Ticket scalping comes to a head

You need only two of the primo tickets you bought for the NCAA championship game on April 2 in Atlanta’s Georgia Dome. So the next move is to scalp the extras online, where men’s college basketball tournament tickets with a face value of $204 are on sale for as much as $5,800 apiece.

Not so fast.

The NCAA, tired of third-party brokers siphoning off money by reselling tournament tickets, is threatening to blacklist fans who are caught scalping tickets anywhere other than RazorGator.com, the NCAA’s official ticket reseller.

And the NCAA isn’t alone. Sports leagues, college teams, concert promoters and entertainers are all trying to control -- and profit from -- the booming ticket resale market.

“This is the hottest-button topic right now in the live entertainment world,” said Jim Guerinot, the manager for Gwen Stefani, Nine Inch Nails and the Offspring. “No question, millions and millions of dollars are going to third parties with no financial investment in the venue, the artist or the promoter. And everyone’s jockeying to assert their interests.”

Last summer, rock star Tom Petty voided a reported 1,400 fan club concert tickets that fell into the hands of scalpers. The NFL’s New England Patriots have filed a lawsuit against season-ticket holders who scalped seats online.

And, in February, the NBA signed industry giant Ticketmaster as its “official” ticket reseller so teams can try to get a share of the profit generated when hot basketball tickets are resold.

The ticket police are out in force because of the burgeoning ticket-resale business. The value of tickets resold online and elsewhere in 2006 is estimated at $2 billion to $10 billion -- the wide range a result of the difficulty of tracking what amounts to fan-to-fan sales.

The NCAA deal with Los Angeles-based RazorGator Experiences blurred a long-standing line between ticket issuers and scalpers.

“Now everyone is trying to figure out a way to capture this market,” said Gary Adler, an attorney who represents the National Assn. of Ticket Brokers.

For proof, look online, where myriad ticket-resale websites are awash in offerings:

A courtside seat for Sunday’s Lakers-Dallas Mavericks game at Staples Center is $5,001. A front-row seat at Staples for the Police reunion tour in June is offered for $3,050. And for last month’s Super Bowl, $600 and $700 face value tickets sold for $3,000 to $5,000 each.

Sport teams and promoters know that they can’t stop all scalpers -- but they are fighting hard for a share of the industry where transaction fees can equal 25% or more of the sales price.

RazorGator, for example, levies a fee of up to 25% on each March Madness ticket resold through its website. So the NCAA and RazorGator will share as much as $454 if someone spends $1,819 for the highest-priced ticket available online Friday. The NCAA also will share in profits generated by tickets RazorGator is bundling into upscale travel packages.

“There’s lot of frustration with the amount of dollars going into the secondary market,” said Gary Bongiovanni, editor in chief of Pollstar, the concert industry trade magazine. “It represents money not being shared by venues, sports teams and artists.”

The NCAA must complete a bit of detective work before placing ticket scofflaws on its blacklist. Tracking an unauthorized ticket sale can be difficult because scalpers often list tickets with several online brokers. Seat descriptions are often vague -- “behind the basket,” for example, or “at half-court in the upper deck.” But the NCAA maintains that it has tracked unauthorized deals during past Final Four tournaments, and will do so again this year.

Ticket issuers say that the policing process will grow easier in coming years as paper tickets give way to electronically issued admissions that issuers can more easily track.

The clearest sign that scalping has moved from dark alleys to Main Street came in February when EBay paid $307 million to buy StubHub, a San Francisco-based company that has brokered the sale of some 5 million tickets and is best known for sports and concerts. One industry observer likened the deal to “creating a Nasdaq for tickets.”

But there isn’t any uniformity in ticket resales because venue owners, promoters, leagues, performers and ticket resellers each have their interests.

Baseball’s San Francisco Giants steer season-ticket owners with extra seats to a proprietary website that handled more than 125,000 sales last season. USC signed a deal to send its football ticket holders to StubHub, though Trojans fans are free to deal their tickets elsewhere. The Chicago Cubs’ parent, Tribune Co. (which also owns the Los Angeles Times), has been experimenting with a free-standing business that has sold Cubs tickets at steep premiums above face value.

Industry giant Ticketmaster, which sold 128 million tickets valued at more than $7 billion last year, also is scrambling to keep pace. The West Hollywood-based company now operates upfront ticket auctions for many clients and also offers online resale for 58 teams, including the Lakers, Angels, Dodgers and Clippers.

Ticketmaster President Sean Moriarty maintains that fans will prefer resales conducted through Ticketmaster and other issuers authorized by sports franchises, partly because it reduces the chance of buying bogus tickets.

Ticket issuers argue that too often they’re left to pick up the pieces when deals brokered by third-party agencies sour.

One box office executive told of a Midwestern couple who flew to the Bay Area to celebrate their 20th wedding anniversary at a Tom Petty concert. The executive broke the sad news that their tickets -- purchased from a third-party broker -- were fake.

Sports and entertainment executives also are realizing that many tickets being resold online are from season-ticket holders, subscription buyers and well-heeled alumni -- not the customers they want to offend.

Season tickets account for 56% of seats in NBA arenas -- but generate 80% of ticket revenue because season-ticket buyers prefer higher-priced seats.

However, the high cost of tickets and the possibility that some will go unused are major reasons why some fans won’t buy season-ticket packages.

So some sports franchises are using their ticket-resale windows to lure more cost-conscious fans, and ease their concerns by providing a market for extra tickets.

Ticket issuers are betting that sports fans and arts patrons will embrace their resale systems.

“They’d rather that the money [spent for tickets] is going to the right causes, like scholarships, grants and financial aid for athletes,” said NCAA Vice President Greg Shaheen.

But ticket issuers acknowledge that fans could be turned off if ticket holders are restricted to proprietary ticket systems or if resale prices are capped. “What we’re not going to do to win this technology war is hire lawyers,” said Bob Bowman, president of Major League Baseball’s Advanced Media division. “The way to win is to make the best solution possible available for customers. The music industry’s experience is near and dear to our hearts.”

To understand where entertainment and sports ticketing is headed, look at the airline industry.

Security rules prohibit airline passengers from selling unused tickets in a secondary market. But airlines not only sell their tickets, so do numerous websites, such as Orbitz.com, Travelocity.com and Expedia.com. Depending on when a consumer buys a ticket, a passenger might have paid two or three times what the traveler in the next seat paid.

Airlines and entertainment have a perishable inventory -- seats that immediately lose their value when cabin doors close, theater lights dim and the first pitch is thrown. And their common goal is to wring as much profit as possible from every ticket sold.

In sports, “dynamic” pricing” is now a buzz phrase. Major League Baseball and the NBA already price some games according to their desirability. The Detroit Tigers add $2 to tickets for Friday night and weekend games, and for games against the New York Yankees and a few other popular teams.

But like the stock market, fluctuating ticket prices don’t always go up.

EBay said 45% of the ticket sales it has brokered are for face value or below. Sports teams and entertainment venues are loath to see their tickets resold at below face value -- even though those lacking hot tickets have no qualms about moving unsold stock through marketing channels that offer steep discounts.

For example, the NHL’s Los Angeles Kings are nearing the end of a miserable season. Next week the Kings play the Chicago Blackhawks at Staples Center. Fans can find $32.50 tickets available at Goldstarevents.com, a Kings marketing partner, for $10, plus a $5.50 service charge.

Some airline industry observers wonder if consumers will be happy with the entertainment box office of tomorrow.

“From a financial standpoint, I don’t doubt that once sports teams get this kind of system in place that that they’ll end up with higher [profits] from their tickets,” said Tim Winship, who publishes the Frequentflier.com website.

“Everyone in the airline space know that it’s really resulted in a lot of frustration, confusion and anger among travelers.”

greg.johnson@latimes.com