assuming that the Cubs don't spend much of their time pursuing season ticket holders that sell their tickets.)
Rovell: Who will buy tickets in this auction?
Lufrano: I think corporations will buy it. I expect we'll see groups of fans who will buy them and share their tickets over 81 games. I think we'll see businesses too and we're excited to see how the auction works so we can, for the first time, understand how the market really works for season tickets.
Questions? Comments? SportsBiz@cnbc.com