Sunday, April 19, 2009

So Maligned, So Misunderstood...

Poor Ticketmaster. So big, so maligned, so misunderstood.

Maybe it has something to do with those Springsteen tickets that somehow disappeared immediately from Ticketmaster's web site and ended up on a secondary market site called "TicketsNow" - at inflated prices, of course. Just a small detail: "TicketsNow" is owned by Ticketmaster. A settlement with the New Jersey attorney general's office cost the ticket behemoth only $350,000.

Or, maybe it has to do with the four class-action suits in Canada that have been filed against Ticketmaster, including one for $500 million. Apparently some concert-goers got a bit huffy following the purchase of 2 tickets for a concert of "Smashing Pumpkins" on the TicketsNow web site for $533.65 instead of the $133 that it would have cost if the tickets were available at regular prices.

And to add insult to injury, Ticketmaster has been ranked only 5th in the "Worst Company in America" competition (today is the last day to vote as it goes up against number 12-seed United Health Care). Looks like Ticketmaster is an odds-on favorite to go to the semifinals against the winner of Citibank vs. Sprint (hey, I don't make this stuff up! I'm betting on a Ticketmaster vs. Chrysler final.

Truth be told, Ticketmaster is just a symptom of a business that can be very dirty. At least with Ticketmaster (or its subsidiaries), you actually get the tickets you pay for – even if they are sometimes at outrageous prices. Pity more the poor folks who purchase tickets from bogus web sites or find that the tickets that they receive are simply counterfeits of the real deal.

We all have friends that have been scammed – just this past week two couples I know who bought tickets for a July concert of Springsteen in Dublin discovered that their tickets came from a fake web site. They were lucky, as the credit card company refunded their money.

The grimier sides of the ticket business also have ramifications in other areas. Just a few months ago I ran into an unexpected problem that caused a legitimate ticket company delays and not a few headaches: a number of the clearance companies we contacted rejected our application – they simply did not want to touch a company involved in the ticket business.

It didn't matter when we explained to them the business model: "Nope", the underwriters said, "too many charge-backs, too risky". Fortunately, a solid clearance company was finally found that understood the business model.

America in recent years went soft on "secondary market" sales, and in many states "scalping" has been legalized, much of it simply out of frustration and a lack of desire to deal with the problem. Looks like, however that there is some push-back, not only from a frustrated and angry public, but even in the form of federal legislation, as proposed recently by Sen. Charles E. Schumer (D-NY).

I get a little nervous, though, when Ticketmaster hails the proposed legislation, as its CEO, Irving Azoff, recently stated: "Ticketmaster recognizes that the ticket resale industry needs far-reaching changes to better protect consumers and ensure fair access to tickets". Indeed.

Sunday, January 25, 2009

Ticket Scalpers Suffer - Boo Hoo!

Pity the poor ticket scalpers. Their excessive profit margins have been sliced dramatically. Not only are they suffering from the sub-prime meltdown, but to add serious insult to injury, they got a Super Bowl with the Pittsburgh Steelers and the vaunted (?) Arizona Cardinals, not exactly your dream matchup.

So the poor "secondary market" vendors (isn't that a nice phrase for "ticket scalper"?) like StubHub, Razor Gator and newcomer LiveStub are reporting significant decreases in ticket prices as we get closer to next week's game. Even poor ol' Ticketmaster Entertainment has been forced to open a ticket office at a Super Bowl for the first time ever. Just think of those falling profit margins! Must be down to at least 100%...

Gee, ticket brokers and online "ticket exchanges" (another fancy term for "scalper" or "touter" as the British like to say) are reporting that the cheapest "get-in-the-door" tickets are selling for only about $1,700 to $1,800. That's more than double the face value of most Super Bowl XLIII tickets, which is basically $800 for the upper level seats and $1000 for lower level seats.

Of course, who suffers most from the ticket scalpers/touters, but the fans and the organizers. Let's do the math: an average Super Bowl ticket, face value, for argument's sake (including luxury boxes) is $1000, but sold for an average of twice that much, i.e. $1000 gross profit for how many seats that are sold on the secondary market? 25,000? 50,000? I will do the math for you: $1000 multiplied times 50,000 = $50,000,000 that gets transferred between fans and the various "ticket exchanges", legal and otherwise.

OK, let's be nice, and pretend that the gross profit is only $500 for 25,000 seats...even in this pathetically conservative scenario $12,500,000 just got transferred between fans and the secondary market scalpers; and that's just for ONE GAME.

And who else loses in all of this? Yes, of course, the NFL - Not for the Fans League. Instead of devising a system where REAL fans can get seats for the Super Bowl at FACE VALUE, AND figuring out how some of those moneys will revert back to the league itself, they continue to condone a system where tens of millions of dollars pass between ticket scalpers (oh sorry - I meant between the "secondary market") and fans while they blithely stand by.

Monday, January 12, 2009

Sports Business Suffers Like Everyone Else - Almost

Sports is big business – but until now, when big business suffered, the sports industry was somewhat immune. Not anymore.

The spending sprees of the New York Yankees and the Abu Dhabi consortium that bought Manchester City and forked out $58 million for Brazilian superstar Robinho notwithstanding, the downturn in the global economy and the subsequent reduction in corporate sponsorships are affecting the games that we love to see.

When times get tough, the first thing to go in almost any business is the budget for public relations and marketing, and the cuts in these items are already being felt in those sports where corporate sponsorships play an extraordinary role and are a significant part of the operating costs.

Golf, motorsports (Formula 1, NASCAR), European football (soccer) and tennis are already feeling the pinch, including in some cases cancellation of major events or reductions in sponsorships and money prizes. But other sports that can rely more on season ticket holders and television revenue – that would include the "big 3" in America (football, baseball and basketball) – are also beginning to suffer from a reduction in income from corporate sponsors in terms of advertising and for corporate luxury items like front row seats and stadium suites.

When economies go into a downward spiral, the sports industry has generally NOT suffered nearly as much. In fact, sports have been surprisingly resilient: a recent report by a Baltimore-based investment banking firm, Moag & Co., found that between 1970 – 2008, during periods of bear markets or great uncertainty, professional sports consistently and significantly outperformed the broader markets.

But this time things seem to be a little different. Fortunately, the demand for sports, in the terminology of economists, is highly inelastic. Psychologically, people are loathe to give up on sports and their favorite teams. Even President-elect Obama has chimed in now several times on the need for a college football playoff.

The demand for tickets – especially for championship events - remains high. Scalpers/touters and their friends in the "secondary market" remain extremely active, though we are seeing some consolidation and increasing cooperation in the field as well as a decreasing demand for top-price seats at sporting events as well as concerts.

There does seem to be a decrease in ticket prices for less than top events - for example the recent announcement by the English Football Association that they are reducing prices for some national team games, including less attractive games against Slovakia, Ukraine and Andorra.

Tuesday, November 4, 2008

The Criminal Side of Ticket Sales

Whether it's Aussie rules football, hockey, rugby, cricket, Major League Baseball playoffs or of course, the Super Bowl, seems like someone, somewhere is scalping – or "touting" as the Brits say – tickets, earning a quick buck and depriving real fans of being able to get seats to big games.

Free market advocates love to tell us how the sale and resale (and resale and resale) of tickets at prices well beyond their face value is really a mechanism for determining the real value of the ticket. What they don't tell us is the adverse effect this has on sporting events as well as the general entertainment industry, including the proliferation of fraudulent operators who are often part of wider criminal operations.

The recent monumental study by the British Parliament (House of Commons Committee on Culture, Media and Sport) of well over 200 pages and dozens of interviews draws a gloomy picture indeed. The report clearly outlines how the resale of tickets at inflated prices puts them beyond the reaches of audiences for whom they were intended, including team supporters or fans who follow a particular artist.

Profits taken by the secondary market also have direct and indirect effects on the organizers and promoters of sports and entertainment events: they rarely see one penny of any of the resales of tickets, and real fans and supporters also then become discouraged from even trying to get tickets to major events in the future. Tickets become in this well-known scenario the purview of only the wealthy and connected.

And there are the counterfeiters…the latest victims were 500 Texas Tech football fans who were scammed this last weekend at perhaps $200 each, (that's a quick $100,000 of almost pure profit), depriving them of the opportunity to see their beloved Red Raiders beat for the first time in nine years hated rival Texas 39-33 in an unbelievable last-second finish.

While the free market advocates have an interesting theoretical argument regarding the most efficient way to allocate tickets, the fact is that many if not all college and professional sports teams are for the most part also public entities – they most often play in arenas and stadiums that are financed in part or in whole with your tax money and mine, and they almost always also enjoy other benefits granted to them through the public domain.

Many states in the US have simply thrown up their hands in despair as to what to do with regards to the secondary market, while many other countries are looking for new and innovative ways to deal with the problem. The growing criminal activity around the sale of tickets to major events only makes solutions to this issue more pressing.

Sunday, August 10, 2008

Not Good Enough!

Let's not get all overwrought about the most-watched basketball game in history. The US won easily 101-70 thanks to great defense - Coach K has the American team pressuring college-style all over the court - and a weak Chinese backcourt.

On the other hand, it wasn't lost on anyone that the US shot 7-24 (29%) from 3 points and the Chinese were left open for threes and hit 4-6 in the first quarter and 7-15 for the first half, exposing again the seemingly eternal US weakness against the 3-point shot. Clog the middle and make the US shoot jumpers...don't have to be a genius to figure that one out.

The "Redeem Team" has an easy one against Angola on Tuesday, but nothing simple after that. And the Croatians - who shot 12-16 from 3-points in their 97-82 win over Australia (who lost to the US by 11 in pre-Olympic play), Russians, Lithuanians, Greeks, Argentines and espcially the Spanish have backcourts that can compete with the Americans, and these teams consistently shoot 40% and more from long range. The US shouldn't count their gold medals before they hatch.

Friday, July 25, 2008

The Bubble

Oh my, everyone is all excited about Atlanta's Josh Childress signing with Olympiakos of Athens. Hey, $20 million over 3 years (tax free? enjoy, enjoy!) isn't bad by anybody's standards, particularly for a perennial 6th man. And that's not all: Brandon Jennings, a non-qualifier for Division I from Oak Hill Academy, is headed to Virtus Roma, where he will undoubtedly spend a mandatory one year before heading back to the NBA.

In a recent column, Fox Sports' (and Tacoma's - say hi to Mom and Dad!) Mike Kahn wrote about the new west to east direction of international basketball, citing not only the examples of Childress and Jennings, but a number of other examples (Splitter, Delfino, Nachbar, Navarro, etc.). He makes an interesting point that the ridiculous amounts spent on superstars that strangle the NBA salary cap for mid-range players coupled with tight restrictions on young players under the cap's rules (not to metion the strong Euro/awful dollar) are creating a more attractive atmosphere in Europe for signing quality players.

Unfortunately, I'm not sure Mike's analysis translates into a lot more Josh Childres's heading over to Europe for a very simple reason: the money being provided for these big contracts are coming almost solely from a few individuals/oligarchs with some very specific teams - and I can count them on one hand: Oympiakos and Panathinaikos of Athens; CSKA Moscow and maybe Dynamo Moscow and Kimchi (suburb of Moscow). The funding for European's professional basketball teams for the most part still comes from corporate sponsors whose ability and desire to subsidize what is still in almost all cases a losing operation, will ultimately always be limited.

For those few individuals and oligarchs who have endless reels of cash, sure, $10-20 million and a lot more is just a drop in the bucket, but ultimately even very rich people get tired of pouring money down a drain and moreover, these teams are ultimately often just playthings for them - and anyone with kids knows that people get tired of playing with the same toys all the time. I have seen these kinds of individuals come and go now in European basketball for well over 20 years, and ultimately the answer to increasing interest in basketball in Europe is not by finding more oligarchs, but by creating the commercial atmosphere that will encourage investors and companies to put money into creating an attractive - and profitable - product.

Whether that can actually ever happen in European basketball is still a big unknown. The Euroleague and FIBA have made some nice strides in visibility, television rights and merchandising, and the web site content and technologies are quite impressive, but the quality of the product suffers from poor infrastructure, i.e. basketball stadiums, across the entire continent. The subject of arenas is really a separate piece, but it is absoutely incredible when you stop and think that the biggest basketball gym in Russia is in Kazan (cap. 7,100) and that one of Europe's top 3 teams, CSKA Moscow plays in a gym that holds only 5,000. Olympiakos plays in the absolutely awful Peace and Friendship Stadium, which seats 15,000, but has a velodrome encircling the court and fans sit miles away. Basketball in Europe is also still competing with soccer and a host of other sports, as well as 45 top-level European players who have opted to play in the NBA. Needless to say, for every one Josh Childress going to Europe, there are dozens more who still want to go the other way.

As to Brandon Jennings, it could be that there will be a few more like him in the future, as players could opt for making a lot of money in Europe instead of going to college for one year before they can be eligible to play in the NBA; but it's not so simple to take an 18 year old and uproot him into a foreign country with a foreign language and onto a professional team, where they virtually have to take care of themselves, as opposed to a Division I school where they are coddled and taken care of in every way. I could be wrong, but I think we may see that Jennings will be the exception - and not the rule.

Sunday, June 15, 2008

Who Killed JFK (the NBA Version)?

One of the dumbest things that I used to hear from coaches during my refereeing days was something in the realm of, "Hey Todd, look at the scoreboard - it's 7-1 in fouls!", or 6-2, or 5-0, or whatever, any time there was some significant difference in the number of fouls between the two teams. My usual retort was, "sorry coach - I just call 'em, I don't count 'em". And the truth is that over the course of a game, fouls sometimes even themselves out...and well, sometimes not.

Let's take for example this year's Minnesota Timberwolves, who committed per game an average of 5.5 more fouls (!) than their opponent, and on the other hand, Memphis, which committed on average 3.04 fouls less. Why? Maybe Minnesota was a poor defensive club; maybe they had some especially rough players; maybe they fouled a lot during the last couple of minutes when they were behind in close games (which was often)... and maybe Memphis was just plain soft?

In my own country, Maccabi Tel Aviv, the almost perennial champion, fouls a lot more than other teams. Is it because the referees in Israel don't like Maccabi? Or maybe, just maybe, because they have a deep bench and can afford to make more fouls, and because they teach players to stop the fast break and drives to the basket by fouling?

Which bring us of course to the big news of the week, which isn't of course Boston's great comeback in Game 4, or the Lakers' almost great comeback from 24 down with 7 minutes to go in Game 2, but the latest court submission by former referee and the now officially criminal Tim Donaghy who in his latest missive accused NBA executives and referees of broad misconduct and outright manipulation of game results (all as part of his quest to get a lighter sentence).

The main evidence for Donaghy's accusations (and what in fact would be a felony), revolves around Game 6 of the 2002 Western Conference Finals between the Lakers and Sacramento, won eventually by L.A. 106-102 and in which they shot 27 foul shots in the 4th quarter alone. I was of course not at the game, and only after reading about it again do I have some vague recollection (clearly Sacramento fans remember the game very well), but let's say for a moment that there was in fact a "conspiracy": how exactly would that work?

Fortunately, after "JFK", "Nixon" and "WTC", Oliver Stone's new movie, "NBA", is already in the can and ready to be shown at a theatre near you. I have, of course, recevied an advance script of a particularly revealing conversation that took place in 2002 at the Dallas Bergin Hunt and Gefilte Fish Club, between Commissioner David Stern, and veteran referee Dick Bavetta, who until now, was best known for kissing Charles Barkley on the lips after their charity foot race during the 2007 All-star weekend.

(Stern) "Hey Paisano, vus machstu" (Yiddish for "whassup")?
(Bavetta) "I wish you wouldn't call me Paisano - you're only a Jersey guy, while I'm from Brooklyn"
(Stern) "Yeah, well, I'm still the capo di tutti capo here - hey listen, got a little job for you.
(Bavetta) "Nu?"
(Stern) "We got LA down 3-2 and going back to Sacramento. We'd love some big TV ratings for a game 7 - think you could take care of this?
(Bavetta) "Yeah sure, but we gotta talk first"
(Stern) "Sure, no problem. Why don't you pop on down here to Dallas - I got Danny Crawford taking care of the Mavs as we talk. Did you know they are 2-14 in playoff games that he's reffed since Cuban took over? I never liked those young whipper-snappers from Pittsburgh anyways."
(Bavetta) "Where do we meet?"
(Stern) "I got this office over by the Texas Book Depository, nice view, but I think Cuban's got the place bugged. There's a little grassy knoll nearby - maybe we can talk about the game there. Oh yeah, and bring along Delaney and Bernhardt. They'll be perfect for what I got in mind."

And here's more fuel for the conspiracy fire: did you know that Bavetta went to Power Memorial High School, which is where of course, Kareem Abdul Jabbar graduated (8 years apart), and we know whom he used to play for! The LAKERS!! Ladies and gentlemen, case closed!

Charlie Sheen will be playing the title role of NBA commissioner, David Stern. Sheen's qualifications became apparent after 9/11 when he stated to Alex Jones, who has an Internet radio show on and "Call me insane, but did it sort of look like those buildings came down in a controlled demolition?"

By the way, has anyone ever really looked at the box score from the famous 2002 6th game? The Lakers had 40 total free throws (Shaq 13-17; Kobe 11-11) and Sacramento 25. In other words, a 15 free throw difference doesn't exactly seem to be the kind of stuff that would get Rudy Giuliani and the Southern District frothing at the mouth.

Now we come to 2008, and of course the Grassy-knoll Gang is having a field day fueled by Donaghy's court submission, the timing of which is no doubt hardly coincidental. OK, so in Game 2 the Lakers shot 10 foul shots to the Celtics' 38 - what exactly does that prove? Maybe it proves that the Celtics did a much better job of trying to get to the basket, and that Odom and Gasol and friends were soft on defense (as they have been most of the series), and that Boston did a great job on Kobe.

And what about Game 3? L.A. took the first 20 of 24 free throws and Kobe got to the line 18 times. The only noticeable item from this statistic is that the Celtics didn't whine about it after the game like Kobe and Phil did.

After reading so much of the crap - and that's exactly what it is - written by otherwise intelligent people, I realize (once again) that sportswriters and commentators have almost no idea as to what basketball referees do, or how they do it. You have to feel for a guy like Dick Bavetta and the rest of his colleagues in the NBA, who while they make mistakes (and generally not many), are the best at what they do in the hardest sport of them all to referee.