Last year around this time, I wondered whether Major League Baseball was beginning to regret its relationship with StubHub because of the bargain basement price levels at which many tickets were re-selling on the secondary market. According to the New York Post, at least a few teams, including the Yankees, have started to have some doubts.
The reason the Yankees and others are reportedly questioning the league’s involvement with StubHub is because they fear that the third-party reseller is starting to cannibalize primary market sales. In addition, teams have become increasingly concerned that the low prices will encourage season ticket holders to let their subscriptions lapse. After all, why pay an inflated price for season tickets, when the same number of seats can be accumulated at a discount? What’s more, compounding the problem is the fact that season licensees are finding it increasingly difficult to recoup some of their investment by reselling a portion of their plan. This two-front assault on season ticket holders is causing many of them to surrender their seats.
In the New York Post article, the idea of a price floor was floated as a potential compromise, but it was noted that StubHub would not be amendable to such a proposition because it would contradict its corporate mission statement, not to mention leave it vulnerable other platforms. If StubHub won’t relent, teams who are unhappy with the deal could chose to opt out, but that also doesn’t seem like an attractive option. Because it would be almost impossible for teams to prohibit resale on StubHub, forfeiting the rights fee could come with little reward, especially when you consider there are several other independent third-party exchanges, such as Ticket Liquidator, that offer tickets at a steep discount.
Baseball’s only viable alternatives to StubHub would be either a licensing deal with another platform or an attempt to establish a proprietary one. Of course, the first option assumes there is a competitor with deep enough pockets to outbid StubHub, while the second is based on MLB’s willingness to make a large, uncertain investment. Neither alternative seems likely at this time, so chances are the two sides will reach some kind of compromise.
Baseball’s current contract with StubHub is up for renewal after this season, so stories about the sports’ dissatisfaction are undoubtedly part of renegotiation posturing. However, because baseball, with its large inventory of seats, is a key growth driver for StubHub, it can’t take the sport’s concerns lightly. Even though MLB probably isn’t in a position to make more money without StubHub as a partner, the ticket reseller can’t afford to find out. Besides, the disagreement really isn’t anything an inflated rights fee can’t mediate. If StubHub is willing to pony up exponentially more money for its exclusive partnership, and perhaps add a few restrictions like an earlier cutoff for game day sales, baseball’s concerns would probably go away. That is, until the next deal is up for renewal.