How Short Sellers Made The BCS Championship Game The Hottest Sports Ticket Ever

chip kelly oregon

Photo: AP

Every big game brings out tales of scalpers, scams, and entire college educations spent on one precious ticket.But tonight’s BCS Championship Game between Oregon and Auburn may surpass all those legends. Some believe the excessive demand — and the rise of the online secondary market — has made this the most expensive ticket in sports history.

All this over Oregon and Auburn?

Yes, two rabid fans bases with long championship droughts have certainly driven up the cost, but the biggest culprit of all may the competition between short sellers, who glutted the market with offers for tickets that simply didn’t exist.

A large portion of any secondary ticket market includes brokers and other individuals who make deals to sell tickets to one party before they’ve actually bought the tickets from another.

They offer up a seat for say, $800, in the hopes they can buy one for $700 and make a tidy profit. But if game time approaches and they haven’t found that ticket, they have to increase their own purchase price, cutting into their profits or (worse) taking a loss.

The problem is that unlike the stock market, ticket resellers are essentially unregulated. Anyone can offer up a ticket for sale on StubHub and then if they’re unable to fulfil the order, they simply walk away from the transaction. That leaves the company on the hook to either find the buyer another seat or refund their money.

But what good is a refund to an Auburn fan who spent $1,200 on a hotel and airfare package and arrives in Arizona to discover they aren’t going to the game?

Experience tells professional brokers how many seats they can usually get their hands on for any given event and they generally limit their offers to an amount they know they can safely acquire. But this game changed all the rules.

Since the beginning of December, when the matchup was announced, there were thousands of more tickets being offered than there were ever going to be seats available. Then there were other compounding factors that limited supply and put even more pressure on professional brokers:

  • People with no experience selling tickets thought they could make a buck and jumped into the game
  • Tourism companies sold numerous packages that included guaranteed tickets
  • University of Phoenix Stadium is the smallest of the four rotating championship sites
  • In past years, the other three stadiums cut marketing deals that released up to 7,000 extra tickets to the secondary market. This year’s game had no such deal.
  • Auburn and Oregon fans, not used to such success, have been less willing than other teams to part with their originally purchased seats.

StubHub is not the only company that deals with secondary tickets and certainly not the only one that promised tickets it had trouble delivering. But as the official reseller of the BCS, they drew plenty of attention when they suspended sales over the weekend and started offering thousands of dollars (above cost) to buy back tickets from earlier purchasers.

We spoke to one ticket insider who says StubHub may have sold more than 1,000 seats that it couldn’t fulfil before pulling the game from its website last week. (The game was re-opened over the weekend.) They reportedly offered more than $2,700 (plus the original sale price) just to get the tickets back, all in an effort to fulfil their guarantees. If those numbers are accurate, they could be looking at a loss of close to $3 million on this one game. (We reached out to StubHub for comment and will let you know if we hear back.)

UPDATE: A StubHub spokesperson writes: “Per company policy, StubHub doesn’t discuss specific financials.  However, we can reveal that this event was the top grossing event in StubHub history and StubHub will probably end up breaking even for the game. StubHub has fulfilled all of its orders.”

Meanwhile, fans in Arizona desperately scramble to find a way into the game. Sales outside the stadium could typically range from $500 to $1,000 a seat, but the tickets just may not be available to sell.

Fanhouse college football writer Clay Travis says everyone arriving at the Phoenix airport has been accosted by ticket buyers before they can even pick up their bags. Brokers are sending thugs to people’s homes to strong arm them into giving up tickets. An 81-year-old Auburn fan drove halfway across the country to learn the $1,000 ticket he bought from a broker didn’t exist.

Worst of all, another fan allegedly paid $15,000 for six tickets that turned out to be fakes.

So what happens now? Will these problems only get in worse in the coming months? (There’s another big NFL game coming up you may have heard of.) Can sites like StubHub survive if short sellers force them to meet outrageous obligations? Or will the government step in and demand more regulation; insisting that sellers be held responsible for every ticket they don’t deliver?

Maybe you should stay home and watch it on TV.

Also: Are gamblers losing their minds too? >

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.