StubHub filed what may be a precedent setting "ticket scalping" lawsuit against Ticketmaster Entertainment Inc. and the Golden State Warriors. The complaint, filed yesterday in federal court (StubHub v. Ticketmaster, U.S. District Court for the Northern District of California, Case No. 3:15-cv-01436), alleged that the team threatened fans with the revocation of ticket privileges as a result of transactions made through secondary outlets other than Ticketmaster. As a result, ticket resales outlets such as StubHub are being frozen out of the marketplace, leaving NBA fans with only one place to buy tickets for resale.
Battle of the Online Ticket Scalpers
StubHub, founded in 2000, was an early entry into the online secondary ticket exchange market, commonly referred to as "ticket resale" or "ticket scalping" locally and "ticket touting" internationally. Prior to merging with Ticketmaster, Live Nation was the largest concert promotion company in the U.S. and second largest primary ticket outlet (tickets which are sold for the first time.) In its complaint, StubHub stated that, in 2010, "the U.S., California and sixteen other states sued to block the merger between Ticketmaster and Live Nation" because of "Ticketmaster's dominance in providing these services." Later that year, the Federal Trade Commission sued Ticketmaster for "unfairly and deceptively steer[ing] consumers to use Ticketmaster for overpriced secondary ticket exchange services." And after signing an exclusive agreement with the NBA, NFL and NHL to become the sports leagues' primary ticket outlet, Ticketmaster sought to "get two bites at collecting services fees" by exercising almost exclusive control in these industries as the only "authorized" source for ticket resales in the secondary market.
In addition to being the largest primary ticket outlet, Ticketmaster operates well known secondary ticket exchanges such as the company branded Ticket Exchange, Tickets Now and NBATickets.com. As a result of the Golden State Warriors recent success on the basketball court, ticket resale pricles for games at the Oracle Arena have soared. The Warriors have sold out all 14,500 season ticket packages that were made available. The current sellout streak has reached 118 straight home games. The waiting list for season tickets is in excess of 10,000 people, who reportedly paid a $100 nonrefundable deposit for the privilege.
The Warriors had a fee sharing arrangement in place with Ticketmaster for revenues generated from secondary ticket exchanges as early as 2012. The team became more restrictive regarding resale policies in an attempt to capture more revenue associated with the lucrative resale market. As a result, StubHub claims that ticket listings on its own site fell nearly 80% due to unfair and anti-competitive business practices in violation of the Sherman Antitrust Act, the Cartwright Act and California law.
Fans are Victims of a Ticket Scalping Monopoly
StubHub lamented in its complaint that Golden State Warriors and NBA fans will have "effectively no choice at all" when it comes to the sale and purchase of NBA tickets. The “Non-Transferability” rule in the Golden State Warriors season ticket purchase agreement was quoted as including the following clause:
“Sale or resale of any [Warriors] tickets by unauthorized means is prohibited . . . . Authorized resale of your tickets via online means is limited to [Ticketmaster’s] NBAtickets.com.”
StubHub also alleged that the Warriors and Ticketmaster closely monitor ticket holders with "Big Brother" tactics so as to be fully aware of when tickets are sold using StubHub or any other major secondary ticket outlet. Fans who sold tickets through "unauthorized" outlets were threatened that the team "reserve[d] the right" not to offer playoff tickets and renewal of season ticket packages. An open question left was whether this policy will eventually spread to remaining NBA teams, including the NFL and NHL. StubHub predicted that as a result of a monpoly in both markets, consumers should expect hefty price increases to continue through the use of "service, " "convenience," "processing," and/or "delivery" fees - which are already tacked onto ticket purchases by Ticketmaster.
- Legal Practice:
- Business - Antitrust & Trade Law
- US Federal