UP549 Priced Out: FIFA’s Big Ticket Gamble

0:00Rob Wilson:The World Cup could set a tone of like, this is the way the future looks for ticketing. Instead, they double down on the exclusive control that really we've seen for decades and that we know has led the ticketing world into a bad place.

0:12Shaun Steward:Welcome to Unofficial Partner, the sports business podcast. I'm Richard Gillis. It is fair to say, is it not, that nobody really likes the ticketing industry, the ticketing experience, and we feel ripped off most of the time. But the news agenda around this summer's FIFA World Cup in North America has been exceptional in terms of the way in which the price of tickets has dominated. Why are they so expensive? What's it got to do with changes made by FIFA specifically for this tournament? Strap in for a very interesting conversation with my two expert witnesses, Professor Rob Wilson, Dean of University Campus Football Business, and Sean Stewart, who you heard just then, who is Vice Principal of StubHub, known as Viagogo in Europe.

0:51Shaun Steward:If you're interested in more of this type of conversation, we've got a huge archive of podcasts with people from across the global business of sport. And you should subscribe to the Unofficial Partner Substack newsletter. Get it every Thursday directly to your inbox. Everyone else does that, you know, so why not you?

1:19Shaun Steward:we're going to start talking about the world cup because obviously you can't talk about tickets and not talk about fifa in america 2026 if you mention the word ticket that's where this conversation will go i think there's other things that sort of jump off it but we'll get to that in due course But FIFA didn't just lock down the primary market. They built their own secondary platform. Sean, is that a fair reading of what's happened, do you think?

1:42Rob Wilson:Yeah, I think this World Cup has kind of three or four areas that are very unique versus how previous World Cups have been executed from a ticketing distribution perspective. The first one, which has been widely covered, is just the acceptance or the investment in dynamic pricing. And that's been two factors that you've seen on the primary ticketing side, which is the pricing is yielding much more than it has traditionally. it varies by game and also by booking window and a bunch of other factors that traditionally the World Cup and ticketing in general has not deployed. Yield management as a practice is far more sophisticated than other perishable product industries like airlines and hotels.

2:19Rob Wilson:So this World Cup, there was definitely more of an embrace of dynamic pricing versus fixed pricing throughout a window. The range that dynamic pricing has been instituted around is larger as well. Both in the bid, it was larger. And then what's actually been executed as larger, we take it to and we've seen the finals and tied$10 ,000 seats at that range. So you're going from like a$60 US low point to a$10 ,000 US high point. That's quite the range. And certainly the high point is beyond what we've seen traditional or previous world cups priced at. The second component you alluded to a bit, which is there's VIP and hospitality and corporate packages and suites, like much more of an embrace in the multi-component event experience, not just a ticket for a seat, but also potential additional hospitality elements for that.

3:07Rob Wilson:And I think you've seen this both in the UK and globally, that sports and music have been shifting this direction for a long time. Since the first day you could get sushi delivered to a seat at a Mariners game in Seattle, suddenly live events have been beyond just standing room only or a seat at an event. It's become multi-component with a dinner before or after the game or VIP access to different amenities. And the World Cup has embraced that a great deal, which also pushes pricing up because the multiple components mean it's just not a ticket you're buying. And then the third one you alluded to, which is just greater control over both primary and secondary.

3:42Rob Wilson:They have their own official primary side and the primary technology backend that they partnered with. They phased the access to that multiple different windows of opening and distribution of that original primary allotment. But then the most unique thing that as you look at other world cups, but also other big kind of events like the Olympics is that they built and they're now managing and running their own secondary platform to move it to. So both the lift above face value and the fees generated on secondary transactions are all going back to FIFA, which is you make versus other world cups and other events as well.

4:17Shaun Steward:Okay.

4:18Rob Wilson:So yeah, a lot. And then that's all around what you started with, which is 104 games, 48 teams. Like it's a larger event than any other world cup in history. as well.

4:26Shaun Steward:Rob, this is the biggest revenue generating opportunity that FIFA has for a generation in the biggest, most capitalistic market in the world. It's the most valuable sports market in the world. It is Infantino's job to make as much money from this World Cup as he can. And the secondary market is a leak on that. So he's looking to stem that and own the secondary marketplace. What's wrong with that? That's a good question. Undoubtedly, FIFA operate on this four year cycle. We've heard him talk, haven't we, in recent report, recent interviews where he's discussed the need to generate higher revenue for FIFA at this World Cup as he possibly can.

5:10Shaun Steward:What FIFA have really done is look to exploit every single potential avenue of revenue generation that they could possibly get. And naturally, that has then pushed them into secondary marketplace because they are selling probably upwards of 80 % of their primary tickets to people that have already kind of locked those down. So that then creates this surge in demand. Then you're into the economics of supply and demand and he's making Infantino, FIFA, and making a huge amount of money. I guess the critics will say, and I'm probably one of those, that the World Cup belongs to fans globally. And we should be talking about access rather than the fact that they're making massive margins on secondary tickets.

5:49Sean, there's a question here, I think, about there's money and then there's reputation.

5:54Shaun Steward:And FIFA's reputation is valuable and it's being monetised by sponsors. And you've got people like Unilever and Coca-Cola spending a great deal of money, hundreds of millions on the brand and the event and the association. What do you think about that sort of risk reward question when it comes to a major governing body looking to get into the secondary market?

6:17Rob Wilson:Yeah, I mean, we've existed in a monopoly structure since 1976 in the US and a little bit after that in the UK. And now people are developing technology to be able to widely distribute tickets across more than just their primary single channel to market. Now, what you find is the most important fork in the road starts with their objective. Some of the rights holders we meet, they set a face value of tickets and they say, we want people to pay this amount for tickets and nothing more and preferably nothing less. In a dynamic world, they may have to price down in different markets to try to drive occupancy.

6:49Rob Wilson:But their goal is like, this is a fair value for the ticket. We want the majority of people to pay this and hopefully not less, not more. Then you see other teams we meet with where their goal is to maximize ticket revenue. And they see secondary as actually, which we just mentioned, like supply and demand equilibrium. Secondary is a different and better barometer of what the market's willing to pay for a ticket to an event. And the majority of tickets on secondary aren't Halo Swift and Oasis and World Cup. The average transaction is an$80 ticket. A lot of them go below space value because many events across the world have challenged finding additional demand, which is why people are moving to this wider distribution.

7:28Rob Wilson:But when you have the biggest football event on the planet that happens every four years, and the level of demand versus supply is 100x what the ticket availability is, then it comes down to is the rights holder's objective to grow average ticket price and maximize revenue? Or is it to cap it at a certain price and try to make sure everybody pays the same price that they think is fair and balanced? And in this case, you clearly see the latter, which is a strategy to maximize revenue and maximize ticket growth. their pricing growth and also do so through multi-components and hospitality and greater experience offerings and just the ticket.

8:04Shaun Steward:Does it matter, is it all noise until there's an empty seat? If everything sells out, if every match sells out, they sell every ticket, will this strategy be deemed as a success or is it more nuanced than that? I'm going to jump in. I think it kind of depends on your position as the fan. So if I want to gain access to the World Cup, I will look on a secondary market because I haven't been able to get a primary ticket. And I will consider whether or not that price is something that I am willing to pay. And that's the beauty of a free market economics and supply and demand, isn't it? Those people that want to pay for that ticket, we've seen it historically with some of the world's largest events where you almost get these bucket list experiences that you're happy to invest in.

8:49Shaun Steward:Or whether you're a person that just simply cannot afford some of the prices that are on offer you and you are desperate to get into the event i think what we need to remember on in all of that is the secondary marketplace provides us with that access and that's something about i think something really powerful about how you can use a secondary market to enable your access to that event particularly when you know the primary opportunities are so few and far between

9:15Rob Wilson:yeah i think that's very valid i think in the end of the way people will look at it after the world Cup is you have a range of different success metrics and measurements of whether this was positive or negative. Some of them are financially based. Did we sell more tickets? Did we make more money? Was the average ticket price higher than the profitability of the overall World Cup? But then as you mentioned, success in any business goes beyond just the economics. You have a brand, you have fan experience, you have likelihood to return. Do all of these things deteriorate the experience and end up causing fans to feel differently about the World Cup?

9:47Rob Wilson:The reality is Probably not. It's every four years. It's like the major event that we all remember from our childhood. It's like the Olympics. There's one or two of them that are just so substantial in sporting and events that I think demand will continue to be this imbalance that so many more people want to attend these events versus the ticket supply available. but it'll be interesting to see do people buy these price points do they buy multi-component packages do they show up at the level expected and what's the impact after the event of how they see fifa how they see the world cup and the bank and their likelihood to participate in the future

10:23Shaun Steward:they tested it didn't they with the club with the club world cup and we saw all the empty seats at that event which was kind of almost an unmitigated disaster from a broadcast perspective because the broadcasters pay the big fees because they're looking at major majorly full stadia just to close the point off though Richard, the reality is FIFA will have to then reinvest all of this revenue that they generate and it will be interesting to see their balance sheet movements over the next three and four years to see whether or not if they generate 10 or 12 billion, how is that money going to be reinvested in the game because we forget FIFA is a not-for-profit organisation that's supposed to be developing a sport of football right across the globe, particularly in those underrepresented markets but yeah, certainly a lesson in earned income economics.

11:08Shaun Steward:Sean, let's talk about secondary markets because obviously that's the world that you're in. What could FIFA do? Is it a totally transparent process? Because fans will say, oh, well, this is just a rigged market. They're ripping me off in some way. People are never happy, like Rob, are never happy about spending more money than less on tickets. It's like saying, I like paying tax. No one likes to pay more money for something than less. But just take me inside the secondary marketplace because i think it's interesting that they've created this but and i don't know what will happen and what could go wrong we talked about reputational risk but what else is in that world in your world that you think okay well yeah good luck with that

11:51Rob Wilson:yeah i mean i think that's where the disappointing part here is that the entire ticketing industry is shifting to a wider and more open distribution strategy overall. The concept of primary exclusivity is crumbling, as you see both in the courts, in the teams, the decisions of venues. They're moving towards greater control of how they price and distribute their tickets, but also a wider net of distribution, building infrastructure and integration so the tickets are not only just sold on primary, but that secondary actually becomes another demand channel for rights holders and venues that they typically have been restricted access from.

12:26Rob Wilson:You think of it as BA, British Airways was never allowed to sell on Expedia or Skyscanner or Kayak. They were told you can only sell on BA.com for 50 years. And not only that, but BA.com was run by Expedia. So you have like, you've given up your own direct website and you're forbidden from putting your tickets anywhere else. It sounds ludicrous when you consider it from a flight perspective, but that's what's happened and evolved over the last, since the mid 70s in the ticketing world. Now, what would have been exciting to see the World Cup and FIFA do is build the ability to distribute those tickets, remain in control of pricing, but put them everywhere.

13:03Rob Wilson:Allow customers to buy wherever they like to buy, which is what the open distribution strategy shift is delivering, is that people who like booking on SeatGeek or buying tickets on GameTime or on StubHub, that the inventory of the primary system is actually distributed far wider and available and all those places. Instead, what FIFA did was instead of building that network of distribution of what really is at the heart of open distribution, is building a network to feature tickets beyond just a single brand location, is they built their own secondary. So they doubled down on the exclusive nature of it, which is we not only have an exclusive primary, we have now made an exclusive secondary, both controlled by FIFA.

13:44Rob Wilson:So you can't really refer to that as secondary. It's just a slight extension to their primary platform. which is you buy the primary tickets and if you want to resell them, you resell them through us as well. And we're taking the Lyft and we're taking, or a percentage of the Lyft is fees as an example. So I think the disappointing thing is the entire industry is rapidly moving to this very different approach to global distribution of tickets. And the World Cup could set a tone of like, this is the way the future looks for ticketing. Instead, they doubled down on the exclusive control that really we've seen for decades and that we know has led the ticketing world into a bad place.

14:19Rob Wilson:We have a lot of upside available for more open distribution.

14:22Shaun Steward:So again, I'm one of the people gets confused about ticketing because you've got these terms that are important and they just need a bit of definition and I'm using them and I just need to be careful I'm using them in the right way. So you've got the primary market, you've got the secondary market, you're talking about the open distribution and you're talking about effectively a breaking of monopoly power. I can see a sort of analogy with the airlines. Can you just extend that for me just a step because I think I know what open distribution means. Does it mean that there are lots of different secondary marketplaces that you then distribute the tickets to?

14:56Rob Wilson:Yeah. So traditionally, a venue, an event, an artist, a promoter or a team has picked a primary. They've picked who's going to be the back end, who's going to run the box office, who's going to be responsible for their ticket distribution, all the way down to like when I scan a ticket of the Brooklyn Nets with my eight-year-old, that piece of hardware I scan my ticket on is owned by the primary company. Even the gate hardware is involved.

15:17Shaun Steward:So can I just stop you there for a second? Because obviously in the news over the last week or so has been a Department of Justice ruling in America, which is about Live Nation and Ticketmaster, and it's been deemed a monopoly. Is that what you're meaning there about a sort of preferred platform or what? Just use that as the example to explain what an open distribution is.

15:38Rob Wilson:Correct. So Ticketmaster is the dominant primary. It's north of 80 % of the primary market in the US. less than 60 % in the UK. And those recent court rulings have concluded like most fans and venues and operators already knew, which is an 80 % market share euro monopoly and 60 % market share euro monopoly as well. And the impact of that monopoly can be positive or negative depending on the maneuvering and decisions of the monopoly entity. And in this case, it seems like a lot of it has been negative for the industry to have that much ticket distribution controlled by a single player. And so that's the primary construct is like you outsource the ticketing distribution of your event or your venue and your team.

16:17Rob Wilson:And so then you get to, well, what is secondary? And so what happened was once this primary system was set up, there were fans who had tickets who wanted to resell them. And that gave birth to the secondary concepts of StubHub and GameTime and SeatGeek. And so for decades, these two have operated completely independently with like a garden wall between the two of them, which is the team agreed that they only work with Ticketmaster as their primary. They can't participate on the other side of the wall. And the other side of the wall has been the supplies sourced from two places. It's fans. Rob buys a ticket to see Oasis, gets a headache, his wife doesn't want to go.

16:54Rob Wilson:They resell the ticket to make some money or to get their money back. Or intermediaries, brokers, consolidators that have official or unofficial relationships with the teams or venues or artists. And they're living off of an arbitrage. They pay for the ticket, they take risk on the ticket and try to sell it in the profit. What started to happen is teams have asked the question of, why can't I list my inventory directly on those channels? And the answer traditionally has been because your primary agreement says you can't. And for decades, that answer was enough. And people said, okay, fine. We signed a contract for a sponsorship check for a decade that says we can't access half the market.

17:30Rob Wilson:And in the last three to four years, you've seen people finally say enough's enough. up, we actually want to access where 50 % of the market is purchasing, that people have a preference of where they buy tickets. Why are we limited from putting our inventory in front of these people? And there's where you come back to that core initiative of the rights holder, which they can use this expanded access to distribution of global demand to either get face value tickets in front of more customers and eliminate that intermediary behavior, or they can look at what's happening in these larger demand marketplaces, see what the price dynamic is and price at that market rate if they want to, which might be above or below what their face value is depending on it.

18:11Rob Wilson:But this major change is for decades, they've been told you have one primary, one path to market, one way people can buy tickets to your perishable product. And now what's happening is people are saying that doesn't make sense. If half of the inventory for or half of the demand for sports is happening on these secondary channels why can't i be there why can't british airways sell on xpedia or kayak or skyscanner because that's where the customers are looking to buy and that's that analogy with the flight

18:38Shaun Steward:industry that i think is quite helpful rob there's also i think a us europe question in terms of attitudes towards marketplaces what do you think yeah i'll choose towards marketplaces attitudes towards regulation you know just to unpack that primary point a little bit more it's not just the ticket but it's also as sean mentioned kind of venue troll the distributor ultimately the primary seller is controlling the fan experience and i think there's a much bigger opportunity to do something a bit different with that the other point is as well we always freak out over price so we see the big prices listed for you know oasis i think sean mentioned not so long ago i never got near oasis tickets because they sold out so quickly and i wasn't that in love with them i was going to to spend the money to buy a ticket.

19:27Shaun Steward:I know plenty of people that did. So people freak out over price because it can escalate quite quickly. But that is naturally how economic markets work, isn't it? As the demand forces the price upwards because the supply is restricted, that's exactly what we would expect to happen. What we need to remember is, particularly some of these secondary markets, is that that provides the access to those tickets, often at a much cheaper price. so whilst we get focused so heavily on these big ticket items the world cup and in the summer oasis last year and taylor swift era's tours and so on and so forth the reality is if you're trying to buy a secondary ticket in the us i think you know about 80 percent of them tend to be under face value so this is genuine people that are saying i bought a ticket i can't go anymore let me see if i can get some money back for that for that particular ticket we i think quite rightly get focused on those unscrupulous individuals that are trying to force prices up and make big livings out of it.

20:30Shaun Steward:But the reality is that it comes back to access for me and that's where that open distribution methodology comes into play in terms of an economic case study. The more people you've got out there to potentially buy tickets, the better the rights holder will be able to receive the revenue generated with the event. But also from a fan experience perspective, it should be a much more enjoyable experience as well and a safe one actually because it means you're not going to the dodgy guy on the corner to buy a ticket which might not actually exist yeah the other bit again obviously we're talking about this and we've got an olympics coming in in the same marketplace in two years time and tickets are always controversial and i think there's something interesting about the way in which the market is viewed by gut sports governing bodies because it's a very controlling worldview so it sees things like secondary markets or it sees EA games for example FIFA you know said right we're closing that down we're going to not renew that license because we want to create the game ourselves we want to own that again big question mark whether actually that's possible for a governing body to do you see it in the obvious leaks are things like piracy media piracy and betting is the other one so when you then talk to the betting industry they say we're taking the your sport and putting it in front of a whole different audience and we're making it more interesting and entertaining i'm not a better i've got no skin in that game but i think it's quite an interesting debate in terms of what a governing body is what it wants to be how big where the lines are and what actually it views as helpful you know one person's leakage is another person's marketing strategy.

22:15Shaun Steward:So, Sean, what do you think about that? Because I think there might be a difference in terms of the attitudes. So something like StubHub and Viagogo is framed as leakage.