In her Inquirer article on the Consumer Fraud Act-based Super Bowl ticket lawsuit, author Jan Hefler optimistically asserts, “A ruling in the fan’s favor could also lead to lower ticket prices the next time the Super Bowl is held at MetLife Stadium in East Rutherford, N.J.” That the court recently ruled in the fan’s favor is true. Whether it will lead to lower ticket prices in the future is a more complicated question.
The plaintiff is arguing that the NFL’s failure to make Super Bowl tickets more widely available to the general public has the effect of artificially inflating ticket prices on the secondary market. The Third Circuit concluded that the plaintiff’s economic theory was sufficiently plausible to allow case to go ahead: that withholding tickets resulted in those tickets being redirected to third-party brokers, who were able to charge higher prices on resale than if the secondary market were supplied by more individual sellers.
Whatever the economic merits of plaintiff’s theory, selling high-demand tickets directly to fans and avoiding scalpers and bots has also been something of a technical challenge. As NFL points out, “many more people desire to attend the Super Bowl each year than can be seated at Super Bowl host stadiums,” and that excess demand for limited-supply events creates a significant incentive for scalpers to find ways to dominate the primary market.
Event hosts and performers have begun experimenting with innovative techniques like Verified Fan sales – using algorithms to identify potential purchasers less likely to re-sell their tickets – with some success. Bruce Springsteen, for example, used the Verified Fan distribution model for his recent Broadway run. But the legislature’s decision to micromanage the mechanisms by which tickets are sold now risks blocking such innovations.
It is not clear that the Verified Fan model would comply with the CFA’s ticket sales provision, and its adoption may very well be subject to future litigation, with the risk of CFA mandatory treble damages. The micromanagement of business practices, combined with the risk of massive financial penalties, discourages innovation and limits options that could benefit consumers and businesses alike.
It is time to make some thoughtful changes to our state’s consumer protection laws. There is an imbalance between protecting consumers and encouraging innovation, and all of us are suffering as a result.