Counterpoint: Supply Glut, STH Bonuses to Blame for Secondary Market Prices; Questions Remain

Preds mascot Gnash waves a rally towel to motivate a Bridgestone Arena crowd during Game Three of the Western Conference Quarterfinals against the Anaheim Ducks on April 17, 2011. - Frederick Breedon

Our recent back-of-the-napkin examination of falling Nashville Predators ticket prices on the NHL Ticket Exchange and StubHub garnered some interesting feedback and discussion. Jennifer Witt, a Preds season ticket holder since 2008-2009, says weak demand isn't solely to blame for secondary market ticket prices bottoming out. But problems persist, regardless of how you look at the price puzzle.

Whenever you analyze and interpret data, it's important to both (a) understand what science can and cannot do, in terms of offering "proof" of an observable phenomenon, and (b) to be appropriately and accordingly transparent about your methodology and assumptions. In our piece last week on the topic of ticket sales, we thought we appropriately hedged our conclusions. Nevertheless, a vibrant, prototypical OTF comment thread erupted, replete with provincialism about national public policy and the Predators' financial health as an organization. We did not mean to suggest that the President of the United States is personally to blame for the Predators' lack of appeal as an entertainment consumption choice, nor did we mean to suggest that Jim Balsillie is bringing his repo team to Broadway to hitch the arena to a tow truck and haul it to Hamilton, Ontario. We meant only to open discussion about what, if anything, prices on the secondary ticket markets say about the on-ice product we all seem to be suffering at present. We felt, in the interest of fairness to the Predators' management, an obligation to offer possible alternative explanations to the demand problem we saw in our admittedly small sample -- no more, no less -- and we tried to be open about how un-thorough our review was.

Lucky for us, Jennifer Witt, a fellow policy analyst, economist, and OTF reader, offered us some insights that help clarify the price puzzle. The basic thrust of Witt's critique is that prices to the Dallas game on January 20 are exceptionally low on secondary markets because there's a glut of supply -- it was one of the games the Preds handed out to season ticket holders as a bonus game.

The business case for bonus games is essentially that season ticket holders, who have already purchased a full 41-game slate of home contests, are in a sense already the greatest word-of-mouth ambassadors for the organization. Putting tickets in these people's hands gets them to casual fans more quickly through relationship sales, and relieves some of the burden of salesmanship from otherwise cold-calling ticket reps. (Lindsey Crenshaw, you're doing a great job, and I owe you a call-back!)

"And this year, unlike previous years, the bonus games from which to choose were extremely limited," said Witt in an online discussion forum. "It used to be pretty much any weeknight game, excluding Chicago/Detroit, and you were given the total number of bonus tickets at the start of the season, and picked across the entire season," she continued. "This year they've offered them in one-month batch increments and give you just a couple games to choose from. I have already found myself with 4+ tickets per game to several games this year, because of my personal schedule and the games from which I could pick. In December I had to get 6 tickets to one game, and that could explain the overload of cheap tickets to these games being sold on the secondary market."

Indeed, an artificially high supply in the presence of weak demand could make ticket prices to the January 20 Dallas game exceptionally low on secondary markets. Conversely, an artificially high demand (spurred by traveling Chicagoans) in the presence of limited supply for the April 12 Chicago Blackhawks game have driven astronomical $1,200-per-seat prices for tickets on the glass in secondary markets.

Since they already have their own tickets, though, season ticket holders don't need the bonus game tickets, and when they can't find someone to bring along to 501 Broadway, they wind up selling the bonus tickets online in secondary markets. Since the bonus ticket offerings are more concentrated this year, season ticket holders just also happen to be selling their bonuses all at once for this particular January 20 game against the Dallas Stars.

Witt is correct in that prices themselves are a reflection of oversupply inasmuch as weak demand. We analyzed the January 31 New Jersey Devils game, for example, and, while still not as high as the gate prices, these tickets are priced higher on NHL Ticket Exchange and StubHub than the Dallas game was. We chose to analyze this game precisely because it was the first home game in January after the Dallas game to which season ticket holders did not receive a bonus offering. In other words, we wanted to account for the supply glut Witt described.

Questions Remain

Even taking as granted that season ticket holder bonus ticket offerings caused an artificial oversupply of tickets for the January 20 Dallas game does not mitigate lingering and, perhaps, additional troubling questions.

Most troubling is that the Preds are giving away tickets to a division rival game, which should be one of the harder tickets to get during the course of the season, since the games mean more. Where is the primary market demand for those games? Does the fact that the Preds are giving away tickets to division rival games before they even hit the primary market signal an internal admission that the universe of people willing to buy season tickets just isn't big enough, even after 15 years in the market? Or has Dallas simply not been a "rival" long enough, having joined the Central just this year after realignment?

"They also just gave [away] 4 more [bonus tickets] for this month the other day," said Witt last Thursday evening, "meaning it's possible to have 10 free tickets to a single game." Yikes. No matter which way you slice it, people just aren't buying tickets right now from the Nashville Predators, so those seats are being offered up as bonuses on a rolling basis to a stable of brand evangelists called season ticket holders. The problem is that the brand evangelists don't seem to be too jazzed about the brand these days (or, charitably, are all incredibly poor salesmen and women). As a quick aside, this seems to buttress a theory I've been developing this season: under the current ownership, the Predators have been so successful bringing sponsors (big money) in the door that they're willing to take a short-run hit on tickets, just to make sure they can appease those sponsors with full buildings and captive eyeballs. That is a significant and very positive development for Nashville in the post-Leipold era.

But what happens to sponsorship sales and partnership development if the team can't fill the building, even with essentially free tickets?

Are "Predator hockey" or #PredatorHard to blame? Concessions prices? Less parking availability because of the completion of the new convention center?

Sound off below!

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