How FOMO and Tech Disruption are the Driving Force Behind Lost Ticket Revenue in the Mayweather vs. McGregor Fight

Limiting purchase capabilities through restrictions has never been an acceptable model in any retail based industry. Last week the Floyd Mayweather vs. Connor McGregor boxing match went on sale with a handful of tight restrictions and a pricing philosophy based on limited data. What occurred was a shocking lack of sales leading to back end shenanigans such as hiding the interactive map showing available seats and listing primary tickets as secondary but at a lower cost. Let’s examine what went and continues to go wrong with the Mayweather vs. McGregor Fight and how to avoid failures like this from the onset.

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Verified Fan Presale: Check

2 Ticket Limit: Check

Pickup Only: Check

Insane Pricing: Check

Nobody Buys: Check

Hide Available Inventory and Interactive Seat Map: Check

Market Again and Again to the Verified Fans Who haven't Bought Yet: Check

Lower Prices and Put them on Your Own Secondary to Hide Lack of Sales: Check

Up Ticket Limit: Check

Plant Article Putting Negative Connotation on Another Entity: Check

Fans Wait for the Bottom to Drop Out, so Still, Nobody Buys: Check

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Someone smart, possibly Einstein depending on the source, once stated that the definition of insanity is doing the same thing over and over but expecting different results. We are two decades into the online retail era, and as other industries move forward with an everchanging business model designed with the consumer in mind, ticketing is still lagging with outdated models based on FOMO or the Fear Of Missing Out (on revenue that is). The same mistake of worrying about revenue loss on a small percentage of your inventory instead of guaranteeing upfront sales, which leads to increased sales, event revenue, long term revenue and data to begin with, continues to be a major roadblock in the industry. Per ConsultantsMind.com, FOMO creates a doom loop of higher expectations leading to a continuous cycle that creates no positive movement.

The hard truth is that there are clear reasons why other industries have continually invested in partnerships to move inventory. The most obvious one is that in the end, they are more profitable because of it. The amount of energy and effort that takes place because of FOMO would be an argument in itself. However, the utilization of data, marketing dollars, and distribution combine to make online retail a powerful tool. Additionally, one off concerts or events like this have additional needs for distribution because they lack the longevity of data, an even smaller marketing infrastructure or budget than a team as well as any relevant history to make informed pricing decisions.  With that in mind, let's look at the four core reasons as to why the sales have hit rock bottom for this event, all even more exaggerated because of its one-off event status:

The Missing Infrastructure of Distribution

All the rules in place to limit secondary involvement end up accomplishing three things:

1.   Selling fewer tickets for less revenue overall to avoid losing additional revenue on 15% of the inventory

2.   Making less money than you would have because you worried about 15% of your inventory

3.   Losing digital reach through retail infrastructure

As I wrote about here, the secondary market accomplishes what retail figured out almost two decades ago when it comes to online sales. The combined marketing dollars through distribution channels allows these websites to utilize budgets sizable enough to handle digital outreach for them.  In short, one can scale and the other cant.

I have spent a lot of time researching and following the sales for this event. All of this was accomplished online. Despite my online footprint, because the restrictions limited distribution, I have seen zero retargeted ads to me. Not on my Facebook page, not on any random ad hosting website, or not on any google supported platforms. The reason is that venues alone cannot afford this outlet but secondary sites can. Also, team and venue sites are not responsive nor designed to work within search optimization with such features as indexed pages or affiliate links back. With no inventory being distributed and pricing not based on demand, there is limited marketing investment from these channels. Basically, the pricing and inventory management is costing the event millions of dollars in free online advertising.

Finally, secondary market sites carry the data and historical analytics to maximize sales based on high volume periods. Prices peak during the initial on sale date, once an event is officially announced as a sellout or even when news break close to an event. The mismanagement of these tickets not only caused a lack of overall sales, but it also caused even more missed revenue by not maximizing on what hundreds of thousands of past events show as possible.

While the core reasoning for the lack of sales correlates with the poorly designed pricing and restrictions, the lack of any support from digital or email marketing based on online consumer profiling has not added any additional sales or revenue.

Sticker Shock does not Equate to Lost Revenue on all Tickets

One of the more curious sides in the ongoing battle of distribution is the human element of sticker shock. Seeing inflated prices creates a feeling of the before mentioned FOMO (I wrote here why pricing based off of secondary sales is a losing proposition).

Analytically the feeling makes little sense beyond human nature, mostly because not all tickets will sell for the listed price (although the media loves to promote the most unrealistic scenarios in listed prices), some of the tickets will sell for less than gate price on many occasions, and the inflated prices are only on a smaller percentage of the seats. 

This event is a perfect of example of the failure. Yes, if you priced and marketed better you would have sold out, and some would have sold for a profit on the secondary. However, in common sense and on the bank statement I fail to see how that is a worse solution than hardly any sales leading to spending time and money on poorly hidden solutions to move inventory without admitting your mistake.

The secondary sales data from Mayweather’s past fight vs. Manny Pacquiao shows an average resale price of just under $4,000 per ticket. His past fights dating back to 2013 all averaged well less than $1,000. The sticker shock of the Pacquiao Fight caused the decision makers to forget that these prices were based off a limited number of seats sold and the event already being sold out. They also did not analytically decide that a Mayweather vs. McGregor ticket would be more in demand than when he fought Pacquiao. 

This fight has garnered all sorts of attention as it has become more of a circus than reality. There was nothing in TicketCity data and marketing research that showed pricing should be as high as it is. So, the median price on the secondary is technically higher for the McGregor fight as of today; it is for a lot fewer tickets sold. And will drop as there continues to be primary inventory masked as secondary with a decreased price. 

Risk Management (or lack thereof)

By putting in many restrictions on ticket buying and charging inflated pricing, the promoters took on all the financial risk of the event.  The two typical tradeoffs of retail infrastructure are upfront cash and use of all that comes with distribution (as mentioned above). The season ticket model in sports works in a similar fashion. Team performance, injuries, weather and other circumstances can raise or lower the price of seats through these channels. Because the risk is spread out to multiple accounts, the model never fails as no one person or entity will take too big of a loss in a downturn of sales.

The common myth is that all seats on the secondary sell for a hefty profit. With thousands of events and games going on each day, there are plenty of tickets that sell well below face value. Hence, the risk management for rights holders and the reason why the model works for the consumers in the first place.

By creating too many restrictions to ensure they collected the FOMO based 15% in additional revenue, the promoters have cost themselves millions. Was it worth the risk? The answer is no.

When Distributed Correctly, the Increased Ticket Prices are Based on the Event Actually Selling Out

This is common when it comes to supply vs. demand but is worth mentioning. The increased revenue that creates FOMO is only possible once there is no supply. By creating a situation where there is plenty of supply and managing to also implement a confusing and ongoing hidden pricing structure to hide the on sale failure, the demand becomes choppy at best. Until the demand outgrows the supply on the primary, it is not possible to drive the increased prices on the secondary market. 

In the end, this event became a combination of additional possible revenue streams not outweighing the risk and a poorly constructed pricing and marketing model based on FOMO. As we stand on Sunday Night, July 30th, there are thousands upon thousands of tickets left with those remaining being stubbornly miscast as lower priced secondary seats. The cost of FOMO has been millions of dollars. Will the insanity continue or will we as an industry work to create a new definition of ticket distribution? One based on forward thinking and modern business modeling? History says we have a long way to go before we even entertain the thought.

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Read Mike's other articles on similar topics:

What did you Consider before Renovating your Suites

Why Bowl Games Need the Secondary Market

3 Reasons why Businesses are Gravitating to the Secondary Market

Non-Conformists are Moving the Ticketing Industry Forward

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Mike Guiffre, VP of Sales at TicketCity

512.721.1166 / [email protected]

Twitter: @mjguff