Billions to be Made by Ticket Scalpers at World Cup 2006

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Billions of dollars will be taken unnecessarily out of fans pockets at the soccer world cup 2006, due to the way FIFA, the controlling body of world soccer, allocate tickets. One group at http://www.worldcupticketexchange.com is trying to stop this and offer fans a fair way to trade tickets, and at the same time petition FIFA to reform its ticket allocation policy.

Today, following the latest FIFA world cup ticket ballot, millions of football fans will feel the gut wrenching disappointment that goes with not getting tickets to see their country play.

The latest ballot for tickets was 24 times over subscribed according to FIFA. This would seem impossible on the face of it; does this mean that 1.2 million people want tickets to see France play Togo? No, the answer lies in the seemingly ridiculous way the tickets are allocated.

The story starts with the allocation methodology. For some reason FIFA seem to think that football is a game for neutrals; as 84% of the tickets are reserved for allocation to people other than the fans of the two teams that will be playing.

The second part of this story is the timing of the allocations; with over 90% of the tickets allocated prior to the draw. This effectively means that the people buying tickets don’t know what team they will get to see.

Why is it then that the crowd at the world cup seems to be filled with passionate fans cheering on their team? The answer lies in simple economics, low supply and high demand equals market opportunity and very high prices.

Call them what you will, ticket touts, scalpers or more formally secondary market ticket brokers are the people who profit from the mess FIFA perpetuate each world cup with seeming indifference.

With up to 70% or 2.6 million world cup tickets being allocated to people who are not passionate about watching the game, the broker’s ability to source tickets is extensive and with millions of real fans wanting tickets, the market for re-sale is vast. FIFA receives approximately US$463 million for these tickets at face values averaging around US$180. With current secondary market values averaging around US$1,672 the profits in the secondary market could be as high as US$3.84 billion.

The secondary market is made up of a number of elements, some reputable and just filling a market gap and some, rather unsavoury. All of them ask for many thousands of dollars in advance and the customer only knows that they have definitely secured the tickets once they have them in their hand. This will leave thousands of unsuspecting fans in Germany without sign of the tickets they paid for. As the tickets are only printed two weeks prior to the tournament, many of the brokers arrange to meet people in locations in Germany to pass over the tickets. The more reputable of the brokers will refund money to people if they fail to secure tickets. However, this still means that they don’t have tickets. Even worse, the unsavoury side of the broking community has a tendency to disappear as soon as it becomes obvious that no tickets will be forthcoming.

So with the possibility of an additional $3.8 billion in revenue, why do the permanently broke FIFA continue to botch the ticket policy? And why does FIFA continue to play directly into the hands of its sworn enemy, the ticket scalper?

For the 2006 world cup, FIFA have tried to tackle the issue of scalpers with a policy that was doomed to fail as soon as it was scripted. Its policy, which is to print the passport number of the buyer on the ticket, stating that the “people who are not the official holders of the tickets will be refused entry” is not only misguided, it is dangerous. I wonder if Mr Johansson, the 77 year old head of the World Cup Organising Committee, discussed this policy with the German Police before implementing it. Based on the simple mathematics above this would mean that up to 40,000 people, with legitimate tickets, that they paid US$1,672 or more for, would be refused entry to the stadia. I wonder if Mr Johansson has witnessed an “Angry Mob” before.

Clearly this latest FIFA farce is unworkable, but there are workable solutions. One method has been suggested in a FIFA reform petition circulating on a website at the moment http://www.worldcupticketexchange.com. A site which exists to sort out the mess that FIFA creates and offers a fair way to trade tickets between fans, without the need for brokers or large upfront payments. The petition suggests that no tickets should be allocated prior to the draw; 40% of the tickets are allocated to each country football association after the draw and tickets for the knock-out phase should be sold on the condition that your nominated team is playing. It also suggests that FIFA put up the face value and make more money.

This would certainly reduce the number of tickets sold on the secondary market, as real fans do not sell tickets; they buy them, usually at vastly over inflated prices. It would also make more money for FIFA. So why do FIFA continue to ignore such simple solutions? Is it that they have an ulterior motive for keeping ticket scalping alive? Is it that at an average age of well over 60 the controlling committee of the world’s biggest sport is simply not in touch with the modern game? I guess we will never know, but one thing FIFA should learn is; never underestimate the power of the masses.

Calculations based on:

3.67 million Tickets in total.

16% to teams playing – 587,000

14% to officials and corporate – 514,000

70% to neutrals – 2.57 million

Average face value €150, US$180

Average secondary market value - €1,392, US$1,672

Total FIFA revenue from neutral tickets €385.5 million, US$463 million

Total scalper profit €3.2 billion, US$3.84 billion

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Peter Widdows
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