SBJ/May 16-22, 2011/Facilities

Deal spotlights struggle for control of ticketing

An agreement that the NCAA signed with Veritix to provide primary ticketing and other services for its championship events has brought to the surface a conflict over who controls ticketing rights at sports facilities.

The three-year exclusive deal, which covers all NCAA championships, was announced in June and took effect for the 2010-11 season. Almost immediately, it drew protests from ticketing industry leader Ticketmaster, whose executives complained that the Veritix deal would violate Ticketmaster’s existing agreements with facilities hosting NCAA championship events, according to several arena managers with knowledge of the dispute.

VERITIX
When venues sign long-term ticket deals, they come with equipment like the handheld units used for scanning tickets, said Ed Rubinstein, CEO of Arena Network, a group of about 40 facilities that work together to book events. If a venue must use Veritix, “Ticketmaster has to reprogram its scanners. It costs money to do that and you need their permission,” Rubinstein said.

Buildings “don’t want to change the equipment because … it could cause utter chaos,” he said.

It took several months of negotiations before the NCAA and Ticketmaster reached a compromise earlier this year for 2011-12, confirmed Jared Smith, Ticket-master’s
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Veritix worked with Ticketmaster to ensure paperless ticket operations ran smoothly at this year’s NCAA Final Four in Houston.
chief operating officer.

Veritix was not involved in those discussions, said Veritix President Jeff Kline.

For the 2011-12 season, Ticketmaster facilities will be able to use their regular ticketing systems to sell NCAA championship event tickets after that inventory becomes available to the public. Veritix retains the exclusive right to sell advance tickets to those events and will continue to use its Flash Seats paperless ticketing technology to issue tickets for courtside student seating for the Final Four. Veritix has done that for the past three Final Fours, and plans to expand Flash Seats for student tickets at this year’s College World Series in June.

The NCAA and Ticketmaster have not discussed agreements beyond next season, Smith said. The 2012-13 season is the final year of the NCAA-Veritix deal.

Greg Shaheen, the NCAA’s executive vice president of championships and alliances, and Josh Logan, the NCAA’s director of ticket operations, refused to comment for this story. An NCAA spokesman said the matter has been resolved.

Ticketmaster has never had an exclusive partnership with the NCAA, but the two have always done business together because the majority of buildings where NCAA events are held are Ticketmaster clients.

Kline, who is a former Ticketmaster executive, said, “In years past, when there were regional [basketball] events in non-Ticketmaster buildings, those facilities had to sign a waiver to use the NCAA’s ticketing system. The NCAA told those buildings, ‘We have the system you have to use.’

“With Veritix technology, the NCAA can sell tickets on our system and transfer those bar codes to Ticketmaster, but you have to have cooperation with the venue and Ticketmaster.”

Smith said Ticketmaster was pleased with the outcome. “We worked side by side with our client partners to protect and reinforce the venue’s right to the ticket,” he said.

Nowhere has the NCAA’s deal with Veritix had more of an effect than in Omaha, where the College World Series moves to a new stadium, TD Ameritrade Park, in June.

The ballpark signed its original ticketing deal with Ticketmaster in May 2010. Then the Veritix deal was signed, and the NCAA told stadium officials they had to use Veritix to process season tickets for the College World Series, said Roger Dixon, president and CEO of the Metropolitan Entertainment and Convention Authority, the park’s operator. The authority then informed Ticketmaster and crafted a special “carve-out” in the ticketing contract for Veritix.

Veritix is handling season-ticket sales for the College World Series. When the tournament begins June 18, day-of-game sales will be sold through Ticketmaster’s system at the ballpark’s box office. About 1,000 tickets are available for day-of-game sales, Dixon said.

Ticketing carve-outs are not unusual. For those buildings without such clauses, though, Rubinstein had discussions with the NCAA about reaching an accommodation with Ticketmaster, after some Arena Network members had concerns about having to break their deals with Ticketmaster to get NCAA championships.

For Veritix, a firm established in 2007, the opportunity “remains large” as the NCAA’s exclusive ticketing provider despite the accommodation made for Ticketmaster clients, Kline said. Veritix has deals with six major league sports facilities and three colleges in addition to its NCAA deal.

In the big picture, the NCAA did the deal with Veritix to gain control of ticketing for its events, said Doug Thornton, senior vice president of stadiums for SMG, the company that operates Reliant Stadium and 2012 Final Four site the Louisiana Superdome in New Orleans. Paperless ticketing for students cuts down on their ability to resell those tickets on the secondary market, Thornton said.

In Houston, Ticketmaster and Veritix officials cooperated to make sure the paperless ticket operation for the Final Four ran smoothly, Thornton said, and he does not anticipate any problems next year at the Superdome with transfer of information between the two ticket vendors.

“The NCAA is trying to control their environment, and the ticket is a precious commodity,” he said.
But in doing so, the NCAA went down the wrong path, other facility managers said.

“There are many reasons why exclusive arrangements are struck,” said Tim Ryan, president and CEO of Honda Center in Anaheim, host site for a 2011 men’s basketball regional. “Ticketing and food and beverage companies invest millions of dollars into infrastructure is just one example. The day that we start breaking down these exclusive relationships with key arena partners for one-time events would not be a positive precedent for many reasons on many levels.”
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