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Fan Freedom Project and the Tennessee Sports and Entertainment Industry Coalition Do Battle in State Senate

Back in April, we covered the Fairness in Ticketing Act of 2012, a bill designed to regulate ticket sales to events like Predators games or concerts at Bridgestone Arena in secondary markets (re-seller markets). By forcing scalpers to register with the state, proponents argue that the bill provides entertainment consumers with a more transparent process for buying re-sold tickets. Little did we know at the time that On the Forecheck's analysis from April would be cited in the Fan Freedom Project's educational materials (PDF) that they submitted to state legislators ahead of yesterday's Tennessee Senate hearings in downtown Nashville.

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The only thing that should be against the law here is that hat. You're welcome, Tennessee.
The only thing that should be against the law here is that hat. You're welcome, Tennessee.

The key provision of the Fairness in Ticketing Act in this dispute is the one that would legally define tickets to Predators games, concerts, and other events as "revocable licenses that can be cancelled at any time, with or without cause." Giving tickets a legal definition like "license" isn't troublesome; it's the "revocable" and "with or without cause" words that give fans pause. If Ticketmaster currently has a monopoly on primary sales (direct from the team to the consumer), then using law to define that ticket as something revocable gives Ticketmaster's platform unique powers to regulate how primary ticket owners sell to secondary market consumers. The language would also, then, grant Ticketmaster sole access to fees, which it would be able to charge secondary consumers to its heart's desire, with the full backing of the Tennessee Code Annotated, if the Tennessee Sports and Entertainment Industry Coalition (TSEIC) gets its way.

The Fan Freedom Project is a non-profit membership group backed by a coalition of pro-market advocacy groups and, in the interest of full disclosure, ticket re-seller StubHub. Representing over 100,000 members, FFP endeavors to supplement ticket policy debates with information and advocacy. As Dirk noted in October 2010, the current voluntary system, adopted by the Predators and season ticket holders alike, seems to be working:

Besides the simple "hmm... I might be able to get more for these" reasoning which brought more ticket-[re-]sellers into the secondary market, the teams themselves became actively involved, legitimizing the practice of ticket resale, which had typically been viewed as an under-the-table endeavor. While Harrington's results came from utilizing StubHub data, I imagine the effect would be even more pronounced if he were able to examine the Season Ticket Holder Exchange, a venture between NHL clubs and Ticketmaster which allows season ticket holders to easily sell their tickets for games they can't attend.

That exchange is very easy to use (having done it myself a few times). It uses the same interface that a season ticket holder works with in managing their account, making it not just insanely easy for someone to resell their tickets, but they get the added validation that their team approves of the practice. As Harrington notes in the article, in some markets season ticket holders could lose their privileges if the team found that they were reselling tickets....

The observed effects of flat prices with increased [ticket reselling] activity, as found in this study, represent a victory for a number of different parties: the season ticket-holder is better able to recapture some of their expense for a game they'd not attend anyway, a fan is able to purchase a ticket that would not otherwise be available, and the team itself gets a live body in that seat, along with ancillary revenue opportunities such as parking & concessions.

The benefits to the team of the current voluntary system are obvious, as Dirk stated: making ticket re-selling easier helps ensure the Preds continue on the path toward 41 home sellouts. Sean Henry, President and Chief Operating Officer of the Nashville Predators, also submitted a letter to the legislature back in August (PDF); his letter reinforces the pro-regulation position previously taken by the team. That the Predators have taken a pro-regulation position on this legislation suggests they've made an internal calculation that, if a fan pays an above-face value price for a ticket, they then have less money in the pocket to spend on those ancillary revenue opportunities (concessions, licensed merchandise, etc.). This may be true, but the position assumes that Ticketmaster, who is notoriously loathed for the fees it charges, would be a partner in good faith. It assumes Ticketmaster would never take a little off the top of re-sold tickets, though having a legally-protected monopoly on the secondary market would give them every incentive to do so. The net effect is that the Predators would face the same challenge they currently claim to face.

Henry discussed some of the organization's concerns on WKRN last week:

It's worth asking, too, if tickets to Predators games and concert tickets are efficiently priced. That is, do the prices consumers currently pay accurately reflect the demand for hockey entertainment, relative to a constant supply of seats? Nobody likes to pay more for tickets, but the strong growth in attendance at Predators games can't be ignored much longer, nor can we ignore the venue awards the Bridge has racked up in recent years. Perhaps charging more for tickets would be a less heavy-handed approach to solving the "problem" of scalpers buying in bulk, in addition to the game-day raffle system.

Add to this evidence uncovered by NewsChannel5's investigative reporting team that suggests Ticketmaster has been all too willing in the past to use scalpers to artificially inflate prices to events, and you have the makings of a political lobbying-for-profit scandal on your hands:

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."

Fan Freedom Project seems to have a legitimate gripe: the Predators have already adopted voluntary measures in the reseller market that work, and this legislation may be superfluous, if not altogether harmful to fans. The hearings yesterday are thankfully only a small part of ongoing examination and investigation by the state legislature. Speaker of the House Beth Harwell told OTF in an email back in April that they "want to ensure [they] are not too heavy-handed in our approach." Here's hoping Speaker Harwell and her colleagues in the Senate give the people they represent a fair shake, and do not cower to special interests with every incentive to influence the law to their advantage.