09-25-2007, 02:57 AM
Just ran across this article again. I know the article is three months old but still interesting for those who may not have read it.
09-25-2007, 02:59 AM
New York Times
By BRAD STONE
Published: June 14, 2007
When the N.B.A. finals resume today in Cleveland, Dan Gilbert, the owner of the Cavaliers, will be showing off the youngest, flashiest asset in his portfolio.
No, not LeBron James, whose team may be headed to an ignominious sweep by the San Antonio Spurs. Last year, Mr. Gilbert, the founder of an online mortgage company, acquired Flash Seats, a small ticketing company with offices in Cleveland and San Jose, Calif.
The company gives Cavaliers season-ticket holders the option to forgo paper tickets and simply swipe their credit card or driver’s license when they enter the arena. If they want to resell their seats, instead of using a ticket broker or a Web site like eBay, they must go to the Flash Seats site at cavs.flashseats.com. There, they can set any price for their seats or view auction-style bids from potential buyers, with the company taking a 20 percent fee from the buyer.
Flash Seats allows sports teams to exert total control over who fills their seats, and to fight back against sites like Craigslist, eBay, TicketsNow and StubHub, which have transformed the shady world of ticket scalping into a $3-billion-a-year business.
Those sites have pushed ticket reselling far beyond the reach of professional sports teams, entertainment arenas and the local police as they try to enforce state antiscalping laws. Now teams like the Cavaliers have conceded the inevitability of ticket exchanges and are creating their own — and, in some cases, taking a lucrative piece of the pie.
They argue that by controlling the resale market for their tickets, they can cut down on counterfeiting and the outrageously high prices often demanded by scalpers. Cavaliers executives also say that with Flash Seats, they have the additional benefit of knowing exactly who is sitting in every seat — and can market to them in the future.
The Cavaliers tried out Flash Seats this year with 1,500 season-ticket holders. During the playoffs, half of the season-ticket holders — a quarter of the arena — have opted for virtual seats.
“You don’t have to worry about losing your ticket, mailing it to a friend or waiting in long lines before the game,” Mr. Gilbert said. “This is the future. You can see the writing on the wall.”
A number of other teams are taking similar steps. Two years ago, the Internet unit of Major League Baseball purchased Tickets.com, in part to give it a stake in the valuable ticket aftermarket. Today on sites like Double Play Ticket Window, a service of the San Francisco Giants, season-ticket holders can sell their seats and buyers can go shopping for games that might be sold out.
The Giants do not allow sellers to list their seats below a minimum price, in order to prevent undercutting their own box office. They also take a 10 percent fee from the buyer.
“We don’t want to teach our fans to go to StubHub. We thought we could make it safer and more reliable,” said Bob Bowman, chief executive of professional baseball’s Internet unit.
Fifty professional sports teams have reached similar deals with the ticketing giant Ticketmaster, a division of IAC/Interactive Corporation.
Instead of asking sellers to mail tickets to buyers, Ticketmaster cancels the bar codes on the old tickets and can e-mail new tickets to a buyer, who prints them out. The teams that have partnered with Ticketmaster each set different rules for their resale exchanges and divide the fees differently.
Some take a more hard-line approach. The Denver Broncos signed a deal with Ticketmaster last year to run their ticket resale site, but the team does not allow sellers to charge more than the initial price of the seat. “It’s an ethical issue,” said Kirk Dyer, the executive director of ticket operations for the Broncos. “We’d be scalping our own tickets.”
Like other teams including the New York Yankees and New England Patriots, the Broncos insist that their ticket holders use only the team’s own ticket exchange. Last month, the team sent a stridently worded letter to season-ticket owners that warned, “Ticket holders reselling their tickets via unauthorized outlets are subject to revocation of their season-ticket accounts.”
The Patriots have gone one step further. Last year, the team revoked the tickets of 52 season-ticket holders who sold their seats on StubHub.
Then it sued StubHub in Massachusetts state court, arguing that it had encouraged fans to flout the state’s antiscalping law and the team’s own contract with ticket holders. StubHub countersued, and the case is pending.
Though 10 states still have antiscalping laws, legislators in many of them have proposed bills to relax or eliminate those provisions. New York, Illinois, Florida and Minnesota have recently done so, citing the open markets on the Internet, which have largely replaced the scalper lurking outside the stadium as a source for hard-to-get tickets.
StubHub, based in San Francisco, has lobbied for many of the changes to state laws. But its executives frown on attempts by teams like the Patriots and Broncos to force fans to use their own ticket exchanges.
“It’s like Ford telling the buyers of their cars that they can only sell them at a Ford dealership,” said Chris Tsakalakis, the president of StubHub and general manager of eBay Tickets. “It’s not part of a free and open marketplace.”
StubHub itself has tried to exploit sports team interest in capitalizing on the secondary ticket market. It has signed deals with a dozen teams, including the Chicago Bears, Indianapolis Colts and New Jersey Nets, to be their official (though not exclusive) ticket resale partner. StubHub is given a link on the team Web sites in exchange for buying ads in their stadiums or arenas.
StubHub executives are not fans of the Cavaliers’ new ticketing system. Mr. Tsakalakis says that when Flash Seats is used for the team’s entire arena, fans will have only one place to sell their tickets, which will presumably drive down their value.
That concern appears unfounded, at least for now. By the end of last week, more than 500 tickets were posted on the Cavaliers Web site for Game 3 of the N.B.A. finals against the San Antonio Spurs. Around 150 tickets to the game were for sale on StubHub, and the prices were comparable.
Sam Gerace, the chief executive of Flash Seats, said that he planned to start marketing the technology to other teams after the season ends and imagines that all the seats in the Cavaliers arena will be sold through virtual tickets within a few years. “Because the system is better for the fans, not because the team forces the issue, or wants to,” he said.
Current users of the Cavaliers’ Flash Seats system seem to like it.
Phillip Grimm, a season-ticket holder from Reno, Nev., said that he used to sell tickets he could not use through ticket brokers who “treated me like a second-class citizen.” This year, he has sold $8,000 worth of Cavaliers tickets on Flash Seats and raves about the service. “It’s been fantastic,” he said. “I’m not one looking to make a big profit. I just want to get my money out of it.”
09-25-2007, 12:24 PM
Oh yeah...this is what Jens was talking about on another thread!