SBJ/August 28 - September 3, 2006/This Weeks News

Battle heats up in ticket resales

Even amid uncertain on-field prospects, the start of Philadelphia Eagles single-game ticket sales each June is typically a joyous event in this football-mad market.

Not so much this year.

Tickets for the entire Eagles season, not surprisingly, sold out within hours. The club on its Web site then directed fans to RazorGator, the California-based entity with which it holds a multiyear sponsorship designating RazorGator as the Eagles’ official secondary ticketing marketplace.

The deal, signed last summer after the club’s 2005 ticket sales were completed, is not unlike the dozens of agreements that preceded it among the four major U.S. sports leagues. But it created howls of protest from fans who couldn’t square the new relationship with standard team and stadium antiscalping policies. It also generated several days of negative local media coverage and even prompted accusations of the Eagles improperly funneling tickets out of the primary market to RazorGator.

“We have a very aggressive media market here, and, unfortunately, you sort of have to take things like this,” said Eagles President Joe Banner. “And it’s important to note that I said no to doing this for over a year. But once the initial furor died down, I became convinced we had done the right thing. ... This is unquestionably going to be part of all ticketing going forward.”

The Eagles’ deal with RazorGator didn’t win a
lot of cheers at first in Philly.
The Eagles’ bumpy entry into the world of secondary ticketing typifies the maturation of the market. Still something of a cottage industry at this time last year — if a business collectively valued at more than $10 billion a year could carry that label — secondary ticketing is mushrooming into a mainstream force.

About 40 teams across the four major leagues a year ago held secondary ticketing deals with companies such as Ticketmaster, StubHub, RazorGator, TicketsNow.com and Tickets.com. That number now exceeds 60, with major colleges and teams from smaller outfits such as the WNBA and Arena Football League padding that total.

“It’s extremely competitive now,” said Jeff Berman, TicketsNow.com vice president of business development. “There’s really now very few teams left. Before, we needed to evangelize a lot and really sell what we’re doing as viable. That pitch isn’t really needed now.”

The competition, in turn, has manifested itself within the industry in two key ways. First, the main players have created sub-niches for themselves as a means of market differentiation. RazorGator plays heavily in the corporate travel space, StubHub works primarily through fan-to-fan connections and advertises heavily in mass media, TicketsNow.com takes sales listings only through prescreened, licensed brokers, and Ticketmaster, unlike its competitors, eschews team sponsorships and works in a more traditional vendor capacity, seeking to more closely align its primary and secondary ticketing operations.

“Everyone is going after the same resale market ... so you’re naturally seeing divergence,” said Jeff Fluhr, chief executive for StubHub, whose sales volume has more than doubled over the last two years and now exceeds 300,000 tickets a month. The sum is about equal to what Ticketmaster’s TeamExchange clients collectively sold in all of 2005.

Amid that differentiation, there is still market blurring. Ticketmaster, whose total sales volume reached 119 million tickets last year, only sells tickets on the secondary market for its own TeamExchange clients. Each of its key competitors, conversely, takes sales listings for nearly every sporting event, creating a far larger and more diverse ticket inventory. The team sponsorships for those companies simply serve as additional marketing vehicles that seek to hasten connections to fans.

The second key manifestation of the competition arrives in the political arena. Ticketmaster has become more aggressive pursuing legislation in various states that would improve its market position against the online resellers, as well as Web sites such as eBay and craigslist.org.

For example, Ticketmaster earlier this year supported now-dormant legislation proposed in California that would have made it a crime to resell tickets at a profit if a person already holds more than the permitted limit of seats to the particular event.

Ticketmaster traditionally has taken a dim view of ticket brokers, and company executives insist their secondary ticket services offer the only truly guaranteed source of seats to sold-out events.

“Any time there’s issues of ticket resale and fraud, you’ll find a highlighting of the differences in our [industry’s] various business models,” said Sean Moriarty, Ticketmaster president and chief operating officer. “I think that’s to our benefit.”

Ticketmaster’s competitors in nearly all instances provide full refunds on tickets not honored at the gates. But one thing all the players can agree on is that public relations flaps such as what happened in Philadelphia do nobody within the industry any good.

“You’re definitely going to have more of these debates,” said Steve Happel, an economist at Arizona State University who has studied the secondary ticket market extensively. “[In] all of the markets out there, with perhaps the exception of human organs, there is no more concern about fairness and equity than there is for tickets.”

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