SBJ/December 10-16, 2012/Leagues and Governing Bodies

StubHub, MLBAM renew deal

StubHub has signed a five-year contract extension with MLB Advanced Media to remain baseball’s official ticket resale marketplace, extending its controversial relationship with the sport but not without some changes.

The renewal, covering the 2013-17 seasons, completes more than a year of negotiations. The talks were often tense, and two teams have already opted out of the new contract.

Financial terms were not disclosed, but the parties will participate in a revenue-sharing agreement. The original StubHub-MLBAM pact was estimated to be worth nearly $60 million a year, when also including offline MLB team sponsorships, and the new deal will increase beyond that.

StubHub has been under heavy criticism from some teams for aggressively promoting available ticket listings far below primary market prices and sometimes under a dollar. The undercutting complaints from teams were among the key points of discussion during the extended, off-and-on contract negotiations.

StubHub and parent company eBay Inc. have fought stridently against any sort of price floors or artificial restraints. But StubHub will seek to address the undercutting complaints by moving toward an all-in pricing model in which MLB ticket listings beginning next year will show upfront the total cost to purchasers when also factoring in commissions, delivery and other fees. Minimum commissions and electronic delivery fees in the past have added at least $10.45 to every StubHub baseball ticket order.

Under the new structure, the minimum MLB ticket cost on StubHub in full will be $6, due largely to changes in how electronic delivery fees are calculated. But the days of the 50-cent ticket listings on StubHub are now over.

Some other ticketing companies, including Ticketmaster, have also sought to move toward greater transparency in showing all related fees earlier in the purchase process. StubHub has been testing its all-in pricing structure during the past year, and by the end of 2013 it will be universally applied on its site.

“We tried hard from the very beginning of this to address the concerns of the clubs,” said Chris Tsakalakis, StubHub CEO. “What we’ve ended up with is something that has a primary benefit to the buyer and seller and delivers a truly great consumer experience with no surprises, addresses the concerns of the clubs, and preserves an open marketplace.”

The new pact will also feature an “anchor tagging” in which listing pages for each MLB game will begin at $10. Users will then be able to move up and down in price from there as they choose. But unlike before, the cheapest ticket listings will no longer necessarily be the first thing they see. Teams additionally will gain greater latitude on whether they want to have StubHub participate in offline marketing, such as signage, within their ballparks.

“We tried to strike a deal that not only was fair on the economics, but also addressed a number of qualitative issues,” said Bob Bowman, MLB Advanced Media president and chief executive. “I think we were able to strike a good balance there and keep a safe, reliable secondary market with a trusted partner.”

In many ways, the new pact follows ground similar to the original deal signed in 2007. Buyers will see secondary ticketing links directly on MLB.com and official team pages, and in some markets fans will still be able to pick up StubHub orders at ballpark will-call windows. As before, MLBAM and individual teams will have access to the wealth of purchasing and consumer data generated through StubHub.

The new contract term also heavily contemplates the continued advent of mobile ticketing. Both MLBAM and StubHub have been among the earliest adopters of emerging technology such as Passbook, a feature on Apple’s latest mobile operating system to store tickets, boarding passes and similar materials.

Still, at least two MLB teams — the New York Yankees and Los Angeles Angels of Anaheim — have already opted out of the new contract with StubHub. The Yankees and Angels for years have been among the most strident and vocal critics of StubHub, arguing the official relationship with baseball is training consumers to look there first for tickets as opposed to the clubs’ box offices and is corroding season-ticket sales.

“We are not participating in the StubHub renewal,” said Randy Levine, Yankees president. “We’ll be making our own announcement in that area shortly. Stay tuned.”

Tickets to Yankees and Angels games will still be available on StubHub, even without direct integration from the clubs, and StubHub plans to set up ticket pickup locations near Yankee Stadium and Angel Stadium of Anaheim. The opting-out clubs will still be able to opt back in to the deal at a later date if they choose. The Boston Red Sox did just that in 2010 after initially refusing to participate in the first MLBAM-StubHub agreement.
Several other teams contacted said they were just briefed on the new terms late last week and were not yet ready to comment.

The original StubHub-MLBAM deal in 2007 arrived rather quickly as the secondary ticket market was beginning to explode in popularity and importance. The latest extension, conversely, happened after nearly two years of exhaustive study, most notably by the Commissioner’s Ticket Review Committee formed in 2010 by Bud Selig.
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