I’m pretty sure I was going to write something brilliant on soccer economics today, but I have a nasty cold and my brain is fuzzy, so instead I’m going to talk about a tangent that fascinates me: the post-purchase, grey-ish market for tickets and what this tells us about how much our tickets are worth.

First, for comparison purposes, journey back with me in time to the communist economy of the USSR, where wages and prices were all centrally planned. If the state said, “A loaf of bread will cost $X,” then that was the cost. At least officially.

In practice, what this led to were long lines, shortages of goods and black markets, all due to the fact that when prices are artificially set below what they would be in a free market, there is huge incentive to sell outside the planned and regulated market at a higher price.

(Completely off topic — because daytime Nyquil will do that to a blogger — I was in the U Distruct during the Goodwill Games back in 1990 — the first time Soviet athletes had ever been allowed to roam a capitalist country without handlers. I remember watching an athlete from the USSR — identifiable by the CCCP on his jacket — as he entered some average drugstore like Bartell’s. The awestruck look on his face as he examined the floor-to-ceiling goods that weren’t available in his country made me realize for the first time what it was that was really tearing the USSR apart.)

How does this relate to Sounders tickets?

As we talked about yesterday, Sounders tickets in 2009 have been priced below market, as evidenced by our gazillion consecutive sellouts. This means that there is pent-up demand in the market for our tickets, even at higher prices.

What got me thinking about this was when reader KFox over on the GoalSeattle boards mentioned that he sees the seats behind him listed on StubHub every week at a significant markup. This means that some enterprising person or organization apparently bought these tickets with no intention of attending the games; instead, the plan was to buy, then to sell at a profit.

This isn’t a risk-free strategy, by the way. The person selling these tickets apparently made a bet last year, before the Sounders’ situation was clear, that the team would be big and that demand would exceed supply — not a small risk when you’re talking about soccer in the US.

In the case of those tickets, the list price is $24, and the usual asking price is about $50. (Although it drops as the game approaches, since the chance of being stuck with unsold tickets increases.) Or approximately 100% markup.

This made me curious. And so, with the help of KFox (thanks much!) I did a little research on what, exactly, tickets are selling for on the resale market.

…if you go on Stubhub and tell them you want to sell. When you get to the place where you have to name your price they give you the last 20 transactions that have occurred for that game. Here are the numbers for the Dallas game:

Section Row Qty. Sold on Price*
230 L 4 10/11/09 $109
101NA K 3 10/10/09 $67
131 L 2 10/10/09 $80
CLB 213 G 2 10/10/09 $90
140 G 2 10/10/09 $75
214 Y 2 10/09/09 $68
118 V 1 10/09/09 $40
110 J 2 10/08/09 $115
135 L 2 10/08/09 $125
214 X 2 10/08/09 $65
100 G 2 10/08/09 $73
109 G 2 10/08/09 $98
135 B 2 10/08/09 $109
111 Q 2 10/07/09 $89
150 F 1 10/07/09 $139
Charter 110 D (4th row!) 4 10/07/09 $97
CLUB 231 w/Qwest parking pass M 2 10/07/09 $80
127 QQ 6 10/07/09 $75
135 D 4 10/06/09 $114
119 HH 4 10/06/09 $74

See your section? See your tickets? What’s the markup?

The closest seats to my $35 apiece tickets sold for $97, $98 and $109. Or, in other words, a markup of 277-311%. Not a bad day’s work, eh?

Of course, not all of that goes to the seller. According to the blogger’s best friend, Wikipedia, StubHub takes a 25% commission, 10% from the buyer and 15% from the seller. Or, on those $97 tickets, the seller would end up with only $82.89. Still, though, a 237% markup, which is not shabby in this economy.

(What I find interesting is that the asking prices in StubHub for tickets near mine are frequently $100 or more higher than the completed sales, or a markup of 5-600% percent. I guess the take-home message here is, it’s okay to get greedy, but not too greedy.)

The reason the markups are this high is, again, that supply is limited. Most of the ticket purchasers are people like you and me; we bought our tickets with the intention of actually attending the games. If too many of us had bought with the intent to resell, the market would be flooded and the prices we’d be able to ask (or at least to actually receive) would drop precipitously.

Or you can look at it this way: If enough people sold their tickets on the secondary markets, the equilibrium price the tickets eventually settled at would give us a pretty good idea of what the fair-market value of our tickets really is. Which, in my case, is almost certainly somewhere between the $35 I paid and the $97 to $109 the current repurchasers were willing to pay.

Question for anybody willing to answer: Have you ever tried to resell your tickets, either through a legit service like StubHub, or through Craigslist, or to a scalper? If so, how hard were they to sell, and how much markup were you finally able to get?

“So we don’t end up like NASL.”

(That would be the long-defunct North American Soccer League. You remember. Short shorts? Porn ’staches? Home of Pele?)

(Right. That NASL.)

Got it memorized? Now challenge your friends to ask you a question about anything they find bizarre or unusual about MLS compared to the game as it’s played in the rest of the world. Some examples for you to practice on:

Q: Why does MLS have single-entity ownership?
A: So we don’t end up like NASL.

Q: Why do they have salary caps?
A: So we don’t end up like NASL.

Q: Why has there traditionally been a go-slow approach to expansion?
A: So we don’t end up like NASL.

Q: Why is there such a focus on league parity?
A: So we don’t end up like NASL.

Was I kidding? I wasn’t kidding, was I?

In order to understand MLS and why it’s structured the way it is, it’s important to first understand what led to the demise of the United States’ other big attempt to bring soccer to the masses.

In a nutshell: It started slow, but in 1975, with the New York Cosmos’ signing of Pele, it turned into an arms race of aging, high-salaried foreign players. The erroneous assumption was that these players would automatically create fans, who would thus make the league itself profitable without any central planning or extra effort.

Didn’t happen. NASL was all over the map when it came to quality of play, commitment of owners to the league, and ability of teams to produce revenue. The top-selling game — with the New York Cosmos — sold 78,000 tickets, but the league average attendance never topped 15,000.

Expansion franchises were handed out like Halloween candy — in part, according to some sources, because existing franchises were hemorrhaging money and the owners wanted their portion of the extra franchise fees that were paid in by the new owners. This overexpansion led to a huge dilution of the talent pool, which led to a further bidding up of the prices for the few superstars who could supposedly carry a team.

In 1980, there were 24 teams. By the 1984 season, this had dropped to nine. The league itself folded in 1984.

From a fascinating 1984 SI article about the league as it was in its death throes:

Most of the owners of the NASL’s surviving franchises (there were 24 in 1980) dream of similar cuts in their losses. In San Diego, Socker president Jack Daley says his club has lost $10 million since 1978. In 1983 the Chicago Sting was more than $1 million in the red, while Golden Bay lost more than $3 million. And the four Tulsa oilmen who sold the Roughnecks last January—three months after they’d won the 1983 Soccer Bowl—said they had dropped $8 million over four years. Only the Cosmos, desperately trying to cling to the glamorous image the team enjoyed just a few years ago, speak of insignificant, unspecified losses.

Others who care for the sport feel threatened in less tangible ways. San Diego coach Ron Newman, who has been in the NASL since 1968, its first season, said after the settlement, “If the NASL had gone, it would have been like losing a leg. I’ve put 17 years of my life into this league.” He had no doubts of whom to blame for the near catastrophe. “Management,” he said. “We changed directions so many times, you didn’t know what would happen next. Days after the biggest crowd ever in Washington, D.C., the franchise folded. We’d shift from foreign superstars to grass roots and back again.” Says Noel Lemon, the irascible Ulsterman who’s general manager of the Roughnecks, “The NASL is at an alltime low.”

If the breast-beating has a single theme, it can be summed up in a well-worn phrase: Too far, too fast. “Our hype tried to present the NASL as a new NFL when we weren’t ready,” says the Sockers’ Daley. Sting owner Lee Stern declares, “We spent too much money trying to market teams as if they were instant big league franchises before the attendance and money justified it.” And (Daley again), “It became fashionable to chase the Cosmos. Everyone had to have a Pelé. Coaches went around the world on talent searches, forcing the prices up.”

NASL went out with a whimper the year the above article was written, in 1984. MLS rose from its ashes in 1993, (with the inaugural season in 1996), in part as a way to convince the world that the US was serious enough about soccer to host the 1994 World Cup.

And with the rebirth of professional soccer in America came a litany of all of the ways that We don’t wan’t to be like NASL. In short, decision-making in MLS is far more centralized, in a way that precludes one rich owner from buying his way to the top of the league. The main entity of MLS is the league itself, not the individual teams. The league owns the players, the league makes the rules, the league signs the contracts.

These centralized rules have chafed a bit, particularly among owners like AEG, who seem more interested in expanding through big moves and grand gestures than some of the other owners. And these rules may change, bit by bit, as the league moves closer to profitability. (They have already changed, somewhat, with things like the implementation of the Designated Player Rule, aka the “Beckham Rule.”)

But I don’t think you’ll find many informed people who will argue that the go-slow approach and centralization of decision-making in MLS has been a bad thing when it comes to creating a sustainable league that will be around for the long-term.

And isn’t that really what we all want?

You know. So we don’t end up like NASL.

******

If you’re interested in the history of the league, I’d suggest starting with the fantastic documentary, “Once in a Lifetime: The Extraordinary Story of the New York Cosmos.” (I bought my copy through Netflix for less than $10.)

And if you haven’t read the above 1984 article in its entirety, you should. The Nasl: It’s Alive But On Death Row

Also of interest: A Short History: The NASL on TV

And the second, black and white photo is from a treasure trove David Falk posted over on GOALSeattle. Photo by Jenni Conner.

This post is part of our MLS 101 series, where we take you through some of the things that are unique to MLS. For more, click here.

Was this a PC Seattle thing? Or an acknowledgement that our fans are so amazingly and awesomely bad that we needed a special set of rules?

Actually, this Code of Conduct (which I’ll discuss more in a later post) is an MLS-wide thing, and it’s new as of the beginning of this season. After several incidents last year, and after wildly varying responses to incidents from stadium to stadium, The Great Powers of MLS decided that this would be a good time to codify.

What kind of incidents were those, you ask? Well, let’s travel back to take a look, because this is interesting.

First? The Hoolie Fan Scuffle. This one happened during the Columbus-West Ham friendly last summer, and no, these were apparently not English hooligans traveling to Ohio (Ohio?!?) to mix it up with the locals. From what I’ve read they were locals themselves, but wearing West Ham jerseys. (Here’s my take on this type of pseudo-European hoolie fan.)

Oh, and when the code of conduct talks about freedom from “thrown objects” (other than streamers and confetti)? We’ve already seen the beer. (Or at least an amber liquid that was apparently beer at some point.) Outside of that, though? Enjoy the video below.

I’m pretty sure that giving away seat cushions probably seemed like an excellent idea at the time. In the future, however, they may want to first check the aerodynamics.

No harm, no foul, though. It’s not like people will get seriously injured by flying seat cushions.

But didn’t I read that some brainiac club gave out freaking commemorative coins this year? Because, y’know, coins used as projectiles can’t cause serious injuries. Or anything.

On a darker note, there was the incident in Columbus (where else?), caught on a homemade video and later posted on YouTube, where someone is heard repeatedly calling New England’s Shalrie Joseph an Effing N-Word. (But, y’know, without the euphemisms.) Shalrie’s crime? Scoring late.

Interestingly, when you click on the link that originally took you to the video, it now reads:

“This video is no longer available due to a copyright claim by Major League Soccer, LLC”

This is interesting because a) the video was fan-created, and b) MLS embraces YouTube and has probably the loosest standards of any league in the world for enforcing copyright violations of this sort. But this video was definitely a negative from a PR standpoint, and so it is now gone.

And last but not least, how does a Fan of the Year get himself a lifetime ban? Dave over at Red Bulls Offside has a very interesting two-parter from last year about former Red Bulls Fan of the Year Thomas Binkley, and how he ended up getting himself permanently banned from the stadium for using bad words. From Dave:

One story that has struck a strong chord with Red Bull supporters was the Lifetime Ban given to 2006 Fan of the Year and season ticket holder, Thomas Binkley. Binkley, or “Binks” as he is referred to, is an instrumental part of the Red Bull fans support structure. He organizes road trips, is a long time member of the ESC, and has supported the team through years of mediocrity and ownership changes – all from his home in Virginia! Yes, he actually travels down to every home game to take in the action, from deep in the heart of enemy (DC) territory.
That’s dedication.

Binkley was later reinstated, along with the rest of the “Beckham 7.” (Hee.) But the incident raised some questions about what kind of conduct should be punished, and how it should be punished, and who should make the final decisions.

So did this Code of Conduct solve these problems? Did it create potential new ones?

That’s a topic for a later post.

This post is part of our MLS 101 series, where we take you through some of the things that are unique to MLS. For more, click here.

I love the Lamar Hunt US Open Cup. Just want to state that right off. And I can say this with a straight face even though I didn’t actually realize that DC United was the team who won it last year, given that I kind of lost interest after the Sounders were eliminated.

Open Cup dates back to 1914, and it’s the one competition in the US where any club can compete, from amateurs up through MLS. So in the early rounds you’ll see the teams like Hollywood United (current chair Anthony LaPaglia, former first teamers include Alexi Lalas, Eric Wynalda, Ziggy Marley, Frank LeBoeuf and Vinnie Jones.) And yes, that would be the same Hollywood United who last year beat the USL’s Portland Timbers on penalties (snicker) before losing 6-0 to Seattle (double snicker.)

(Recap of how the early rounds are set up is here.)

USL Sounders had a history of doing fairly well in the Open Cup. The tourney is set up so the lower-level (sub-MLS) teams will eliminate each other down to the last eight before MLS teams even really get into the competition, and USL Sounders were pretty good in recent years at knocking off lower-level teams and advancing to play MLS.

In the magical 2007 season, they got to the final sixteen, then knocked off Chivas USA 3-1, then Colorodo 5-0 before finally falling in an abysmally reffed game to a diving, unsportsmanlike FC Dallas in extra time in the semis. (Not that I’m still bitter about that game. Or anything.)

Last year they beat Chivas USA again, then the Kansas City Wizards on penalties before falling to the Charleston Battery, another USL team, in the semis.

The thing about US Open Cup — and one of the reasons USL teams have historically done fairly well against MLS sides — is that these MLS sides frequently don’t field their best players, at least until the final rounds.

Last year, in what I’m guessing was an attempt to make teams take the competition more seriously, the powers that be decided that the winner of the competition would automatically get entree into the CONCACAF Champions League. Still waiting to see if that works and, given things like schedule congestion and small roster sizes, if it’s even a good thing from a cost-benefit perspective. One of the theories as to why neither DC United nor Houston Dynamos did as well as expected last year was that they were so bogged down in extra competitions that they couldn’t give their all to everything.

Which leads us to the question: How seriously is Sigi going to take the US Open Cup given that this team actually has the potential to be contenders in the league? Is he going to risk injury to the starters he needs in league competition for a Cup game (which is actually just a qualifier to try to be one of the eight MLS squads in the final Cup competition), or is he going to give a shot to some of the players who aren’t regular starters?

I’d guess the latter. I’m guessing we’ll see a few starters, but not Freddie, and I’m thinking Fredy may sub in but won’t start.

What’s funny is that last year I really thought MLS should take this more seriously. But now that our team is MLS, I’m thinking a go-slow approach is best.

Plus how fun would it be to see Roger Levesque playing a full game that actually matters?

This post is part of our MLS 101 series, where we take you through some of the things that are unique to MLS. For more, click here.

1)what is a conference and what does that mean for who we play or don’t play?
2)what do points have to do with play offs and how does that relate to conferences?

Since MLS is new in Seattle, I’m pretty sure she’s not the only one wondering about not only this, but some other quirks of MLS. So I thought that over the next few days or weeks I’d do an “MLS Primer” series to welcome new fans and introduce you to some of the things that make MLS different from the beautiful game in other parts of the world, and from other US sports.

Future topics may include: Single Entity Ownership, The Salary Cap, Allocation Money, etc.

Today’s topic: The Eastern and Western Conferences, and how that affects Seattle.

If you followed MLS just a little last year, you probably found yourself thinking, “How the hell did the New York Red Bulls become the Western Conference Champions?” Isn’t New York, y’know, east?

Short answer: Yes. In fact, I gave MLS my “Sarah Palin Commemorative Award for Excellence in Geography” after New York won.

(Um…yeah. It was a lot funnier in November.)

As you’ve probably noticed, MLS is currently divided into two conferences: Eastern (currently Chicago, Columbus, DC United, Kansas City, New England, New York and Toronto) and Western (Chivas, Colorado, Dallas, Houston, Los Angeles, Salt Lake, San Jose, Seattle.)

Originally, conferences were at least partially used as a way to cut down a bit on travel time; before recent expansions, the teams would play each team in their own conference three times each, while playing each team in the other conference twice (home and away.)

As the league has grown, this is becoming less and less the case; we’re moving closer each year to a round-robin style format. This year we’ll be playing only two other teams more than twice: San Jose (two home games) and Chivas (two away games.) Next year, with the arrival of Philly, we won’t even do that.

No clue what they’ll do when Portland and Vancouver are added in 2011.

What the Conference format means as far as playoffs go is that each Conference qualifies for the playoffs separately. Kind of. Except not really.

First off, the history of MLS conferences and playoffs is incredibly complicated, but there’s a good recap up to 2007 here. But let’s start with where things start to make sense, at least to me: in 2003, when the top four teams in each conference qualified for the playoffs. The teams in each conference would then knock each other off until only one remained, with the MLS Cup final being top Eastern team vs. top Western team.

The problem with this was that this was way too easy to understand sometimes there were huge disparities between East and West, with the West recently kind of sucking. This meant that some of the teams who would miss the playoffs in their own conference would have qualified easily if they’d just been in the other conference.

Rather than going single table like the rest of the world, though, in 2007 MLS took what I’m pretty sure is an interim step: Wildcard teams. Four in 2007, down to two in 2008, back to four in 2009.

So last year the top three teams (calculated by point totals) in each conference qualified for the playoffs, but the fourth spot in each conference went to the wildcard teams — the teams with the next-highest point totals, regardless of Conference. Except that MLS still keeps up the East vs. West charade format and crowns “Conference Champions.” This is how the New York Red Bulls qualified in the West last year, and eventually went on to become Western Conference Champs.

The format for this year — 2009 — is slightly different. The top two teams from each Conference automatically qualify. After that, there are four wildcard teams, i.e. the next four teams, regardless of conference. So yes, in theory we could have six teams from one conference in the playoffs this year. Which feels pretty damn close to single table to me. (I’m guessing that’s what we’ll see in 2010, but you can never predict with MLS. For all I know, they’ll go to three or four conferences instead.)

Here’s a quick look at how this works on a practical basis:

At the end of the regular season in 2008, the Conference standings at the top looked like this:

Eastern Conference
Columbus Crew* — 57 points
Chicago Fire* — 46
New England Revolution* — 43
Kansas City Wizards* — 42
New York Red Bulls* — 39

Western Conference
Houston Dynamo* — 51
Chivas USA* — 43
Real Salt Lake* — 43
Colorado Rapids — 38

*went to playoffs.

So the Crew, Fire, Revs, Dynamo, Chivas and RSL qualified automatically in their conferences, and KC and RNBY took the final two wildcard spots because their point totals were better than Colorado’s.

In case of a tie, these are the tiebreaks used:

1. Head-to-Head (Points-per-match average)
2. Overall Goal Differential
3. Overall Total Goals Scored
4. Tiebreakers 1-3 applied only to matches on the road
5. Tiebreakers 1-3 applied only to matches at home
6. Fewest team disciplinary points in the League Fair Play table
7. Coin toss
NOTE: If more than two clubs are tied, once a club advances through any step, the process reverts to Tiebreaker 1 among the remaining tied clubs.

Clear as mud? Welcome to MLS. (Wait till we start discussing allocation money.)

If you’re curious, Wikipedia shows what 2008 would have looked like if MLS had been single table.

For more info, including how the seeding and playoff formats work this year, here is the Official Explanation from the Official MLS site.

Hope this helps, Johonna!

This post is part of our MLS 101 series, where we take you through some of the things that are unique to MLS. For more, click here.