Who doesn’t love to see their favorite teams play in the biggest games for the respective sports? Whether it’s the Super Bowl, World Series, BCS Championship or the Final Four, as sports fans we always dream to watch our teams in these games. However, ticket prices tend to be a deterrent for us to be able to attend such events.
The life cycle of a typical ‘hot’ ticket seems to go something like this. Early on in the season those willing to take a risk on their team can likely find one at a very reasonable level, relatively. However, as the games are played and indications point to who will actually be playing, ticket prices begin to creep up. On the announcement, or as it becomes official as to who is going to be playing, ticket prices seem to have their greatest spike.
After the original spike in ticket prices, we tend to see a leveling out. The market finds equilibrium and that tends to be the prices for all the days and weeks leading up to the big game. On game day prices may see a little bit of a bump depending on any news (or lack of) that comes out.
On game day prices begin to retreat as game time occurs and after tip off/ kick off, ticket prices become noticeably more affordable. Every sports fan knows this… if you want a cheap ticket wait until after the game starts. It’s simple as to why this trend occurs. Those holding the tickets become more worried about being left with them and must lower the price to entice buyers. The tide has changed from favoring scalper to now favoring the fan.
The life cycle of a ‘hot’ ticket is somewhat similar to the recent life cycle of rates and the reaction we have seen due to possible tapering. The announcement of possible tapering came on May 22nd , and rates reacted as ticket prices would have to the announcement of who will be playing in the championship game.
Rates rose from the mid 1% levels all the way to nearly 3%. The rise was actually 83%, from the beginning of May to the recent peak in rates. This would be like a face value championship ticket at $90 going up to $165… that’s realistic.
Nevertheless after the initial rise, we begin to find an equilibrium for yields… settling in around 2.70 – 2.80%. As news comes out smaller shocks occur, but nothing like that original spike that we saw when we became aware of the taper.
Now, the longer term impact of a slowing of easing by the Fed and then ultimately monetary tightening (not in the near future) will be for rates to rise, but when the tapering game begins, we may actually see rates act similar to ticket prices.
It is a typical buy on the rumor sell on the news situation with this taper talk. Rates spiked originally, found equilibrium and the majority of the original impact has likely been built into rates based on the economic growth that we are currently seeing.
Another 83% spike in the span of 4 months is likely not going to occur, thus it makes sense for us to allow the taper game to begin and see what happens to ticket prices. It may actually prove to be more beneficial for us, just as waiting for kick off tends to be beneficial for those looking for affordable tickets to the big game.
(All data used within The Capital Course was provided by Ned Davis Research)