By Jonathan Isaby
Yesterday saw the Second Reading of the Sale of Tickets (Sporting and Cultural Events) Bill, a private member's bill being promoted by Labour MP Sharon Hodgson.
The central measure in her bill is a proposal to make it illegal for an unauthorised individual to sell tickets for a sporting or cultural event at a price greater than 10% above face value, when those involved in putting on the event have successfully applied for protection from the unauthorised resale of their tickets.
The Tory MP for Hove, Mike Weatherley, declared his support for the Bill, saying:
"Music and other forms of creative expression are vital to the British economy. I have delivered a number of speeches in the House about the importance of the music industry to the country for overseas earnings and suchlike. The performing arts and sport sustain employment and tax revenues, which benefit all our citizens. There is, however, a blight that creams off revenues by exploiting an imperfect market and contributes nothing to the creative copyright holders. That blight consists of those who profiteer by exploiting excess demand.
"Ticket touts who take advantage of availability do nothing to promote our creative industries, and this is one of those rare examples where the Government need to step in to protect creative persons. There are five conditions for the formation of a perfect market, such as perfect knowledge of alternatives and so on. One of those conditions concerns the availability of supply. That is fine for physical products, which can be increased or decreased according to demand—for example, when manufacturing output is turned up, supply increases and the equilibrium price is found again. However, where supply is based on an individual, it is impossible for the number of hours in the day or the number of days in the year to be increased. A performer cannot be in two places at the same time. An imperfect market is then created, and prices rise due to a shortage of supply.
"The question is whether intermediaries should be able to take advantage of that imperfection against the wishes of those providing the service… My view is that the copyright owner who produces the good, whether it is a concert or a sports event, is the owner and should have control of it for various reasons. There are many reasons why a business might want to price at below full market value—in specific sectors, market penetration is one such reason; reward for loyalty is another. Football is a good example. There is differential pricing in stadiums, but clubs depend on their regular, grass-roots fan base, and this is recognised in the lower prices in certain sections. Many clubs have a young persons’ section at half-price. They could easily charge full-price for that section, but they do not. If the argument of free market enterprise were applied to those tickets, young people would buy them and sell them on at a much higher value, but the club does not want them to resell those tickets at a higher price, as it knows they could, because it wants to encourage a loyal fan base and benefit the community.
"On the face of it, ticket touts provide a free-market service, but scratch a little deeper, and for some events that is a misguided and counter-productive service. The touts are exploiting a market abnormality to the detriment of the wishes of those who put on the event."
But a number of Conservative MPs made clear their opposition to the measure. Here's what Bromsgrove MP Sajid Javid had to say:
"The Bill is flawed, in that it really does not understand the most basic laws of supply and demand. I do not think that one can buck the free market, or that it is the role of Government to get involved in free transactions. Let me make it clear that the issue is not about fraudulent transactions or criminal activity; as my hon. Friend the Member for Shipley (Philip Davies) said earlier, such activity is already illegal. This is about people legitimately getting hold of tickets in an honest way, and not prohibiting them from trying to sell those tickets at a profit, whatever that profit might be.
"Ticket resellers act like classic entrepreneurs, because they fill a gap in the market that they have identified. They provide a service that can help people who did not obtain a supply of tickets in the original sale to purchase them for sporting and cultural events. As long as those tickets have been acquired genuinely and lawfully, it is an honest transaction, and there should be no Government restriction on someone’s ability to sell them."
He then illustrated his argument with two examples. Firstly, the Wimbledon final:
"Only 10,000 tickets are available, but demand is three times as high—30,000 people want a ticket, which is not atypical by any means. If the tickets are priced at £20 a head and are sold in a secondary market at five times face value at £100 a head, who is being exploited and how? I assume that the hon. Lady would say that the ticket tout is exploiting people in that example by making a profit of £80.
"Perhaps that could be avoided if the club priced the tickets at the outset so that there was not a mismatch between supply and demand by selling them, for example, at £100. If that is what the hon. Lady is suggesting, the corporation or company behind the club or event would make the extra profit. I would have thought that, as a socialist—I assume that she is a socialist—she would welcome the small man or the honest ticket tout who has bought their tickets legitimately and offers them for sale, making a profit for themselves, as opposed to the corporation making those profits."
And then he went on to discuss used cars:
"The hon. Gentleman may have sold one of his used cars in the past. If he wanted to sell a car, he could try and sell it himself, but most people would try to find a middleman to help with the process. They might go to a car dealer. Their car might be sold for £1,000 to a car dealer. If they learned that the car dealer who purchased their car and helped them went on to sell it a few days later for £1,500, they would not say that the car dealer had ripped them off by £500, because he had provided a service. A middleman in a ticket transaction provides a service no different from that, as long as—I stress this—he had acquired the tickets honestly. That is why we have a secondary market in the sale of tickets and will continue to do so. So long as the individual involved in secondary market transactions has acquired the tickets legitimately, they are providing a service that deserves to be rewarded."
"The hon. Lady should understand, as has not been made clear today, that not everyone has the time to queue for a ticket, or leads a well-regulated life or knows months in advance, when tickets might go on sale, whether they can attend an event, and not everyone knows privileged insiders who can get hold of tickets that would otherwise be difficult to obtain. However, everyone, to a greater or lesser extent, has money. If a person wishes to devote a large part of their disposable income to see something that is disproportionately attractive to them, why should anyone else care and why should it be their business?
"The hon. Lady seems to believe that touts are ruthless exploiters whom no one in civilised society should countenance. Nothing could be further from the truth. If the tout has come by his tickets in an honest way and offers a genuine service with a real risk of loss in the pursuit of profit, that is not a problem. As someone who believes passionately in the virtues of the free market and who is on the side of the ordinary, common working man, I respectfully oppose the Bill."
The debate continued, but had not concluded by the end of the time available, meaning that the Bill remains on the backburner and is highly unlikely to get anywhere near the statute book.