FIFA says ‘market rates’ explain World Cup prices. Economists say the market was rigged by design

FIFA launched its own resale marketplace and collects 30% on every ticket resold. Economists say it was designed to extract revenue at every stage.

On Monday, New York Gov. Kathy Hochul and Mayor Zohran Mamdani stood in Central Park to announce a free watch party for 50,000 New Yorkers in the park for the World Cup final. The State of New York is spending $6 million so that residents who cannot afford the most-watched sporting event on earth can at least watch it together on the Great Lawn. “In a moment where sports, experiences, and memories have grown increasingly unattainable for working people,” Mamdani said, “we will make this viewing party 100% free.”

Standing nearby was FIFA president Gianni Infantino, who last month defended the exorbitant costs of the world’s most prestigious sporting event and blamed them on “market rates” that apply in the U.S.

“We have to look at the market—we are in the market in which entertainment is the most developed in the world, so we have to apply market rates,” Infantino said at the Milken conference.

His comments mirror what some economists have pointed to as driving the World Cup’s pricing crisis, saying it’s a market deliberately designed—by FIFA, with full knowledge of the consequences—to generate revenue at every stage of a fan’s increasingly expensive journey to a seat. By offering the watch party to soccer fans who otherwise should be able to attend in person at a stadium just 20 minutes away, these economists say the governments of New York City and state are patching a hole that FIFA deliberately designed to enlarge.

Those market rates have produced numbers without precedent in World Cup history. Face-value tickets to the July 19 final at MetLife Stadium started at $2,030 and ran to $6,730 for Category 1 seats—but under FIFA’s dynamic pricing model, they didn’t stay there. By early May, FIFA had tripled its best available final tickets to $32,970, up from a previous high of $10,990, on the same day members of Congress pressed the organization for transparency on its pricing. On FIFA’s own resale exchange, final tickets were listed at about $9,000—each transaction generating 30% in combined fees that flow back to FIFA. Four years ago in Qatar, the most expensive seat at the final cost roughly $1,600. Football Supporters Europe estimates that a fan following a single team from its opening match through the final would spend a minimum of $6,900 on tickets alone.

“We as customers and fans should look at those fees and be annoyed by them, the same way, potentially even more so, than we are annoyed by very high initial ticket prices,” said Judd Kessler, a professor of business economics and public policy at the Wharton School of the University of Pennsylvania and author of the new book Lucky by Design, which looks at how market designs force a hidden market that benefits only a select few at the cost of the many. “When you have limited supply and lots of demand, the market can generate very, very high prices for the tickets.”

What is a hidden market?

When a seller prices tickets below what the market would bear, the surplus doesn’t disappear, but rather, moves into queues, bots, and resale platforms. Tickets end up costing the same or more. That means when Bruce Springsteen, for example, prices tickets at $60 and they get bought by bots and resold at $4,000, that money goes straight into the speculators’ pockets.

“You kind of would prefer that the money go to the Boss, because you know he at least is performing at the show, as opposed to the speculators who buy the ticket and add nothing to the production,” Kessler said.

For most of its history, FIFA ran a relatively conventional version of this system: face-value tickets, price caps on resale, fees of 10% or less. But this year, FIFA abandoned price caps for matches in the United States and Canada, defending the decision by claiming that restrictions would drive sellers to third-party platforms like StubHub. In their place, FIFA launched its own official resale marketplace—and charged both buyers and sellers a 15% fee, effectively collecting $30 for every $100 in resale transactions on its platform.

“Maybe they don’t raise prices because they’re worried about the backlash,” Kessler told Fortune, “and being able to make 30% on the secondary market allows them to collect without as much backlash.” The optics of a $700 ticket feel different from a $500 ticket plus a $200 fee collected at the back end.

Mexico, where ticket resale laws are stricter and the government lobbied for consumer protections, got a different deal: FIFA agreed to limit resale prices to face value for matches held there. But for American fans, there’s a 30% fee and no cap.

What about secondary markets?

In late May, the number of tickets available on FIFA’s official portal suddenly dropped by 44,000 to under 30,000. The inventory then reappeared on StubHub and SeatGeek at prices well below FIFA’s official site. Florian Ederer, a professor of economics at Boston University’s Questrom School of Business, noticed the seat maps contained large, contiguous blocks of seats that had suddenly appeared on the secondary market. This, Ederer told Newsweek, is a pattern inconsistent with ordinary fan or commercial scalper behavior, which typically produces scattered pairs and small clusters.

His theorized to the publication that FIFA was dumping inventory in bulk onto secondary markets at below-official prices, allowing it to clear unsold tickets while keeping official prices high, thereby avoiding the refund demands and consumer-protection liability that an official price cut would trigger. Both SeatGeek and StubHub denied any partnership or distribution agreement with FIFA. FIFA has not commented about this publicly, nor has it responded to Fortune’s request for comment.

Victor Matheson, a professor of economics at the College of the Holy Cross, predicted exactly this. “I wouldn’t be surprised if FIFA tries to dump any of its excess inventory kind of secretly by disguising them as secondary ticket markets,” he told Fortune. “Just because you see them on the secondary market does not mean that’s actually the secondary market. Lots of venues place tickets they still have in their possession on those secondary markets.” In many cases, he said, “those secondary markets literally are the team in the first place.”

The real cost of fees

Kessler estimates platforms take between 25% and 35% of secondary market sales, split between buyer and seller fees. “That’s also why I worry that one of the reasons we haven’t seen innovation in hidden markets is because a lot of the players in these markets have an incentive to allow transactions on the secondary market, because they get to take a big cut of them.”

FIFA’s 30% fee puts it in the company of the platforms it once positioned itself against, but with the added caveat that it also controls the primary market. FIFA sets the rules of access and operates the official resale exchange. This phenomenon, which could control the box office and resale platforms, led the New York and New Jersey attorneys general to subpoena FIFA in late May.

The attorneys general have framed the investigation around two tracks: the alleged seat-location misrepresentation, and whether FIFA’s phased release schedule was designed to artificially inflate prices. “The high ticket prices actually didn’t have anything to do with the legal exposure,” said Matheson, who bought Category 1 tickets himself. “It’s that they are charging a high price for something and delivering something else.” Category 1 buyers were shown maps indicating premium seats near the 50-yard line. Those seats went to VIP packages. “FIFA made themselves the least sympathetic defendant in fraud history. If they were selling $25 tickets and screwing you over, Letitia James is not going to bat for you.”

A free lawn watch party

Mamdani and Hochul, who spent the morning alongside Infantino when announcing the watch party, have continued to point out the discrepancy in those who are some teams’ biggest fans and those who can afford to watch their teams play. Mamdani negotiated 1,000 affordable tickets from FIFA at $50 each, with free round-trip transportation, for New Yorkers who won a lottery. He announced a $6 million free watch party for 50,000 more and fan fests across all five boroughs.

What he did not say and could not say, at least while standing next to the FIFA president, is that the $6 million the state is spending to provide a free alternative is in effect a public subsidy for a pricing structure that FIFA designed to extract maximum revenue from a captive market.

For Kessler, the problem is structural: As long as secondary market platforms take 30% of transactions and primary sellers benefit from the opacity that gap creates, there is no incentive to fix the system. “I would like to see a world where artists, sports teams, and FIFA could sell tickets to real fans for reasonable prices, and those tickets would not then be resold at slightly higher prices. But that requires changes to the hidden market.”

This story was originally featured on Fortune.com