In defence of World Cup ticket scalpers

Rugby World Cup ticket scalpers are being used as scapegoats to excuse the greed and incompetence of the government and the New Zealand Rugby Union.

The deluge of scalping-related stories has already started, with Trade Me removing listings for semi-final tickets.

You’d think scalping was illegal or something. Well, it is: the Major Events Management Act 2007, which might as well have been called the Pork the NZRU Act, imposed a maximum penalty of $5000 for this activity.

But far from being a crime, ticket scalping is a market response to under-priced tickets, as economist Dr Eric Crampton from the University of Canterbury explained.

“One way or another, markets always clear. Normally, we let prices adjust to set demand equal to supply. Goods flow to the users who value them the most as measured by prices.

“When we put in place a price ceiling below the market clearing price, the market clears instead by queuing: would-be attendees have to spend time and effort rather than money to get their tickets.”

If they want to, promoters can prevent scalping by printing names on tickets and checking ID at the gates, Dr Crampton said.

“Were the Rugby World Cup a strictly private endeavour where the promoter estimated the losses on ticket sales were more than made up for by gains in merchandise sales and higher values for broadcasting rights, that would be fine.

“But where the event is massively subsidised by the government, it seems far more likely that setting prices very low is a way of generating a transfer from people who don't much like rugby to those who do.

“That might be a decent strategy for the government in an election year. But it's rather poor policy overall. I can't help but wonder whether the Prime Minister will arrange for free bread distribution to complement his circus.”

And there’s a further complication: tickets to big games such as the final are being rationed neither by price nor by queuing but by a lottery system for those who have already bought tickets to pool games.

With more than 60,000 people applying for only 15,000 available tickets, this grossly unfair system ensures that the vast majority of people who want tickets miss out.

RWC 2011 marketing and communications manager Shane Harmon was recently quoted as saying, “We know that demand for the final is going to significantly outweigh supply so we are completely appreciative of that.”

To add to the farce, fans don’t even get to choose which category of ticket they go into the draw for: people wanting cheaper category D tickets might end up with category A tickets they can’t afford or don’t want.

No wonder there’s a healthy market for scalping of these tickets.

This issue wouldn’t exist if the NZRU priced the tickets realistically to begin with, as there wouldn’t be such a huge imbalance between supply and demand.

The problem is, New Zealand rugby fans are infected with an entitlement mentality and the NZRU doesn’t want to risk bad PR by being seen to only allow rich people the opportunity to go to the final.

But there is nothing wrong with only the wealthy being able to afford coveted tickets, according to Walter Block, who argued in favour of ticket scalpers in his book Defending the Undefendable.

According to Mr Block, ticket scalping ensures that sought-after tickets go to the wealthy people who are willing and able to pay higher prices than the Average Joe can afford.

“When wealth is earned honestly, there is nothing inappropriate about being able to receive a greater share of goods and services, and it is essential to the preservation of the monetary system.

“The scalper, by facilitating the price rationing of tickets, is instrumental in assisting the rich in obtaining the rewards of their efforts.”

But suggesting that the rich have earned their money, or that the government shouldn’t use taxpayer money to subsidise rugby fans with cheap tickets, would offend the two religions of New Zealand: green-eyed socialism and rugby.