SBJ/Dec. 16-22, 2013/Finance

Lender signs with teams to finance broker purchases

A Connecticut-based lender has struck partnerships with three NHL teams and one NBA team to help finance broker purchases of season-ticket packages.

Entertainment Financial, a sister company of established secondary-ticket market player TicketNetwork, has positioned itself as a preferred ticketing financier of the four undisclosed teams in the new partnerships. In the deals, Entertainment Financial makes short-term loans to ticket brokers, with a minimum loan of $10,000 and an average loan size of about $80,000. Interest rates to the brokers are about 12 percent annually, far less than many credit cards and other financing structures, and teams pay a merchant fee of 2.5 percent, comparable to credit card merchant fees.

Teams will present Entertainment Financial loans as an option to brokers looking to buy or renew ticket packages. The loans allow teams to keep season-ticket sales up, lessen the risk of chargebacks, and help fill gaps in their seating manifests. Brokers gain another option to buy tickets without needing to pay all costs upfront.

The partnerships are another maturation point of the secondary ticket industry. A decade ago, most teams openly combated the secondary market. Now it has been embraced to the point where brokers are relied upon in many markets to help teams absorb the financial risk of shifting fan demand. Selling tickets directly to brokers, however, remains a delicate topic in terms of appearances and public relations, which is why Don Vaccaro, co-founder of both Entertainment Financial and TicketNetwork, has not been authorized to publicly disclose the identity of the teams with which he is working.

“We think this makes a lot of sense,” Vaccaro said. “Teams and event producers are now well aware of the important role brokers play in the overall ticketing landscape, and a product like this makes it easier for the brokers to manage the risk of their purchase.”

Entertainment Financial formed three years ago making loans for commercial development and residential housing rehabilitation projects, and now has expanded into funding sports and entertainment ticketing.

“This is another way to help accommodate some of your key accounts,” said an NHL team executive familiar with the broker loan program but not authorized to speak publicly about it because of the sensitivity of the matter. “There is definitely some utility here where you can offload some of your financial risk and not be chasing payments all year.”

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