With 46 seconds left in last season's Super Bowl, the Philadelphia Eagles still had a chance: A field goal would tie the game, a touchdown would win it. On the third play of the possession, quarterback Donovan McNabb rifled the ball downfield - right into the hands of New England Patriots safety Rodney Harrison. The contest ended, and die-hard Eagles fans were heartébroken. But for two of them, a new game was about to begin.
Late the next night, Brad Simmons left the warmth and poky dialup modem of his Philadelphia apartment and walked 20 minutes through a frigid February evening to his office and its high-speed Internet connection. Meanwhile, in Crofton, Maryland, Brad's older brother, Paul, was seated at his home computer and already connected to the Web via high-speed access.
Both had their browsers pointed to an online futures market for Super Bowl tickets. Fans purchase options in the hope that their team will be in the championship. The Simmons siblings were confident the Eagles would make it to the Super Bowl again next year, and they had a simple strategy: buy, buy, buy.
The market opened at midnight, and the brothers jumped right in. After a few minutes, with the option price at $150, Paul spent $1,200 for the right to buy eight standard tickets to the 2006 Super Bowl (if the Eagles make it). Meanwhile, Brad, who was only just getting warm after his walk, didn't fare so well. The site couldn't handle the heavy traffic and stalled as he tried to join the frenzied buyers - prospective Eagles seats sold out in minutes. Brad had little choice but to try an end around. He bought options for all the teams that he thought Philadelphia might play in the next Super Bowl.
The Simmons brothers purchased these options, or Fan Forwards, at Ticket Reserve. The Chicago-based company offers sports-lovers the opportunity to buy seats at face value to everything from Nascar Daytona 500 races to NBA playoff games - events that are often accessible only to people willing to hand their life savings to scalpers. So, if the football team you've bought an option on makes it to the big game, you will be able to buy tickets for between $500 and $600 each. Add in a couple hundred dollars for the options and the total cost per seat will still be much less than the $3,000 a scalper would charge on game day. Of course, if your team doesn't make it, your ticket options are worthless - you get the right to watch the kickoff from your living room couch, no matter how much you paid.
Opening prices for ticket options are set by the company based on a team's likelihood of success. Once an option is purchased, it can be traded as the season progresses, with Ticket Reserve taking a 7éto 10 percent cut on every transaction. If a fan holds Forwards for a team that gets knocked out of the running, he forfeits his money. As soon as the teams in the big event are determined, the market closes and everyone with eligible Forwards is charged face value for the tickets.
The company can guarantee seats because of its partnerships with leagues, teams, and hospitality providers that sell ticket packages. In return, sellers get the full price of the tickets, a percentage of the Fan Forward opening price, and a percentage of fees earned by Ticket Reserve for all subsequent trades involving those tickets.
The system works much like futures markets for stocks or frozen pork bellies, with one big difference: The customers have emotional investments in what they're buying. Chicago resident Vincent Schideman bought options to watch his hometown Bears play in the Super Bowl - an unlikely scenario when he bought the options that became much more plausible as the season progressed - though he didn't have much luck with his Forwards for the Cubs. "I always bet with my heart, never with my mind," Schideman admits.
Paul Simmons, meanwhile, bets with both. The same day he bought his eight ticket options for $150 each, he sold two for $580 a pop. Then, as the team slumped in the middle of the season, he dumped the rest of his Forwards, selling two for $300 and four for $200 after a dispiriting loss to the Washington Redskins. But he hasn't given up all hope; he's just put money into the teams that might play the Eagles in the Super Bowl. If his hometown team recovers and makes it to the big game, he's definitely going with his brother.
If the Eagles continue to flounder, he might just deal away his other futures. He won't get to live his dream, but at least he'll make a few more bucks.
- Erin Biba
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The Ticket Option Market
