Ticket “Short selling”: Good strategy or recipe for disaster

One the strategies that came to light while researching successful ticket broker strategies is "selling short".    A broker will sell tickets without actually possessing those tickets after a big event is just announced – for example, a match up for a playoff game.   When it comes time to deliver those tickets, a broker will buy those tickets shortly before the event, and then deliver them  to the buyer.  

This strategy rests upon the dynamics of ticket supply and demand of an event.  A typical pricing pattern for a hot event is that demand (and therefore prices) are highest within the 24-48 hour period immediately following an event announcement.   This is usually the best time to sell tickets for the highest return.  As the the event approaches, demand with decline along with ticket prices. 

Experienced ticket brokers see the opportunity in this pricing pattern by selling tickets immediately after the event announcement for the highest prices, and then buying and delivering those tickets right before the actual event at the lowest prices – thus profiting from the difference in the high/low ticket pricing.

According to several ticket brokers, most established brokers use this strategy regularly.  But, as relatively new, low volume ticket broker, should you?

The unwritten rule of ticket brokering is that only big, established brokers – or ticket brokers with deep pockets – should short sell tickets.   While most of the time, prices start high and drop, sometimes prices will just keep going higher. 

So for example, if you sell the "rights for a ticket" for $100, then that price drops to $50 before the event, you're going to make $50 per ticket just from timing the market (just like timing is everything in the stock market). 

On the other hand, if you sell ticket rights for $100 per ticket, then the event gets hot and the ticket price increases to $200 when it's time to deliver those tickets, you're going to lose money.  If you short sell a lot of tickets, you're going to lose A LOT of money.

There are horror stories of small time ticket brokers shorting tickets, then burning customers.  After the price goes up, those brokers refund money and skip town.   That's not good customer service.

Anyone who is considering shorting tickets should have the capital to buy those tickets when the price goes up – not down – when its time to buy.  Not delivering on promised tickets is bad for the industry, and bad karma.  Keeping your word and delivering what  you promise is a huge key to success in this business.