No Gold Medal for Olympic Ticket Market

LONDON, ENGLAND - AUGUST 05: Usain Bolt of Jamaica celebrates winning gold in the Men's 100m Final on Day 9 of the London 201
LONDON, ENGLAND - AUGUST 05: Usain Bolt of Jamaica celebrates winning gold in the Men's 100m Final on Day 9 of the London 2012 Olympic Games at the Olympic Stadium on August 5, 2012 in London, England. (Photo by Amin Mohammad Jamali/Gallo Images/Getty Images)

As fans around the world wondered why the best seats to Olympic gymnastics and swimming were empty, frustrated Londoners and competitors' family members were fuming (politely, no doubt) that they couldn't attend half-empty "sold out" events. These Olympics provide a disturbing snapshot of what happens when event organizers stack the deck against ordinary fans and try to stop the free market from working.

Like music fans who face "sold out" signs one minute after concert tickets go on sale, sports fans around the globe spent months navigating the byzantine London Olympics ticket lottery. We now know most of them never had much of a chance to score the most prized tickets, because Olympics organizers were acting like concert promoters - reserving the best seats for VIP pre-sales or giveaways. Whole sections of prime seating were reserved for "the Olympic family" of sponsor companies, foreign dignitaries, sport federation bureaucrats and other VIPs -- many of whom clearly had no interest in attending the events.

To their credit, the London Organizing Committee of the Olympic Games (LOCOG) has now disclosed some information about their fan-unfriendly ticketing policies, including that 25% of all Olympic tickets were never available to the public. That's a lot more information than you will ever get from Ticketmaster about how many tickets are really available to the public for Justin Bieber's tour. But the Olympic organizers have not revealed how many tickets for any given event are reserved for VIPs, and we can all see on TV that at some of the most popular events nearly 100% of the best seats are empty.

While this initial ticket fiasco is frustrating, the larger problem is LOCOG's attempt to control fans' tickets even after they were purchased by prohibiting ticket transfer and resale. Organizations and individuals with extra tickets had no way to give away or resell them, and die-hard fans -- who would have willingly paid -- were left watching their favorite sports on video screens in the Olympic Park.

This is what happens when powers-that-be try to stop the free market from working: artificial shortages and a thriving black market. With no legitimate way to get tickets, including for all of those unused seats, desperate fans buy them on the street. Now the London Police are arresting street-corner scalpers charging outrageous prices for tickets to events with hundreds of empty seats -- tickets that otherwise would be sold and re-sold for much less money because it is clear that there is less demand for these particular events. And the British newspapers are filled with stories of victims who bought fraudulent tickets from these scam artists -- which never would have happened if a legal, competitive, consumer-protected market had been permitted to exist.

Having spent years devising systems to thwart the free market, public outcry has shown LOCOG the error of its ways. They are now scrambling to set up a makeshift secondary market to allow safe, legitimate resale and trade. But for many fans, it's too little, too late. And once again, basic economics prevail: whether it's the next Bruce Springsteen tour or the greatest sporting event in the world, secret ticket distribution formulae and non-transferable tickets hurt fans and benefit no one.