You’re paying too much for Olympics tickets — and here’s why

You’re on your way to the 2016 Rio Olympic Games, when you realize you’ve been totally ripped off on your event tickets— paying 60 to 80 percent above face value.

Note: If you are looking for information on how to buy tickets for PyeongChang 2018 Olympic Winter Games, I have published my new guide here: https://medium.com/road-to-pyeongchang/ultimate-guide-to-pyeongchang-2018-how-to-purchasing-tickets-for-the-olympic-winter-games-4cd860002398

Outraged? You should be.

Over the past few months, there has been a lot of chatter about how the everyday fan doesn’t stand a chance at obtaining event tickets, especially when going up against brokers and their bots. Tony Knopp, CEO of InviteManager, first exposed this issue in January when the NY Attorney General issued a damning report on the state of ticketing. This was followed by Nathan Hubbard’s infamous rant in June, and most recently, Lin-Manuel Miranda‘s op-ed piece for The New York Times on ticketing woes surrounding the musical Hamilton. Lately, it seems like everyone’s talking about ticketing, ticket brokers, and scalpers.

Believe it or not, however, the severity of the situation is actually much, much worse than what’s been discussed.

When it comes to this year’s Olympics, fans are being ripped off by the ones who are supposed to be looking out for them, the source. The suspect in question being the authorized Olympics ticket reseller for the United States: CoSport a division of Jet Set Sports.

First, let’s look at the facts:

Event: Weightlifting (WL012)
Ticket Category: A
Rio Olympics Face Value: RS$ 100 ($28.49)
CoSport Price: $42.55
CoSport Handling Fee: $8.51
CoSport Total: $51.06
Markup: 80%

Event: Weightlifting (WL012)
Ticket Category: B
Rio Olympics Face Value: RS$ 70 ($19.94 US)
CoSport Price: $29.79
CoSport Handling Fee: $5.96
CoSport Total: $35.75
Markup: 79%

*based on exchange rate of $1 USD to RS$ 3.51 as of June 6, 2016

Due to a contract between the Rio Organizing Committee for the Olympic Games (ROCOG) and CoSport, Olympians, their families, and fans in the U.S. are paying for tickets with a markup of up to 80 percent.

Two key provisions exist between ROCOG and CoSport, which explain why:

1. CoSport and the Rio Organizing Committee for the Olympic Games contractually agreed to a fixed exchange rate of 2.35 BRL to 1 USD for the Olympic ticket prices.
2. The Rio 2016 handling charge guidelines that allow ATRs (Authorized Ticket Resellers) to charge up to 20% of the face value of the ticket as a handling fee, up to RS$120.

Let’s dive into how each of these provisions hurt consumers.

Fixed Exchange Rate:
This problem all started in 2014 when a contracted exchange rate was decided between the 2016 Rio Organizing Committee and CoSport. CoSport had the option to either contract at a fixed exchange rate (2.35 BRL to 1 USD), or to pay in Brazilian Reals. CoSport picked the fixed exchange rate. At the time, it must have seemed like a smart way for CoSport to hedge against a further strengthening of the Brazilian currency. The Brazilian economy was robust, and oil prices were high. But since then, Brazil’s economy has gone sideways, roiled largely by political turmoil.

(To be fair, in May 2015 with open ticket sales fast approaching, both CoSport and the United States Olympic Committee requested an adjustment to the exchange rate given its massive change . But their request was denied by the Rio 2016 Organizing Committee. Donovan Ferreti, ticket director for Rio2016 was unapologetic in his remarks at the time, stating simply that it was a final decision, period.)

As a result, the BRL stands at 3.51 to 1 today. But because of CoSport’s fixed exchange rate deal, Americans are paying at least 50 percent more for Olympics tickets. Care to guess where all of this extra money is going?

Contrary to popular belief, CoSport it not capturing all the surplus, but they are benefiting significantly from their sweetheart deal on rates. Most of the extra revenue is actually going straight to the Rio 2016 Organizing Committee. Rio 2016 claims that it has to protect itself against exchange-rate risk. This seems fair enough until you consider that it negotiated non-fixed rates with other countries like Austria and Germany, directly exposing them to that risk.

Good for Austria and Germany; not so good if you live in the United States.

When US residents spend an average of $200 each for 500,000 tickets -- that's an additional $50 million that Rio 2016 could receive from its lock on exchange rates alone.

Handling Charges:
Earlier I mentioned that Rio 2016 guidelines allow CoSport to collect up to 20 percent of a ticket's face value as a "handling charge," which is an addition to the $35 shipping charge it already receives. For a top event like the Athletics 4x100M relay final, a category B ticket will set you back $51.06 in handling fees alone.

To determine whether the Olympic ticket handling fee is justifiable, stop and ask: would it cost $40 more to handle my ticket for an athletics event ($51.06) vs. wrestling event ($5.96)? Of course not.

The real question should be: why is this even allowed by the Rio Organizing Committee?

It almost makes you long for those controversial TicketMaster fees.

So what can you do?

Two things:

1. Do not buy your tickets for the Olympic Games through CoSport. As of June 1st, you can purchase your tickets directly from the Rio 2016 website. By doing so, you will not only avoid bad foreign exchange rates and excessive handling fees, but you will also have the option of either eTicket delivery or will call once you get to the Olympic Games.
2. Let the Rio 2016 Organizing Committee for the Olympic Games know that you want your money back. I am sure that the President, Sidney Levy and the Director of Ticketing, Donovan Ferreti want to hear from you. Contact them here.

The only good news is that this price inflation may mean greater access to the best tickets here in the US. As various authorized ticket resellers around the world return unsold tickets to the 2016 Rio Organizing Committee, they are incentivized to make those tickets available to the US, UK and other countries with the highest markups. If you are willing to pay (and be patient), you could have greater access to tickets than fans in other countries.

A similar situation happened during ticket sales for the London 2012 Olympics. The difference back then between the agreed-upon exchange rate was closer to 20 percent. The far bigger problem with London 2012 was the late delivery of tickets and eight-hour lines at will call, thanks to CoSport. But the exchange rate issue has plagued the last two Summer Olympic Games and is likely to continue for the foreseeable future.

The path forward
The world should be taking a hard look right now at the International Olympic Committee for future Olympic games as ticketing issues have plagued the games for years. Important questions to ask include:

1. With the success of the London 2012 and the Rio 2016 ticketing sites and the emergence of eTicketing, what is the role of ATRs? Are they really necessary anymore?
2. What is the appropriate fee structure to compensate ATRs for the work that they perform? A flat per-ticket fee around $5/ticket should do it.
3. What is an appropriate way to structure contracts in the global economy that balances exchange rate risk against affordability for Olympians, their families, friends, and fans?
4. CoSport has been contracted by the United States Olympic Committee (USOC) through the Tokyo 2020 Summer Games in a way that is supposed to limit markup. Is there anything the USOC can do to help TeamUSA supporters?

Despite these challenges with ticketing for residents of the United States, the 2016 Olympic Summer Games in Rio de Janeiro will be an experience of a lifetime. I cannot wait to attend the games starting in August and see all the athletes from around the world compete. By following my advice, you still have time to plan your trip to Rio 2016 without getting ripped off.

About Ken Hanscom:
Ken Hanscom is the Chief Product Officer for InviteManager. InviteManager makes it easy for the world’s best companies create powerful experiences for their clients and measure ROI. His firm manages over 15 million tickets and invitations annually and currently oversees the sale and distribution of Olympic ticket allocations for the United States Olympic Committee, NBC Universal, and Cartan Tours, the re-seller of Olympics tickets for 74 countries around the globe. In addition to being the ultimate Olympics insider, Ken is a veteran of the Olympics and will be experiencing the power of Rio 2016 for at least 25 events, including the opening and closing ceremonies, six swimming finals, the 100M finals, the long jump finals and several other marquee events.