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Leagues and Governing Bodies

Ticketing companies face pressure on credit policies

In the face of demand destruction for live sports and events, ticketing companies are trying to survive and emerge from the pandemic on sound financial footing. That often means offering customers only credits instead of refunds on previous purchases to protect cash flow and remain liquid.

 

StubHub, which was recently purchased from eBay by Viagogo for $4 billion, has drawn much attention as the largest player in the secondary market. The company has sponsorships with more than three dozen pro teams and a similar number among colleges.

During normal economic conditions, if an event were canceled, StubHub would refund ticket buyers their money immediately. Now, in most cases, the company is offering buyers a credit equal to 120% of the original purchase. StubHub is facing various lawsuits from consumers and ticket resellers over this change in policy. 

Kate Brinks, StubHub’s senior director for global communications and social media, said refunds are being issued only in states and jurisdictions where it is required by law. Brinks said StubHub was in discussions with teams, leagues and college athletic programs about refund and credit policies, but declined to offer specifics. 

One major league team executive told Sports Business Journal that he was largely sympathetic to StubHub’s credit policy because of the scale of event postponements and cancellations. The executive said the company needs a way to protect its businesses until certainty returns to the ticketing market. 

Amid criticism from fans, resellers and lawmakers on social media, some major ticketing companies continue to react by changing their refund policies. With the exception of StubHub, all of the major ticket companies declined to comment on their refund policies and how they might emerge from the aftermath of the pandemic. 

Some ticket companies such as TickPick continue to give refunds, and Vivid Seats is giving customers the option of a cash refund or a 120% credit. SeatGeek has continued to offer refunds on tickets to events that were canceled but not for postponed events.

Starting May 1, Live Nation, Ticketmaster’s parent company, will give fans two options for postponed events. Fans can request a refund that will be fulfilled within 30 days, or for a Live Nation-promoted event can receive a credit for 150% of the value of their ticket. If the customer takes no action, the ticket to the postponed event will be valid for the new date.

Ticketmaster released a letter from President Jared Smith that said 30,000 events in its system had already been impacted by the pandemic shutdown. Of those, Smith’s letter reads, “over 12,000 have already been canceled and we are actively issuing refunds to every one of the purchasers of those events. Roughly 5,000 events have already been rescheduled, and organizers have authorized us to issue refunds to consumers who request them.”

Smith said in the letter that as the remaining events, which include sports, concerts and Broadway shows, are canceled or land new dates, “we will work quickly with the event organizers to authorize refunds on those events as well.

“Let me reiterate: neither our clients, nor Ticketmaster, intend to withhold refunds on postponed shows.”

Just last week, Live Nation, Ticketmaster, StubHub, Major League Baseball and its teams were hit with a class-action lawsuit challenging refund policies in the sport. 

Chris Giles, who recently left his role as the Oakland Athletics COO to start a digital ticketing membership company, said that teams and all ticketing companies should focus on the consumer by offering refunds to engender goodwill during tough times, which will pay off when live sports eventually return. 

“I understand the … challenges that they are facing, but during these times, it’s not appropriate to be punishing consumers by not offering refunds, in my opinion,” Giles said. “The challenge with their current policy is they’re on the buyer side, not offering refunds, and on the seller side, they’re going and proactively charging credit cards on file to collect” the proceeds that originally went to the seller.

Given StubHub’s dominance in the secondary market, some ticket brokers are especially concerned about that company’s future. But Brinks said StubHub is not going bankrupt and will be here when live events return.

“I don’t even think it’s that they’re holding the cash, I think it’s probably due to the nature of the way their business operates,” said Dave Wakeman, who runs a ticketing consultancy. StubHub will process a sale by first collecting fees from both the seller and the buyer, then pay the seller for the original tickets that were offered. “They are probably revenue rich but cash poor, so they collect their fee from the broker or the seller and the buyer, then they pay the seller, they have to pay out to their employees. They have to pay out to the advertising that they’re doing, all of these things.”

Wakeman said many professional resellers and small midsize brokers run their business like StubHub but on a smaller scale by buying tickets, posting them on other ticket marketplaces and selling them, then reinvesting the cash into purchasing more tickets. 

“This has set off a chain reaction, where nobody has cash,” Wakeman said. “As long as the plates keep spinning, everybody’s cool but as soon as one hiccup in the system comes up, everything falls down because everybody has really built their business on floating from one thing to the next.”

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