New Documents Link Ticket Scalpers To Ticketmaster
By Phil Williams
Chief Investigative Reporter
NASHVILLE, Tenn. - Ticketmaster is pushing legislation here in Tennessee that, it says, is designed to crack down on ticket scalpers.
But never-published documents, uncovered by NewsChannel 5 Investigates, show the ticketing giant has been more deeply involved in the scalping industry than it's been willing to admit.
Ticketmaster says it wants to protect fans who buys tickets -- for example, prohibiting misleading websites that look like they're from official sources.
But the debate is also about control.
"They want to own the secondary business, they want the transactions fees to themselves," said Ticketmaster critic Jon Potter, head of the Fan Freedom Project. That's a grassroots lobbying organization funded by the ticket resale website StubHub.
Ticketmaster often dismisses Potter as being "the scalpers' lobbyist."
"StubHub and pure consumer brokerages don't know where their sellers get those tickets, but Ticketmaster knows which brokers it's giving tickets to - and they don't want you to know that," he said.
Ticketmaster officials have refused for months to sit down and answer NewsChannel 5's questions.
But, in February 2009, then-CEO Irving Azoff testified before Congress, downplaying the impact of the merger between the ticketing giant and event promoter Live Nation.
"Personally I don't believe there should be a secondary market at all," Azoff told the House Judiciary Committee. "I believe that scalping and resale should be illegal."
But NewsChannel 5 Investigates obtained an email that Azoff sent just two months later to professional broker/scalper Chuck Lombardo, confiding that "the long-term merger plan will be great for you."
We showed the documents to Jon Potter.
"I think what's fascinating about these documents is it shows you that Ticketmaster is feeding those scalpers," he said.
According to the documents that Ticketmaster itself filed in court, the company paid Lombardo to help Neil Diamond secretly scalp his own tickets. Celine Dion is also mentioned, as are the Eagles and numerous other acts.
Lombardo even claimed in one email to have deals to secretly scalp tickets for the U.S. Open tennis tournament and events at Madison Square Garden.
In those court documents, Ticketmaster itself admitted that it "offered Lombardo exclusive access to its pricing platforms so that he could use Ticketmaster's systems to price Platinum tickets on behalf of artists."
As a result, Ticketmaster said, Lombardo "could have potentially earned millions of dollars."
"I think what is remarkable about it is that they are in bed with the brokers, they are in bed with the people whom they point fingers at and call scalpers," Potter said.
Ticketmaster dismisses such evidence as reflecting old business practices.
But earlier this year, a British TV crew went undercover inside one online ticketing operation and discovered it was secretly getting tickets from Ticketmaster's parent, Live Nation.
"How come they give us tickets, because we give them a split or something?" the undercover reporter asked.
"Yeah, basically we give them like a 90/10 split so they get their face value and they get 90% of whatever we make," an insider with the ticketing company answered.
Potter was incredulous.
"I'm confident that in London, just like the United States, Live Nation and Ticketmaster are pointing the fingers at those evil scalpers," he said.
NewsChannel 5 Investigates asked, "Is Ticketmaster talking out of both sides of its mouth?"
"If they had three sides of their mouth, they'd be talking out of all three sides," he responded.
On top of that, it has struck deals with the National Football League, National Basketball Association and the National Hockey League to operate official ticket-resale sites.
In addition, NewsChannel 5 Investigates discovered a promotional video for EventInventory.com, a website that Ticketmaster operates for professional ticket scalpers. That website boasts that it offers "serious software for serious brokers."
It's a place where ticket brokers can cut deals with each other -- and post tickets for sale on TicketsNow.
"Nine out of 10 professional online ticket companies in North America list their tickets in the Event Inventory database," the video's narrator states.
"With over 1 million tickets in our marketplace on a daily basis, Event Inventory should be your source for premium seating and sold-out events.... This is where all the business-to-business ticket buying and selling takes place…. You will gain a considerable advantage by publishing your tickets on Event Inventory....
"There is no better return on investment available to brokers looking to sell tickets…. More exposure results in more sales, and no other system offers the kind of exposure that you will get with Event Inventory. Your broker-to-broker business will increase exponentially."
StubHub also offers a similar website for brokers, TicketTechnology.com.
The Fan Freedom head said such ventures show Ticketmaster's true intent.
"Ticketmaster has absolutely no interest in ending the scalping industry, they have every interest in owning the scalping industry," Potter said.
"What you are saying is that Ticketmaster isn't against scalping, really," we noted.
"Ticketmaster is a scalper," he declared.
"And Ticketmaster wants to control the scalping?"
Potter again insisted, "They want to be the scalper."
Despite those connections, Ticketmaster still insisted in a statement that it "stands categorically against ticket scalpers."
Here is the statement:
"As the leader in a very competitive industry, Ticketmaster has embraced its obligation to lead by example by having the most consumer friendly policies and practices in the space.
"Our commitment to fans also means that Ticketmaster stands categorically against ticket scalpers -- meaning while we support resale done the right way, we are against deceptive and unfair practices that are all too prevalent in the resale space. We believe the first sale of every ticket should be to a fan who wants to go to the show. We've invested millions of dollars in technology, and work aggressively with lawmakers, regulators and law enforcement to help prevent scalpers from cutting in front of fans at on-sale. We also support legislation in states like Tennessee that would introduce meaningful change and needed fan protections into a convoluted resale market.
"We also understand that actions mean more than words. That's why we have joined more than 60 Tennessee artists, teams and venues in support of the Fairness in Ticketing Act which would cut down on scalping and set a high bar for ticket resellers operating in the Volunteer State. We encourage others in the industry to join this effort and take a stand against scalping and in support of a resale market that actually works for fans."
Still, it's important to note that the company's legislation would not outlaw scalping -- or even put limits on how much scalpers can jack up the price on fans
A joint legislative committee will hear from both sides next Tuesday.