SBJ/Nov. 1, 2010/This Week's Issue

NBA clubs may need OK for ticketing deals

The NBA is discussing a plan that would require league approval of its teams’ deals with outside ticketing companies, a departure from its current hands-off approach, as the league looks to maximize the value of future ticketing agreements.

NBA teams currently are free to strike their own local ticketing deals in the primary and secondary markets, but the league believes that a more centralized structure could help give its teams increased scale and traffic to drive the value of new deals.

The issue was an agenda item during the recent NBA board of governors meeting in New York, but no formal action was taken nor timetable set. The league is expected to ask teams for their primary ticketing sales contracts as it begins gathering data on their various agreements.

“It is about increasing the scale and leverage,” said NBA Deputy Commissioner Adam Silver. “We are exploring the issue and we want to be able to give teams other options.”

The NBA has no leaguewide deal with an outside primary ticketing vendor and is in renewal talks with Ticketmaster for its secondary ticketing partnership.

While the league oversees much of its
teams’ business practices, it never has
had full control over specific team
ticketing deals.

NBA teams are free to make their own outside ticketing deals, and the agreements typically include a lump-sum fee paid by the ticket vendor for rights to sell the team’s inventory. Team sponsorships can also be packaged within the deals.

Teams increasingly are running their secondary ticketing operations on their websites through outside vendors. These deals typically include an up-front marketing fee, but also can include a data-share agreement with the teams.

“A bunch of teams have [their own] captive secondary exchanges, but most don’t attract the traffic or sales of places like StubHub, so it becomes more of a value-add for fans,” said Jesse Lawrence, chief executive officer of TiqIQ, which aggregates ticket listings of various sports sites.

Exerting control over which outside ticketing vendors teams do business with would not only improve financial terms of a total deal but could also mirror a more centralized model the NFL is adopting.

The NFL is in its third year of a centralized secondary ticketing program called NFL Ticket Exchange provided by Ticketmaster. As NFL team deals expire, they are required to participate in the NFL Ticket Exchange, and the league expects to have 31 of its 32 teams exclusively in the program by 2012. The Ticket Exchange deal means that fans buying a ticket on the secondary market do so through the Ticket Exchange site, allowing the league to package the deal to Ticketmaster on a large scale while also collecting data on fans using the exchange.

“From a fan standpoint, it allows you to provide one-stop shopping, and you can look at improvements through new technology,” said Neil Glat, NFL senior vice president for corporate development. “And while we haven’t really had a lot of issues, you want to be able to authenticate tickets. We wanted to play a more active role there, and the [Ticket Exchange] business has been growing for us at 30 percent a year.”

Major League Baseball, through its Advanced Media company, has a league-level secondary ticketing deal with StubHub. The company serves as the official online ticket reseller of and MLB’s 30 clubs.

The NBA oversees much of its teams’ business practices but never has had full control over specific team ticketing deals.

“We are a ‘state’s rights’ league and we are not looking into a team’s business, but we are trying to support our teams and help them,” Silver said.

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