(This story was updated at 3:25 p.m. EST on Thursday, January 6, 2011, to include new details of StubHub’s offer to customers.)
Faced with the potential for dozens of busted ticket orders for the January 10 BCS National Championship game, secondary ticket marketplace StubHub, which is the official resale marketplace for the game, was forced to pull down all BCS tickets from its Web site Wednesday night, January 5, because a broker oversold and could not fill customer orders.
The exact number of problem orders, where the broker made speculative sales but then could not obtain tickets, was not disclosed, and as of this morning, January 6, StubHub was warning customers that some orders might not be filled. StubHub said it will issue full refunds for the orders made on its Web site under its FanProtect guarantee, however, the move may offer little solace to fans who already spent hundreds or thousands of dollars booking airfare and hotel accommodations to attend the game.
Prices for tickets to the game have exploded over recent days with several Web sites offering tickets in excess of $4,000 a piece. Though one unnamed large broker is being blamed, the tentacles of the situation are stretching throughout the secondary ticket market and causing several brokers to also scramble to fill orders at huge losses.
StubHub did not disclose how much it stands to lose as a result of this situation, but that figure could reach tens of thousands of dollars or more.
“As a result of the high demand and scarcity of BCS National Championship Game tickets, we have been unable to fulfill some customers’ orders,” StubHub said in a statement. StubHub, itself, is not a ticket broker, instead it is a ticket resale marketplace or exchange that relies on brokers and fans to provide inventory. “Unfortunately, one of our larger sellers for this event could not secure enough tickets to fulfill all of their confirmed sales, which has caused a trickle-down effect. We have purchased as many tickets as are available to help fill customers’ orders, however we are still short of tickets due to the incredibly high demand for this game.
“Additionally, we have currently stopped the resale of BCS National Championship Game tickets on StubHub and have chosen to reach out to buyers to offer them an incentive to more than double their purchase price in exchange for their tickets. Should buyers choose to resell their tickets, we will use them to fill the outstanding orders. StubHub will not be re-listing any of these tickets on its site. This was done in an effort to satisfy as many customers as possible, while standing by our FanProtect guarantee that states that all confirmed ticket orders will be fully refunded if they are not delivered on time, authentic, and as good or better than the tickets ordered,” the company said.
As of this afternoon, after the company had released the above statement, StubHub said it was offering a “full refund of [a customer’s] purchase price, including shipping and service fees as well as an additional cash sum” for customers willing to sell their tickets back to the company. The additional cash sum is two-times the refund price, and depending on what a customer paid, it could total more than $2,000 per ticket. See the text below of one of the emails sent out to a customer.
StubHub spokesperson Glenn Lehrman told TicketNews that the company “fully expects to fulfill every current order and is anticipating turning the BCS Championship game back on over the weekend.”
At issue is the pervasive practice of speculative ticket sales, where brokers or individuals list and sell tickets they do not have. After the sale, the seller then goes out and buys the ticket — often from another broker, season ticket holder or other source — which they then send to the customer. In many cases, brokers “short sell” these tickets, which is where the broker sells the ticket for a high price in anticipation of obtaining the ticket at a lower price and pocketing the difference.
On any given day, thousands of speculative ticket transactions occur throughout the secondary ticket landscape without a hitch, but similar busted ticket orders occurred last winter leading up to the Vancouver Olympics, where thousands of customers never received their tickets and brokers suffered losses refunding orders. Some politicians, such as U.S. Rep. Bill Pascrell, Jr. of New Jersey, are seeking to eliminate speculative ticket sales in legislation they have proposed. Companies such as Veritix, with its Flash Seats technology, and Ticketmaster, with its TicketExchange division, only allow resale of tickets that brokers or fans have in hand.
In the case of the BCS National Championship, which features Auburn against Oregon, ticket prices on the secondary market started relatively high, stayed high and then exploded as demand continued to rise. Auburn has not played for a national championship in years and Oregon has never played for one, which helped push interest in the game to a fever pitch.
“Ticket prices for the BCS Championship Game are at nearly unprecedented levels,” Russ D’Souza, founder of ticket price forecaster SeatGeek, told TicketNews. “The ‘get in’ price for the event is around $4,000 which is around two-times the current price for the 2011 NFL Super Bowl. Consumers looking to attend the game should buy tickets now as the dearth of available tickets may cause prices to rise further.”
“I give [StubHub] a lot of credit for standing behind their orders and doing the right thing by filling them at whatever prices they need to,” broker Steve Lichtman, owner of Prestige Entertainment, told TicketNews. “It is unfortunate there are brokers out there who love to spec [sell] when things are going in their direction and then run away from the order when they’re not. Perhaps an event like this will help to create more strict policies as to who is allowed to go short moving forward because situations like this are happening far too often. The once in a hundred year flood is now coming every year.”
Below is text of an email StubHub sent out today to BCS Championship ticket buyers:
Thank you for your recent purchase of BCS National Championship tickets. Due to the incredible popularity of this event, ticket demand is at an all time high and as a result some StubHub customer orders have as of yet gone unfulfilled. In an effort to satisfy as many customers as possible we are prepared to make you an offer to purchase your tickets, so that we can provide them to other customers. StubHub is willing to give you a full refund of your purchase price, including shipping and service fees as well as an additional cash sum of $2500 per ticket.
If you choose to accept this offer, please reply to this email, or contact StubHub Customer Service immediately at 800-471-4297. Once StubHub has filled every order this offer will end.
Should you choose not to accept this offer, have a great time at the game.
Thank you for your consideration and thanks again for using StubHub.
StubHub Customer Service