Archive for Tuesday, June 29, 2010

Online ticket exchange helps schools limit fraud

June 29, 2010, 8:00 a.m. Updated June 29, 2010, 2:15 p.m.

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College sports fans searching for a coveted ticket to a sold-out game can bypass the shady guys hanging outside the stadiums and arenas. Just try your favorite school's website. Or go straight to the NCAA.

A scalping scheme at the Kansas University has exposed the seamy side of the secondary ticket business, with five now-former athletic department employees and a consultant accused of keeping the profits from selling as much as $3 million worth of basketball and football tickets to brokers. A federal grand jury is reviewing the case.

The KU case is a rare black eye for an industry that has grown in both size but also legitimacy.

A 2008 Forrester Research report values the secondary ticket market for live entertainment — pro and college sports plus concerts — at $4.5 billion annually, or roughly 20 percent of the primary ticket business.

Other estimates peg the annual secondary market as high as $10 billion. Industry leaders say as many as 30 percent of concert and sporting event tickets wind up on the secondary market.

The industry has its own lobbying group, the National Association of Ticket Brokers. The trade association and other industry groups hold annual summits at Las Vegas casinos and the Waldorf Astoria hotel in New York. And its political influence has led to an across-the-board decline of state and local anti-scalping laws, as well as greater cultural acceptance of ticket resales.

The NCAA in 2007 enlisted the Razorgator online exchange service as its "official ticket and hospitality package provider" for the men's Final Four. The deal has since been extended to include the women's Final Four, the College World Series, Frozen Four hockey tournament and the remaining four rounds of March Madness.

That means ticket sellers and buyers — fans or professional brokers playing the market — can ply their trade online under the NCAA's seal of approval. Alumni whose school loses in the semifinals can pawn their championship game tickets at the Razorgator table inside the stadium.

Need tickets and a hotel room for the 2011 Final Four in Houston? A shade under $1,900 will get you an upper-level seat in Reliant Stadium, four nights at a nearby Marriott, a souvenir program and admission to a pre-game hospitality tent with food buffets and an open bar.

Greg Shaheen, an NCAA senior vice president, said the association was tired of watching secondary market ticket sellers profit off the NCAA's name and reputation. He said the partnership with Razorgator also allows the NCAA to limit ticket fraud.

"It acknowledges reality," Shaheen said. "Our goal is to provide a legitimate, safe, guaranteed means by which those transactions occur."

Razorgator charges sellers and buyers an administrative fee. Shaheen declined to disclose the specifics of the NCAA's multiyear contract with the company.

Individual schools are also increasingly turning to Web-driven ticket exchanges to complement box office sales.

The KU athletic department launched its own online Ticket Marketplace where Williams Fund members can post their season tickets online for resale.

In order to purchase tickets on the marketplace, an individual must register with the athletic department and be a donating member of the Williams Fund or purchase a $50 membership.

Ticket reseller StubHub, a division of eBay, counts 13 schools among its officials partners, including Alabama, Louisville, Purdue, Stanford, USC and Wisconsin. Other schools team with industry giant Ticketmaster or provide their own programs, which sometimes are restricted to donors and season-ticket holders.

At the StubHub school sites, ticket holders can sell their extras or average Joes can buy the finest seats in the house. So Trojan fans eager to watch USC face Virginia in the Sept. 11 home opener can buy a seat inside the Los Angeles Coliseum for just $39. High-rollers looking for a 50-yard line perch for the late November game against Notre Dame can expect to pay $3,000.

StubHub also works with pro teams such as the Chicago Bears and Washington Wizards and has an exclusive deal with Major League Baseball. Ticketmaster is the NFL's official ticket exchange partner.

"Scalping is no longer a guy in a van or behind a hotel," said Mark Nagel, a University of South Carolina associate professor of sport and entertainment management. "It has become a 'legit' business."

Brendan Ross, Razorgator's president and chief executive officer, and other industry types preach a free enterprise mantra that considers sports and concert tickets a commodity, not a birthright.

Since season ticket holders assume a risk "conferred by the team" and "give their money as an obligation to the team before (they) know what the product is," there is no reason they should be prohibited from reselling those tickets, Ross said.

Internet sales also allow buyers and sellers to be exempt from anti-scalping laws in the few remaining states and localities where selling tickets at marked-up prices remains illegal.

Online secondary ticket brokers take a hands-off approach when it comes to the source of the tickets sold on their sites. In the Kansas case, school employees sold complimentary tickets and others intended for donors to ticket brokers in suburban Kansas City and Norman, Okla. An independent review paid for by the school did not determine how those tickets were sold once they were in the brokers' hands.

"We don't know how the tickets are obtained (by) our sellers, and we don't ask," said Chris Tsakalakis, president of StubHub and general manager of eBay's ticketing division. "The onus is on the seller to make sure they follow the law. The assumption here (at eBay) is that people are basically good."

Tsakalakis said that the Kansas incident shouldn't tarnish the reputation of ticket brokers, just as the misdeeds of crooked car dealer or a rogue government official wouldn't mean their entire professions were tainted.

Las Vegas ticket broker Ken Solky agrees. Yet he said the pressures on campus ticket managers to generate revenue for their schools could lead some to cut corners.

"You're in a position to (ensure) that there are butts in a seat," said Solky, president of his industry's national association. "If I'm doing my job right, and I'm in the athletics department, I'm going to do whatever I can to get fans into the arena."

Comments

rgh 5 years, 2 months ago

And if you want to exchange or purchase tickets, you might as well hire a scalper. It's the exact same thing (I know, I've been on the site). Friends will still give away their prime seats or sell them at face value to neighbors but some still ask for an arm and a leg through the on-line service. The only difference is that KU athletics gets a portion of the money instead of the scalpers getting all the profits.

bangaranggerg 5 years, 2 months ago

If Kansas Athletics wants to make more money on the resale of tickets in the secondary market the tickets would have to actually reach the primary market. Let's work on that first, huh, KU Ticket Office?

fan4kufootball 5 years, 2 months ago

I am a WEF member and I have purchased tickets from the KU ticket exchange program and was very dissappointed that I had to pay a fee on top of what the tickets where listed for. What's up with that?

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