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Who Owns The Ticket? StubHub’s Lawsuit Brings Up Many Questions

StubHub’s watershed lawsuit against Ticketmaster and The Golden State Warriors illustrates a huge issue: Should one vendor be able to control both the primary and secondary markets?

Here’s the lawsuit filed by StubHub, and some of the accusations are big.

While ticket brokers have existed in the shadows for years, when a team gets hot, suddenly they become less “broker friendly” and start canceling seats of long-time season ticket holders who resale. Teams are currently sending out 2015-16 season ticket holder letters, specifically obligating that any resale by their season ticket holders occur through Ticketmaster’s secondary market as part of owning seats. This is exactly what StubHub is accusing The Golden State Warriors of doing, and seeking to stop. Part of StubHub’s claim is that the number of listings on its site to Golden State Warriors games have dropped 80% in the past year alone.

But this boils down to how someone defines “ownership” of a ticket.

With paperless ticketing, teams/venues messaging puts out that the consumer is restricted from doing whatever they want with a ticket, because it is a revocable license. However, it is not revocable if a person wants a refund from that ticket prior to being scanned through. That’s a one-sided claim, where the team wants to claim ownership of the ticket only to dictate the terms to the buyer, but doesn’t want to own it when that buyer requests a refund.

StubHub’s 35-page lawsuit charges that TM wants to “reap service fees and profits that they not earn in a competitive secondary ticket exchange environment.”

Some teams have attempted to transform their business into a “broker friendly” by controlling the secondary even on StubHub through resellers. So attempts have been made by franchises to control their product, but success is still hard to attain.

New York-based broker, 3Bros Tickets’ Binyomin King, said that the broker program installed by an MLB team in New York involved 10 brokers in 2014, but was removed as a program in 2015.

“The basic gist of the program is you give them $250K or more before the season and they distribute tickets throughout the season to all the members of this program,” King said. “They limit season ticket holder resellers to four tickets per account and they make sure you don’t crash the market and release them slowly, giving generally a 30% discount of the face value.”

King said that if a reseller priced the tickets too low on the secondary, the MLB team would call the broker, make them change it, and even take back seats day-of-game as a guarantee for the brokers to make money. King said that this controlled the quantity of tickets available on the market, as well as the pricing.

This shows that even with StubHub, teams are trying to control the secondary market but with limited success.

Thus, the question of ownership of a ticket remains.

Part of StubHub’s lawsuit charges that “to control and profit from the resale of Warriors tickets through such exchanges, the Warriors and Ticketmaster have cancelled or threatened to cancel fan ticket subscriptions to Warriors season and post-season tickets if fans choose to resell their Warriors tickets over a secondary ticketing exchange that competes with Ticketmaster’s, such as the one operated by Plaintiff StubHub.”

According to SeatGeek’s data, out of the 216 NBA games that were played during March, they held a specific resale line in terms of value on the secondary:

The Average Resale Price (ARP): $73.42
The Median Listing Price (MLP): $72.90
The Get-In Price (GIP): $22.98
The Average Inventory (INV): 1521

In the 10 games that The Golden State Warriors played at Oracle Arena, that line changed in terms of value on the secondary entirely, using SeatGeek’s data. The Warriors are almost double the ARP & GIP average of the entire NBA, with two-thirds less inventory sitting on the market at any one time:

The Average Resale Price (ARP): $137.16
The Median Listing Price (MLP): $109.17
The Get-In Price (GIP): $42.21
The Average Inventory (INV): 572

In defense of a franchise attempting to build revenue, does The Golden State Warriors not have the right, as well as the obligation, to protect their price point by limiting the amount of inventory available on the secondary market?

The GIP is the lowest price available on the secondary market that a broker is willing to take, yet several teams struggle to have a GIP higher than $11-$13 per game per night with massive amounts of inventory flooding the secondary market.

Limiting ticket inventory on the secondary is not a new tactic to long-time ticket brokers and this is why resellers typically don’t list the seats on a secondary market exchange, just the row and section. Because teams tend to seek out those tickets, canceling them, and hurting the third-party customer who purchased the ticket on the secondary market. Unless the team stinks, then the franchise has its sales staff contacting brokers consistently to move tickets.

Long-time ticket consultant Josh Klein sees the entire dichotomy between an event and attendee to be unique.

“As hosts of the basketball game, the Warriors as well as the arena operators must create a safe environment for their guests to enjoy the experience of attending an NBA game,” Klein said. “If someone exhibits bad behavior or does something illegal, the person may be asked to leave the arena and possibly face criminal charges. The event itself is under the control of the hosts. And if person is a Warriors season ticket holder, and the Warriors wish to revoke his/her rights to attend future games with rightful concern about what may or may not happen, that should be their privilege and priority.’

These ‘old hat’ tactics that TM and the Golden State Warriors have been accused of are nothing new to experienced resellers. Such as limiting paperless ticket distribution to the buyer until days before the event which eliminates resale possibilities. And in the end, StubHub’s lawsuit points to the 2012 deal by TM and Golden State to split service fees as well as ‘additional supra-competitive profits from their exclusive secondary ticket exchange relationship” and have “taken a series of interconnected, anti-competitive actions with the intended purpose, resulting effect, of excluding competing secondary ticket exchange providers such as StubHub.”

But how the attendee acquires that game ticket, in Josh Klein’s point of view, is an entirely different matter.

“The Warriors own the tickets to their events. Once the ticket is sold (or given away) by the Warriors, then there is a new owner,” he said. “The new owner can do what they want with the ticket. Now, if the new owner sells the ticket, and the second owner attends the game, causes mayhem, and is arrested, is the first owner at fault? Are the Warriors at fault for selling it to the first owner?”

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