From the sounds of it, Ticketmaster is losing it’s grip on the ticket sale/resale marketplace. The Plain Dealer had an interesting article today regarding the ongoing legal dispute between the Cavaliers and Ticketmaster, who owns exclusive rights to all Cavs single-game ticket sales until 2010 (they paid 4.3 million dollars to the Cavs to obtain those rights). It’s a safe bet, regardless of the outcome of the suit, that the relationship will not be one either party wishes to renew, and Damian Guevera of the Cleveland Plains Dealer detailed the main point of contention between the Cavs and Ticketmaster:
The Cavs and sister company Flash Seats are being sued in U.S. District Court in Cleveland by Ticketmaster, the leader of the ticket-sales industry. Ticketmaster says the Cavs violated their contract with the company when the basketball team established Flash Seats as a way for people to buy, sell or swap tickets. “For each ticket sold through Flash Seats that otherwise would have been sold through Ticketmaster, Ticketmaster loses revenue,” lawyer Robert Platt said in the lawsuit.
The central issue in the case is whether an unsold ticket in an area designated for season tickets should be classified as a season ticket or a single-game ticket.
If it’s a season ticket, the Cavs control the rights to it, but Ticketmaster has the rights to selling single-game tickets.
About 60 percent of The Q’s 20,500 seats are set aside for season tickets. Ticketmaster contends that for games in which season tickets go unsold, the Cavs sell those seats directly through Flash Seats, instead of releasing the tickets into a pool that would be sold through Ticketmaster.
The Cavs and Flash Seats, both owned by Dan Gilbert, countersued Ticketmaster, saying the corporate giant is trying to squash Flash Seats’ expansion in the competitive ticket-vending industry. They say the Flash Seats Web site is simply a convenient way for season ticket holders to get rid of ducats they can’t use, rather than scalp them, sell them on eBay or let them go to waste.
I’m certainly not a legal expert, but to me, it sounds like the Cavs are in the wrong. If I read correctly, they are taking unsold season tickets, which to my understanding means seats that nobody has purchased even one time, and they’re selling them off on an individual game basis simply because the seats are in a section which they had intended to save for season ticket purchases. If that’s the case, what’s to prevent them from designating 80% of the arena as “season ticket seating”. I agree with Ticketmaster that those seats should be dumped back into the pool that they would be selling. Now as a consumer, if the prices stay largely the same, I don’t care who’s getting what commission, but if the 4.3 million dollars was my money, you better believe I’d be angry.
As a consumer, I have no issue with a resale market for season ticket holders. Ticketmaster is lacking in this respect, and Stubhub is how I purchase a lot of my seats but Flash Seats is taking some pretty aggressive step to expand beyond just a ticket resale outlet for season ticket holders apparently.
The Plains Dealer outlines the arguments of each side:
Cavs officials said they launched Flash Seats to cater to season-ticket holders, which an executive called the “life blood” of the franchise. Through Flash Seats, season-ticket holders can sell, transfer or buy tickets, bypassing the need to sell them through a third party such as eBay.
Ticketmaster argues the setup cuts into its profits.
The Cavs and Flash Seats split a 20 percent commission on tickets sold through the Web Site, and team executives testified they see it as a valuable service to season-ticket holders, who otherwise would be stuck with tickets they didn’t want or couldn’t use.
When Ticketmaster sells a Cavs ticket, the Cavs get the full sale amount, plus half of Ticketmaster’s fees, Castrodale said. Ticketmaster also controls ticket sales for other concerts and sporting and entertainment events at The Q, he said.
This will likely play out for the next month or so, but my money is on Ticketmaster winning or a settlement in their favor. You can bet other franchises will be watching this one closely, as Flash Seats and the Cavs have set themselves up for a lucrative future in the ticket sales business. For more check out the article from the Plains Dealer here:
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