I missed concerts during the pandemic. I did NOT miss ticket fees

June 16, 2021 • Issue #98

Hi y’all —

Notice anything different about me? That's right — Money got a new look, and so did Dollar Scholar! I'm cute, right?

The only thing that could make this better is if I got Jonas Brothers tickets.

Oh, wait. I DID.

As you may have predicted, I’m kind of losing my mind over their upcoming tour. My goal is to attend at least three and possibly as many as five shows. I’ve already taken time off work, mapped out my travel and researched rental cars. And, um, I’ve spent over $115 on Ticketmaster.

But here’s the outrageous part: Not even a cent of my $115 actually went toward the tickets themselves. That’s just how much I’ve paid in ticket fees.

For the concert in Hershey, Pennsylvania, there was a $27.75 service fee plus a $5.10 facility charge. For the one in Saratoga, New York, the system charged a $5 “order processing fee” in addition to a $21 service fee. For Holmdel, New Jersey, I paid $22.50 on top of the $70 for my lawn seat.

Obviously, I think the Jonas Brothers are priceless — I will happily fork over my hard-earned cash for the chance to breathe the same air as Nick for a night — but that’s ridiculous. Although I’m overjoyed the world is returning to normal and shows are back, I can’t be the only person who’s frustrated that it’s so expensive to take part.

I decided to investigate. Why do ticket fees cost so much? What’s in them, anyway?

I called David Goldberg, a longtime ticketing executive and investor, to get the scoop. He told me ticket service fees have a long history. For decades, people had to go in person to actual box offices to buy tickets to events. When ticket sales started to go remote, companies had to pay for the service of hooking up computers and hiring staff to answer the phones. 

We’ve come a long way since then, but the infrastructure costs remain.

“I think people have this misconception that it’s easy and cheap to sell a ticket on the internet,” Goldberg says. “While you don’t have to pay a phone operator or a clerk, that doesn’t mean that it’s free.”

He explained there are different business, and therefore fee, models for different levels of ticket companies. Ticketmaster, AXS and SeatGeek are examples of primary sellers, while StubHub and Vivid Seats are examples of secondary sellers.

I’ll tackle primary sellers first. Goldberg gave me an analogy: Say I go to Madison Square Garden for a concert. When I go to buy a beer from the concession stand, it costs $15. It can be frustrating; I can get the same beer from my local convenience store for $5. What gives?

He said that’s because there are multiple concessionaires who bid every few years for a contract giving them the right to sell that beer at Madison Square Garden. In order to win the contract, they have to make big promises not just about providing great choice and service but also about how much money they can give back to the venue. In order to make good on those promises, they may have to charge $15 for a $5 beer.

It works similarly with ticket sales. Companies have to bid to be the exclusive ticket provider for venues, and to get chosen, they have to cut deals.

“In most cases, a significant portion or a majority of those service fees get paid to the venue or the promoter of the event you’re buying the ticket for,” he adds. “It's another revenue stream. As much as Ticketmaster or AXS or SeatGeek is the one charging the consumer that fee, they're doing it as a vendor on the behalf of the venue.”

Indeed, Ticketmaster’s website says that “in exchange for the rights to sell their tickets, our clients typically share in a portion of the fees we collect,” with some going toward software, equipment, services and administrative support. The rest, “when taken with other revenues, is how we earn a profit.”

Service fees, also called convenience fees, don’t come out of thin air. Goldberg says they’re actually spelled out in the contracts. But that doesn’t make them any cheaper — or less frustrating to encounter when I’m trying to score front-row seats.

A 2018 report from the Government Accountability Office found that primary ticket providers charged, on average, 27% of a ticket’s price in fees. As the news release said, “some ticket websites GAO reviewed did not clearly display fees or disclosed them only after users entered payment information,” leading to consumer protection concerns.

Secondary sellers are a different story. Christine Yeo, marketing and communications manager for Vivid Seats, explained that Vivid Seats is a marketplace. It vets individual sellers and allows them to post their tickets online for resale.

Yeo says Vivid Seats’ “service fees go toward a couple of different things,” including operating costs, “things to actually keep our lights on,” customer service and the technology that powers its system. There’s also a delivery fee that helps fund the process of sending out the tickets via email and mail.

“We really, really try to offer competitive pricing to make sure that we’re giving our fans great value, so they’re not paying crazy fees where we feel like we’re not providing a service to them,” Yeo adds.

To that end, Vivid Seats actually has a rewards program where I can earn cash back on my purchases and redeem it in the app. I can also check out credit card perks, like the Savor Rewards card from Capital One, which gives customers 4% cash back on entertainment.

If I’m willing to go old-school, I often can save money on ticket fees by buying directly from a venue’s physical box office.

THE BOTTOM LINE

(but please don't tell me you scrolled past all of my hard work)

Ticket fees are hella high but not quite as arbitrary as I thought they were. While secondary sellers use it to stay in business, primary sellers generally charge service/convenience fees because they have to in order to secure contracts with venues. 

“It just becomes a part of the overall economics of going to an event,” Goldberg says.

VIA GIPHY

RECEIPT OF THE WEEK

check out this wild celebrity purchase

VIA INSTAGRAM

Boxer Floyd Mayweather has had a busy couple of weeks, what with fighting Logan Paul and buying $1 million worth of cars for his friends and family. According to TMZ, Mayweather purchased two Rolls-Royces, one Mercedes, one Maybach sedan, one Dodge Journey, two Dodge Chargers and three Dodge Challengers. I guess you could say he’s really... throwing his weight around.

INTERNET GOLD

five things I'm loving online right now

1	A chicken nugget shaped like a character from the video game Among Us sold for $99,997 on eBay earlier this month, so that’s a thing that happened.
2	I would argue that most of the “normal people” on this list of 17 celebrities who married normal people are not actually normal people, BUT I did learn several fun facts while reading it. Jerry Seinfeld’s love story in particular is bonkers. And I’m obsessed with Jon Stewart proposing to his wife via The New York Times crossword puzzle. Anyway, if anyone knows any celebs who are looking to date a chatty personal finance reporter with a hilarious newsletter, HMU.
3	A bar in Miami has created a Florida Man pizza topped with fried gator, banana peppers and a “special trailer sauce.” Honestly, that doesn’t seem outrageous enough to me. Might I suggest an orange zest garnish? Or a key lime drizzle?
4	Woodchuck on dog… in lake!
5	TV rec: I can’t get enough of Cruel Summer on Freeform. It takes place in three different years — 1993, 1994 and 1995 — which makes it feel like a slightly more sophisticated Pretty Little Liars. I’m a fan.

401(K)9 CONTRIBUTION

send me cute pictures of your pets, please

VIA MICHELLE GONZALES-HANNA

Meet Penny, a beautiful brown pup who is excited to attend concerts again because she is a subwoofer.

What do you think of my new look? Beauty is in the eye of the beholder or whatever, but I'm dying for your approval. Please send feedback (read: compliments).

See you next week.

P.S. OK, I *finally* caught up on emails. Scholar Smith pointed out that last issue I forgot to include mention of the Dutch tulip bubble, which happened in the 1600s. Scholars Katherine and Wanda agreed that we're in a bubble now. Scholar Shelley told me she prefers Froot Loops with no milk, and Scholar Amanda raved about haystack cookies, which honestly sound perfect because it's too hot to turn on my oven.

P.P.S. How do YOU find cheap tickets to events? What would you put on a Florida Man pizza? How much would you pay for a single chicken nugget? You can reach me, always, at julia.glum@money.com or @SuperJulia on Twitter.

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