Decoding TicketReserve.com

I had heard a commercial for these guys last week, and James Worthy is all over the radio shows this morning giving NCAA analysis on sports radio stations in exchange for a minute to do a plug for this site. I'm sort of a junkie for cool business models, plus know a great deal about buying and selling tickets, so I had to find out more about this.

Here is their pitch to consumers. We'll look at it from the final four standpoint. You go to their site, and you can reserve the right to buy tickets to the final four, IF your team goes, for a set price. So, for example, if your team is the Xavier, you could go and pay $11 each for the right to buy upper level final four tickets at face value. So, lets say you want to buy 2 tickets, you'd pay $22, and if Xavier goes to the final four, you'd then have the right to buy 2 tickets at face value. If Xavier doesn't go to the final four, then you lost your $22.

Here is the neat thing about this, it is an options market, where the free market ends up dictating the price. Xavier probably isn't going, so the price is low. Duke is a little higher, with prices ranging from $53 upper, to $75 lower, UNC is $83 to $114. So, if you are a UNC Fan, and you really believe your team is going and you really want to be there, instead of waiting and possibly paying $1000 to scalpers, you pay $114 per ticket now, and when Carolina goes to the final for, you just pay face value for the ticket. It's clearly a gamble, but so is waiting to see and paying the premium later.

So, two brilliant things about this business model. Let's walk through a simple scenario from the companies standpoint. They somehow get 4 tickets, lower-level, to the final 4. Once the brackets are out, they know that they can make those 4 tickets available to fans of 16 different teams. For maybe those 4 tickets get assigned to the east region. So, maybe they make them available to
Eastern Kentucky, Belmont, Oral Roberts, and New Mexico State for $10.
Then the next 4 higher seeds for $20, then 5-8 for $30, and the 1 through 4 for $50 for example. You can see how those 4 tickets, that will eventually end up in the hands of fans for just one team, will generate revenue from fans from 16 teams, and that options revenue could be much more than if they had just sold the tickets on a free market.

The other thing they do is they have created a marketplace where you can buy and sell these options. So, let's say that you go in now and decide to buy rights to 2 lower level UNC tickets for $100. You can then turn-around in their system and offer that option for sale to others for $150. Maybe at this point nobody would pay that, but after the first or second round, when people get more serious about UNC making the final four, the price may go up. And of course TicketReserve takes a cut of each transaction.

Very neat idea.


Found an NPR story on them below:

Buying 'Ticket Futures' at TicketReserve.com

by Alex Chadwick