Ticketmaster Rolls Out Fan-Friendly Exchange in Wake of Undercover Sting Investigation

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A September CBC News/Toronto Star investigation revealed that Ticketmaster was working in collaboration with ticket brokers, allowing a network of scalpers to acquire tickets in bulk (using proprietary Ticketmaster software) and then re-sell them for a profit; with Ticketmaster collecting fees on both sales. The undercover sting also determined that the ticketing giant was manipulating inventory (see: not releasing all tickets at the same time) to increase the perception of demand and then driving up the price of the remaining seats as actual inventory declined.

Ticketmaster denied the allegations (that have since spawned a lawsuit) saying they’re a “technology platform” that does “not own the tickets sold on our platform nor do we have any control over ticket pricing – either in the initial sale or the resale. In both cases, prices are set by the seller. We also do not determine when tickets are available for purchase or how they are allocated – those decisions are communicated to us by our client, the venue, after consultation with the event presenter.”

While certainly not an admission of guilt, the company has since decided to shutter 2 resale sites (Get Me In! and Seatwave) and to introduce a new fan-to-fan exchange that caps the resale price to the face value of the ticket. Following last week’s roll-out of the new ticket exchange, Managing Director of Ticketmaster UK Andrew Parsons said, “we know that fans are tired of seeing tickets being snapped up just to find them being resold for a profit on secondary websites, so we have taken action.”

Howie Long-Short: Ticketmaster’s creation of a fan-friendly exchange is long-overdue so the result is a win for fans, but Parsons’ statement comes off as a bit disingenuous. Sure, the company has done the right thing, but only after it was caught with its hand in the cookie jar and subsequently got blasted by the media. Remember, Ticketmaster has aggressively fought against bots and secondary market profiteers claiming they’re in violation of the company’s terms of use agreement.

I checked in with Mike Guiffre, SVP of Business Development at SuiteHop and a 20-year veteran of the ticketing industry (on both primary and secondary sides), to find out if he thought a fan-friendly exchange (see: capped resale price) could succeed in a competitive secondary market?

Mike: It is hard to imagine any site that caps resale will be successful long-term. What gets lost in the ecosystem of ticketing is how many resellers, not just brokers but season ticket holders or others who use resale to offset costs of upfront package purchases, take losses on much of what is resold. Without the ability to make a profit on a % of games or events they simply will forgo buying packages. We have seen this quite a bit on the team side which has left too much inventory available for sale game by game which has created too much supply.

Credit CBC News and Toronto Star for exposing questionable business practices, but understand the 2 media outlets didn’t require Sherlock Holmes’ assistance to crack this case; the Live Nation subsidiary (LYV) pitched their undercover reporters (media wasn’t supposed to be in attendance) on TradeDesk (their proprietary resale platform) during an industry conference. It also wasn’t like this racket was a secret, over 100 scalpers were operating on the platform.

Fan Marino: Footies Tech (founded by Ian Ayre, CEO of the new Nashville MLS franchise, formerly held same position with Liverpool FC) has partnered with TechFinancials (publicly traded on London Stock exchange under the symbol TECH) on a company that plans to use blockchain technology to make ticketing a “more secure and stable market”, while helping teams recoup revenue lost from secondary market sales. The platform will give sports organizations tighter control over ticketing (primary & secondary), a trend amongst the progressives in the industry.

I love blockchain for legitimizing each sale, but I’m not sure teams should take on secondary ticketing. As Mike noted, by restricting resale you’re limiting who is willing to buy upfront (see: only fans 100% going to the game); in turn, driving up the supply. With the U.S. sports fan conditioned to wait until the last minute to find a cheap seat, it’s possible (if not likely) teams will end up selling seats for less than it costs to buy a hotdog and a soda.

Speaking of resale sites, Eric Fisher of Sports Business Daily has reported that Stubhub partnered with an unidentified MLB to buy and distribute ticketing inventory. I asked Mike Guiffre for his thoughts on a team partnering with a ticket marketplace turned to broker?

Mike: That is interesting in concept because teams have been attempting the consolidation method with outside parties. It seems this gives them a more direct partnership (deal includes data-sharing component). However, this is also limiting the distribution of the individual tickets to one site instead of broadcasting their inventory on dozens if not hundreds of websites. It would be silly to think this won’t have any sort of negative effect on sales.

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Author: John Wall Street

At the intersection of sports & finance.

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