Scalping law designed to protect major events

IN THE leadup to New Zealand hosting the Rugby World Cup, legislation was introduced to protect it – and other major events – from commercial exploitation. The Major Events Management Act (2007) recognises that big events rely on sponsors making very large financial commitments without others ‘‘free-riding’’ on their investments.

Under the act, on-selling tickets at anything above face value is illegal and those responsible can face a $5000 fine.

The MP who chaired the committee considering the bill in its early stages, Gerry Brownlee, is happy how the legislation has worked out.

It was meant to protect events which brought a large

‘We take a view that, in principle, if I buy a ticket to a sporting event or band, it’s not different to buying anything else like a car or house. Once I own that, why can’t I just dispose of it for a price that I can get for it whether it’s more or less?’ PHIL O’REILLY, BUSINESS NEW ZEALAND CHIEF EXECUTIVE

number of international competitors to the country, attracted international media attention and generated tourism.

Organisers of any event can apply to New Zealand Major Events to be considered, but there are tough criteria.

Mr Brownlee admits the legislation was never intended for small events.

‘‘As we were going in to the Rugby World Cup it was pretty clear that we had to have some provisions.’’

The 2006 Fifa World Cup in Germany was a good example of what can go wrong, he says. Sponsor Emirates was the victim of ambush marketing by a competing airline painting a football on the noses of its planes. It gave the illusion it was the cup’s sponsor when it had no financial input.

‘‘In the case of the Rugby World Cup, it was clear that there was going to be very, very big demand for tickets.’’

Tickets were already going to be expensive enough, without online bidding wars elevating prices, Mr Brownlee says.

For events not covered under the act, such as One Direction – which Mr Brownlee’s 13-yearold daughter is attending – high popularity combined with a small venue drives up demand.

But legislation should not be there to stop someone taking the ‘‘extraordinary decision’’ to pay large amounts to go, he says.

‘‘[The Major Events Management Act] was never intended to have anything to do with events for domestic audiences.’’

Business New Zealand chief executive Phil O’reilly says it had been in support of the bill, but not in terms of the principle of on-selling tickets at a profit being illegal.

‘‘We take a view that, in principle, if I buy a ticket to a sporting event or band, it’s not different to buying anything else like a car or house.

‘‘Once I own that, why can’t I just dispose of it for a price that I can get for it, whether it’s more or less?

‘‘If someone wants to pay $5000 to see that boy band, why on earth shouldn’t they be allowed to? It’s their money.’’

And if event organisers have a problem with scalpers getting higher prices for their tickets, they can adopt an ‘‘if you can’t beat ’em, join ’em’’ stance and allocate some tickets for auction, Mr O’reilly says.

‘‘If you say that other people are profiteering, it’s because you put it at the price you did.

‘‘It’s important to try to have an open market as much as possible and be clear about the rules and restrictions so that you don’t get a black market.’’

Canterbury University economics professor John Fountain says there would be less demand for scalped tickets if event organisers released all available seats.

‘‘Exorbitant prices are coming from people withholding tickets in the first place.’’

He sees reselling in an open and competitive market situation such as Trade Me as good for fans, not bad.

‘‘Every resale of an event ticket on Trade Me is to the mutual advantage of both the buyer and the seller. There is no coercion. There is no monopolistic price-gouging.

‘‘I don’t think that it should be vilified.’’

American website Stubhub was created for legitimate onselling of tickets people could no longer use – because there is a market for it, he says.

And some American sports teams are even realising the power of the secondary market and supporting ticket on-selling by providing validation.

He believes there should be no restrictions on selling and reselling tickets, whether an event is ‘‘major’’ or not.

‘‘I think there’s enough going on here that the Commerce Commission should investigate. Are there things, anti-competitive processes, preventing desirable on-trading of goods?’’