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US ticket resale market eyes broad redefinition amid Covid-19

(Photo by Craig F. Walker/The Denver Post via Getty Images)

  • Pandemic accelerating emerging trends within the industry
  • Layoffs and furloughs have hit nearly every prominent ticket reseller
  • Future activity to be impacted by restrictions on game attendance

Nearly two decades ago and long before the US ticket resale industry grew large enough to support one of its companies being sold for more than $4bn, the business was much smaller and mostly local in its operation. 

Thanks to the ongoing Covid-19 pandemic, the secondary ticket market could now be heading back to its more market-specific and relationship-driven roots in many ways. 

Each of the major US sports leagues are now actively preparing to return to competition, or have already done so, but either with no attending fans or limited attendance. And absent a vaccine for the virus, many local US jurisdictions are unlikely to allow full stadiums and arenas, in turn significantly driving down the market opportunity for the resale business.

Those factors, in turn, have forced major schisms within the resale marketplace. StubHub has already made the unpopular decision to shift its payment to ticket sellers only upon completion of an event, as opposed to after the initial sale. The move was designed to protect against mass refunds of canceled events, but also created significant cash-flow issues for many smaller brokers. 

The company then cut 200 jobs, saw its president Sukhinder Singh Cassidy leave her post last month after just two years, and its intended merger with Swiss-based Viagogo has not yet been given regulatory approval by the United Kingdom’s Competition and Market Authority. The company is additionally facing class-action legal challenges for its new policy of shifting its refund policy for ticket buyers to store credit, except in certain jurisdictions where cash refunds are required by law.

Layoffs and furloughs have similarly hit other players such as Ticketmaster and its parent company Live Nation, Vivid Seats, AXS parent company Anschutz Entertainment Group, and Connecticut-based TicketNetwork.

Those personnel moves, also typically involving hundreds of people at each company, were, of course, driven by the near-total dearth of live events over the past three months and lack of corresponding revenue. 

But the public health crisis has also accelerated a series of emerging trends with the ticket resale business that previously were bubbling below the surface. 

Already, the core notion of a season ticket, a key source of ticket resale inventory, had been starting to undergo seismic redefinition, with a growing number of teams, such as Major League Baseball’s Oakland A’s and Seattle Mariners, move toward membership-based models, take more direct control of their overall ticket distribution, and place more restrictions on how and where fans can resell tickets.

Other emerging ticket technologies, such as Ticketmaster’s SafeTix create dynamic barcodes in an effort to combat fraud, but also act as a further tool to aid teams and other rightsholders place additional restrictions on how, where, and when tickets can be resold.

There were also rising questions of whether the overall secondary ticket business had essentially peaked in size as the other macro-level industry trends took hold, and StubHub’s financial results released over the past two-plus years, while still owned by publicly traded ecommerce giant eBay, showed a general leveling off of its gross sales and revenues.

“When I look ahead at the secondary market, I see that channel over time getting smaller, particularly as teams take more control over their own assets,” says Jesse Lawrence, founder of New York-based ticket search engine TicketIQ. “Secondary is going to be a smaller piece of that distribution equation where it’s really more about smaller supply and higher prices, and sort of goes back to its original use case scenario.”

Boston, Massachusetts-based Ace Ticket is one of several more regionally focused companies poised to survive in a US ticket resale market upended by Covid-19. (Photo by Jim Davis/The Boston Globe via Getty Images)

Patrick Ryan, co-founder of Texas-based ticket distribution company Eventellect, said he doesn’t necessarily see any of the large resale marketplaces going out of business soon. But he did say the more localized nature of the US sports’ industry recovery presents a sizable opportunity for some players to exploit their deep market-based knowledge, and in return will recast the entire industry.

“Years ago, the ticket broker business was a really hyperlocal thing,” Ryan says. “Since the sports industry recovery is going to be a very geographic, market-specific thing with a lot of variance from market to market, I think we’re going to go back to an emergence of really strong, really savvy local brokers. And I think there’s going to be a real renaissance of a more customer service-driven model of ticketing.”

Jim Holzman, founder and chief executive of Boston, Massachusetts-based Ace Ticket, prides himself on being one of those entities driven by a focus on customer service. Along those lines, he said it is the regional-based nature of his operation that dictates that mindset.

“At least in my case, you’re selling tickets to people you might actually see out at a restaurant or some place like that,” Holzman says. “It’s not an anonymous thing. And I think that will serve us really well going forward. When fans are able to go back to games, they might think twice about doing business with an online marketplace that took forever to refund their money, or didn’t at all, and there’s no personal relationship. But somebody they actually know? That’s what we’re banking on.”

Holzman has a massive reduction in his business over the past three-plus months, and said he “would love to get back to a situation with 25 per cent attendance in the stands and our business getting back to 25 per cent of where we were.” Back in the early spring, he took out a $4m line of credit to refund ticket purchasers for events that were canceled due to the pandemic.

“At the end of the day, the strong survive and the people that are resourceful and smart, and if you’re fair, take care of people, and provide value, you’ve got a business,” he says.

StubHub has seen the Covid-19 pandemic greatly impact its business, facing in recent months mass layoffs, a departure of its president, lawsuits, and a troubled merger with Viagogo (Photo by Hunter Martin/Getty Images)

NFL as a bellwether

The May release of the 2020 National Football League schedule brought a predictable jolt of fan energy, and in the days immediately following, many ticket resale marketplaces reported strong sales for games, with hopeful fans eyeing a return to stadiums this fall. 

New York-based SeatGeek, for example, generated a 163 per cent increase in gross ticket sales volume for NFL games in the three days following the schedule release compared to the same time period a year ago, and the average ticket price went up by a fifth from $251 to $302.

“People still want to go to live events. That desire hasn’t completely gone away,” says Russ D’Souza, SeatGeek co-founder. “We have a resilient industry, but it’s going to be a gradual recovery as restrictions get lifted and people feel more comfortable going to events. There will definitely be a transition period.”

That football buying frenzy, however, ultimately did not last and sales have slowed in subsequent weeks. And as the league’s season approaches, it is still not known exactly how the NFL will handle fan attendance. League owners, however, have agreed to tarp off the lower rows of stadiums in order to create additional distance between fans and the players and coaches, and in turn create new sponsorship inventory.

Amid that continued turbulence and redefinition in the ticket market, it is likely that local guidelines will heavily dictate the situation, and that there will be marked variances from market to market in what is allowed from a health and safety standpoint, and in turn, what can be sold.

“The NFL is sort of the best indicator of where we’re at, because they haven’t lost any games,” Lawrence says. “Quantity of available tickets so far across the board is down significantly, but pricing is up significantly. We don’t know what’s ultimately going to happen with seating this fall. But overall, right now it’s less supply and higher prices, and speaks to this new sort of dynamic we’re entering.” 

An additional wrinkle in that will need to be addressed, not only in the NFL, by ticket resellers is additional restrictions put in place because of Covid-19. It is possible that for health and safety reasons, for example, that originally purchased ticket blocks will not be permitted to be divided into smaller chunks.

“Due to the distributed nature of resale this is a complicated problem that could be challenging to solve,” tweeted Ken Hanscom, chief operating officer of California-based software developer TicketManager. “An obvious solution could be no more splitting tickets (buying two of four available in the listing) but the problem is much more challenging than that.

“[The] reality may be that unless there is mass venue layout and restrictions sharing for all marketplaces, even those that are not league or team partners, in addition completed sales sharing, teams could be left to solve problems on game day. Not surprising, but reintroduction of sports in a Covid world stretches far beyond stadium configurations and social distancing, but goes to the core of the secondary market and ultimately ticket control,” Hanscom said.

Beyond all that, the attendance limitations on that sport and every other one also expose the folly of heavy efforts brokers and marketplaces of all sizes spending heavily on internet-based marketing.

“We’ll definitely see a decrease in search-engine spend,” Ryan says. “What everybody was doing with Google and Facebook before the pandemic just wasn’t sustainable, was cannibalizing the customer, and wasn’t creating demand. Why were six different entities going after the same customer?”

Another key element redefining the ticket resale market going forward is an expected heavy retreat among corporate purchasing. With US unemployment in excess of 13 per cent and jobless claims since the arrival of the pandemic surpassing 40m, many companies will be loath to be seen publicly entertaining clients with high-priced sports tickets.

“Who is going to be buying season tickets among corporations and groups? That’s going to change. And as the season ticket goes down, secondary goes down,” Lawrence said. “And since the season ticket was already changing anyway, the season ticket question is a big one.”

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