The Masters Sans Galleries Will Result in $50-$100 Million Revenue Loss for Secondary Market Stakeholders

The Masters Tournament (Nov. 12-15) will be played without fans in attendance for the first time in its 86-year history. Augusta National Golf Club (ANGC) chairman Fred Ridley announced on Wednesday that the club officials determined “the potential risks of welcoming patrons and guests to our grounds in November are simply too significant to overcome.” While coming as no real surprise—last weekend’s PGA Championship and September’s U.S. Open didn’t/won’t have fans either (the ’20 British Open was canceled)—the decision is expected to have a significant impact on those trafficking in Masters Tournament badges. Said Sam Soni, founder of PrimeSport: “Beyond just the secondary ticket market, companies like PrimeSport (which he founded and has since sold to Endeavor) provide [tournament attendees] with hospitality and all [a host of] ancillary services” (including lodging)—none of which will be needed this year. The former PrimeSport President and CEO suggested a fan-free tournament would cost secondary ticketing market stakeholders collectively “somewhere between $50 million and $100 million in revenue.”

Our Take: To understand why holding the Masters Tournament without fans is problematic for companies playing in the secondary ticketing space, one must understand the chain of custody for badges. Patrick Ryan (co-founder, Eventellect) explained that unlike most pro sporting events, where tickets are sent to the buyer weeks, if not months, in advance, “Masters Tournament badges don’t really exist until about a week before the tournament.” Because of the limited window of availability, ticket brokers “take orders ahead of time, commence on Augusta the week prior to the event and then wheel and deal with the locals [in possession of badges] until all of their orders are filled.”

Back in March, a four-day badge with hospitality was trading for between $5,000-$6,000 (down from the $9,000-$10,000 they were commanding in the fall and early winter of 2019). Now that the 2020 Masters has been closed to spectators, it’s reasonable to expect many retail customers who bought tickets will be looking for refunds. While that wouldn’t be an issue if brokers could easily recoup their cash outlay (a significant number considering there’s only a 10%-15% markup on badges)—the reality is that’s unlikely to occur. Soni reminds, “With the Masters, [brokers are making individual purchases. They’re buying from patrons and members” (not from ANGC). Considering the U.S. economy is in the midst of an economic recession and that the money was paid four-plus months ago (the tournament was originally scheduled for early April), it reasons to assume many of those suppliers have already spent the funds. If that’s the case, they won’t be able to refund brokers; they’ll look to defer their obligations until next year (Augusta National is granting all 2020 ticket holders access to the exact same ticket in 2021). It’s worth noting that due to uncertainty surrounding COVID-19, Soni is projecting the price of a four-day pass will remain flat YoY.

No company will be hurt more by the 2020 Masters than Endeavor, which controls 10-15% of the total badges on the market. Aside from the money they’ve laid out for the tickets (which as mentioned they’ll struggle to recover), the event is among their most profitable of the year. Historically speaking, PrimeSport would generate between $3-$5 million in revenue on badges and hospitality surrounding the tournament. Golden Tickets (Plano), Bullseye Event Group (Indianapolis) and Empire Tickets (Atlanta) are among the other companies with an outsized business built around the annual golf tournament.

The secondary marketplace exchanges are also expected to suffer. Soni said companies like StubHub and Vivid Seats “do a significant amount of business selling badges.” Because the cost of entry to the Masters Tournament is so high, expect those businesses to be issuing refunds too. That’s likely to include StubHub, which has taken the position that they’re not offering rebates for canceled events due to COVID-19. It’s hard to imagine a customer who bought a pair of badges for $10,000 or more is going to be willing to accept a five-figure site credit.

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