Ticket Flap: What Price Convenience? : Entertainment: A host of service fees, surcharges and taxes is riling concert-goers--and lawmakers.
Imagine going into a supermarket to buy a carton of milk. The container bears a price tag of $1, but as the cashier rings your order up, he begins tacking on a series of surcharges: 11 cents for refrigeration; 9 cents for bagging; 29 cents for parking, and a 19-cent “convenience” fee--for saving you a drive out to the dairy.
Your $1 carton of milk is now a $1.68 carton of milk.
Not to anyone who has tried to purchase tickets to a concert or sporting event in Southern California recently, where laissez-faire economics rules the industry.
So much so that tickets to many events can no longer be purchased anywhere at face value. In some instances, admission to a concert advertised at $25 can end up costing as much as $35.05, plus parking (see related story, F23).
Could it get worse? Two recent developments suggest to some that it could.
* Any day now, the Justice Department is expected to approve Ticketmaster’s acquisition of longtime rival Ticketron. The action would end competition between the nation’s two leading ticket agencies, prompting fears among some that a monopoly situation could result in even higher ticket “fees.”
* Last week, the Los Angeles City Council tentatively approved a 10% tax on admissions to most movies, sporting events, concerts, theatrical and “amusement exhibitions.” The proposal faces stiff opposition not only from Mayor Tom Bradley, who said he would veto it, but also from the entertainment industry. (The city of Inglewood, home of the Forum, already imposes a 55-cent admissions tax on admissions over $10 and 45 cents on tickets under $10.)
“I think these service charges really stink,” said North Hollywood writer Selimah Nemoy, 38, this week, referring to the fee structures already in place. She complained about her recent purchase of concert tickets. “I wound up paying $51 for two $19.50 seats. Not only is it an unreasonable amount to pay for such poor service, I think it’s deceptive.”
“This merger raises serious antitrust concerns,” said State Assemblyman Rusty Areias (D-Los Banos), whose proposal to put a 10% ceiling on ticket surcharges died in committee last session. “It could prevent healthy competition and threaten the free-market mechanism that helps control prices and protect the public.”
Ticketmaster denies allegations that it might try to control the market.
“We couldn’t control the market if we wanted to,” said Fred Rosen, chairman of the board and CEO of Ticketmaster. “Ticket companies do not fix the pricing of tickets or fees. The buildings do, much in the same way that they control the price of hot dogs.”
The debate in this case doesn’t involve the controversial practice of independent ticket “brokers” who legally buy and resell tickets at up to 20 times their face value. Concerns voiced this week have focused on the “service” fees charged by venue operators and authorized vendors (such as Ticketmaster) which are the box-office representatives.
Complaints on the East Coast about Ticketmaster’s service fees charges have convinced Richard M. Kessel, executive director of the New York State Consumer Protection Board, that some kind of control needed to be put into place.
“I have serious concerns about the excessively high level of service fees that ticket agencies like Ticketmaster sometimes charge,” Kessel said in a phone interview from New York. “And now, due to the proposed merger of Ticketmaster and Ticketron, there will be less competition in the field, which in turn could lead to even higher service fees. We felt something had to be done.”
As a result, the agency urged N.Y. State Rep. Jerrold Nadler (D-Manhattan) to introduce legislation that would require a 10% cap on all ticket service fees. The proposal got bogged down in committee last session, but Nadler reintroduced it again this year.
A similar proposal was introduced in California by Areias in 1990, but the ceiling provision of the bill lacked support in the Assembly and was removed. Areias then proposed a milder version that would have required promoters and ticket agencies to disclose in print the full amount of service charges placed on a ticket before purchase, but the concert industry lobbied heavily against the bill, and it also died in committee.
“It’s unfortunate that the answer to corporate success in America is always government regulation,” Ticketmaster’s Rosen said. “Consumers have a lot of misconceptions about how these rates are established. All fees are negotiated at arm’s length with the building.”
But critics of the Ticketmaster takeover disagree.
Three years ago, San Jose ticket broker Max Gordon sued Ticketmaster, Bay Area Seating Service (BASS)--the Northern California licensee of Ticketmaster --and Bill Graham Presents, charging that the companies conspired to drive him out of business after he refused to fix prices. Gordon, who says he is pleased with the settlement arrived at three months ago, opposes the takeover.
“What Ticketmaster and the promoters are trying to do is reinstall the days of serfdomship,” said Gordon.
“I think that what should happen is that the attorney general of California ought to become involved in this thing, the State Board of Equalization and the Internal Revenue Service too. We’re talking about millions upon millions of dollars here (much of it in cash transactions). I think they should take all this stuff and strip it right down to its knuckles.”
Other industry veterans, such as Avalon Attractions president Brian Murphy, whose Los Angeles-based promotion company has done business with Ticketmaster for eight years, dispute such claims and predict that the proposed acquisition will not affect consumers whatsoever.
“When you look at it on the surface and you see that one company is going to control all the tickets in the United States,” Murphy said. “Potentially, I think that there would be people who would say, ‘Oh my God, we are going to get raped here.’ But candidly, knowing Fred Rosen, I don’t think that is going to be the case. I have not found him to be in the business of gouging the consumer.”
$2.25 FACILITY FEE CHARGED BY THE VENUE: Retained by the venue for “refurbishment” costs. $5.75 CONVENIENCE FEE CHARGED BY THE AGENCY: Consumers who charge tickets by the phone pay the “convenience” fee, which is applied toward additional costs from a telephone switching network, sales operators, local number phone line access, credit card fees and other charges. $2.05 PROCESSING FEE: Those purchasing tickets by phone are also charged a $2.05 “handling"fee for each order, which averages three tickets per call. PLUS $5 PARKING: Most venues offer few parking choices other than their own and typically keep all these revenues. CHEAPER WAYS TO BUY TICKETS: * At the venue: $25 base ticket price, plus $2.25 facility fee, plus $1 box office fee. * At the agency: In-person purchaser pays $25 base price, plus $2.25 facility fee, plus $3.50 convenience fee.
TOTAL $35.05 If purchased by phone from an agency