Ticket brokers, also known as ticket scalpers, are people or companies that buy event tickets with the intention of reselling them for a profit. There is often a perception that ticket brokers make exorbitant amounts of money by jacking up ticket prices, especially for high-demand events. However, the reality is more nuanced. While some brokers definitely turn large profits, there are risks and costs associated with the ticket resale business. In this article, we’ll take an in-depth look at ticket broker profits and examine whether they really make “a lot of money.”
How Ticket Brokers Make Money
Ticket brokers earn revenue primarily through the difference between what they pay to obtain tickets and what they are able to charge customers on the secondary market. Here are some key factors:
– Acquiring tickets: Brokers use various methods to buy tickets, including season ticket plans, special presales, contacts inside venues/teams, and mass purchases on the primary market. The cheaper brokers can get inventory, the higher their potential profit margins.
– Market demand: Brokers set resale prices based on demand. For hot shows or games, they can charge large premiums over face value. Less desirable events may sell below face value.
– Fees and services: Many brokers add on service fees for customers to maximize revenue. Some also offer delivery guarantees and other benefits.
– Volume: Brokers rely on high sales volumes to multiply profits across many transactions. The more tickets they can flip, the more money they can make.
What Are Their Profit Margins?
Exact profit margins vary widely depending on the broker, type of ticket, and other factors. Here are some estimates:
– According to one ticket industry report, the average ticket broker makes about 15-25% profit margin per ticket.
– Popular digital ticket marketplaces like StubHub and Vivid Seats reportedly take 10-20% commissions on ticket sales.
– For high demand events like playoff games or hot concerts, brokers may get 50-100% above face value or more.
– On the flip side, they may sell low demand event tickets at a small loss just to recoup their costs.
– Larger brokers likely get better wholesale ticket pricing, increasing potential profit.
Overall, profit margins appear to range roughly between 10-40% in most cases. The biggest brokers likely fall toward the higher end of that scale.
What Are Their Total Revenue and Profits?
The largest ticket brokers generate tens or hundreds of millions in sales yearly. Here are some examples:
– StubHub sold over $4 billion in tickets in 2015, likely making over $500 million in commissions alone.
– Ticketmaster Resale marketplace did around $1 billion in sales in 2018.
– Smaller brokers may do anywhere from a few thousand to tens of millions in sales.
Profit varies based on costs but could be anywhere from 10-40% of sales. So a broker doing $10 million in revenue may pocket $1-4 million in profit.
It’s difficult to quantify the exact size of the ticket resale market. But overall it appears to generate billions in profits each year when combining major brokers and smaller operators.
Do They Make “A Lot” of Money?
Whether ticket brokers make “a lot of money” is subjective. But here are some perspectives:
– Compared to median personal incomes, profits in the millions would be considered very high earnings.
– However, major brokers have lots of overhead costs for staff, marketing, technology, ticket inventory, etc.
– Their profits may pale in comparison to those of big teams, leagues, and event organizers.
– Small brokers may struggle to get by, especially if stuck with unsold ticket inventory.
– Profits likely vary widely year-to-year depending on events and ticket demand.
Overall, large established brokers appear to make sizable profits that would be considered very high earnings compared to regular jobs. However, there are always risks in the resale business, and smaller operators may have a harder time turning huge profits consistently.
Factors That Affect Their Profits
Here are some key factors that determine how much money ticket brokers can make:
– Event demand – More popular events lead to higher resale prices and profits.
– Supply and pricing of primary tickets – Harder to get/expensive direct tickets increase brokers’ margins.
– Consumer discretionary spending – A strong economy provides more customers willing to pay higher prices.
– Competitors – More brokers competing can decrease per ticket profit margins.
– Regulatory restrictions – Limits on pricing in some areas caps profit potential.
– Relationships with venues/promoters – Direct ticket access improves inventory costs.
– Operational efficiency – Keeping costs low improves overall profitability.
– Risk management – Getting stuck with unsold tickets results in losses.
The most successful brokers structure their operations to maximize these factors to consistently earn strong profits.
Profit Breakdown by Ticket Resale Business Model
There are some main types of ticket brokers, each with different potential profit levels:
Digital Marketplaces
Platforms like StubHub, Vivid Seats, Ticketmaster Resale fall into this category. They earn money by charging sellers commissions on sales.
– Typical commission: 10-20% of ticket price
– Low upfront costs and overhead
– High sales volumes spread across many sellers
– Hundreds of millions in annual profits for major companies
Traditional Brokers
These traditional ticket brokers purchase ticket inventory outright and sell at a markup.
– Gross margins around 15-40% per ticket
– Large upfront costs to acquire inventory
– Higher overhead supporting sales operations
– Higher risk if unable to sell inventory
– Profits in the millions for large established companies
Independent Small Brokers
These are very small operators or individuals reselling tickets.
– Resell small volume – few events per year
– May keep their full-time job and broker part-time
– Limited access to ticket inventory
– Profits from a few thousand to low tens of thousands per year
– High risk and challenging to be consistently profitable
Do Ticket Brokers Provide Any Value?
There is much debate around whether ticket brokers provide value or simply exploit supply and demand imbalances. Here are some perspectives:
– Brokers provide a secondary market for tickets, giving fans access even when events initially sell out. This increases consumer choice.
– Resale markets allow price discovery based on true market demand rather than artificial price caps.
– Critics argue brokers limit access by snatching up supply only to profit from scarcity.
– They also point out most brokers provide few additional services beyond a listing and process the sale.
– Secondary markets probably expand access modestly for those willing to pay higher prices.
There are good arguments on both sides. Overall ticket brokers provide some consumer value, but also have incentives to maximize profits over access.
How Can You Make Money As a Ticket Broker?
For those considering becoming a ticket broker, here are some tips:
– Start small – test the waters with low inventory costs to limit risk
– Use all available options to source tickets for cheap/free
– Focus on very high demand events where large premiums are possible
– Offer excellent customer service to build a reputation and sales
– Minimize costs by outsourcing delivery, customer service, etc.
– Consider focusing on digital marketplaces by becoming a seller
– Have deep knowledge of the events and ticket markets you are brokering
– Be prepared for big up and down swings in revenue and profits
– Keep improving operational efficiency to maximize margins
It’s a challenging business but big profits are possible. Just be cautious about rapid expansion and overextending financially.
Conclusion
The ticket broker industry certainly generates sizable profits, especially for large established companies. Digital marketplaces like StubHub and major brokers earn hundreds of millions in revenue and tens of millions in profit annually. However, the resale business also comes with substantial risks and costs. Smaller brokers must hustle just to earn a solid side income. While the largest brokers appear to earn very healthy profits, their financial success is not guaranteed from year to year. Factors like event demand, regulations, and competition all impact profits. Consumers have mixed opinions on whether ticket brokers provide value or simply exploit supply and demand imbalances in the market. The reality is nuanced, with valid arguments on both sides. The ticket resale business may seem like easy money from the outside, but actually building a consistently profitable brokerage takes strong business acumen and operational execution.