Part two on how tickets for prime events are increasingly difficult for fans to get, and brokers aren't the only reason. New York Attorney General Eric Schneiderman recently announced an investigation into ticketing. The investigation will likely shine a light on how the ticket industry really works, and why consumers have no chance. Who ends up with tickets to big events? How do they end up on the secondary market so quickly? Why do the content providers allow it?

Part One is here. The rumors are true. Bots and spinners exist that give some ticket brokers an unfair advantage at on-sale. Spinners and Bots are actually relatively simple and much more prominent than the general public believes despite high-profile cases in Las Vegas and Pennsylvania. What does a Bot do? A bot is technology coded to hit the on-sale thousands of times instantly. The operator sits back and watches all the options populate on his screen and chooses which tickets to buy.

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This practice is much more prevalent than the public could imagine. In a previous life, we personally sourced over great tickets to a conference semifinal basketball game through coaches in the conference alone.

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Though these tickets are given with the best intentions, to have friends and family attend the event, the practice has grown beyond its intent. Brokers offer these insiders a way to profit from their tickets: Selling tickets is a moving target changing every day. The benefit of a season ticket is having your seat for every game.

If you bought season tickets five years ago, and I bought them two years ago, you likely have better tickets than I do. However, if you move out of town, I am next in line to buy your tickets for next season.

Once the season tickets are spoken for, tickets go on sale to the general public, which goes through the torturous on-sale process to buy their tickets. Our event is now sold out. Those tickets are now reclaimed. Naturally, the next in line would be easiest, but moving every single person on the list every time someone cancels or stops paying mid-year is not practical. Next, the insiders return a block on unused tickets. So now, the venue finds itself with a block of unused, unpaid for, great tickets.

Putting them on sale to the general public is unfair to those who bought in advance and would create a mutiny. So what do they do? They sell them to a source who will keep it quiet, those who make their living staying under the radar: These deals are very common and have matured over time into sophisticated give-and-take deals.

Each party knows the value of the tickets being sold. It was just the tip of the iceberg.

Some of these deals are so mature the ticket brokers become a channel for the teams. The broker buys blocks of tickets at a discount and can even return unsold tickets prior to the event. Many teams will publicly slam the practice of scalping or ticket brokering, yet will partake in the same kinds of deals themselves on a rather broad scale.

As the ticket market has matured and the secondary market has gotten more legitimate, some of these larger deals have made their way out from the shadows and become more formal and turned into sponsorship or business deals.

Major sponsors get tickets in advance as part of their agreements. Brands sponsor tours and get ticket allotments. What these deals did, however, was make it simpler for the aforementioned hand-shake agreements to become more formalized. The venues and teams could now pocket money from these deals upfront and while spinning them as reputable business deals instead of keeping them quiet.

Once these sponsorship deals became commonplace, brokers of all sizes got in on the action. This sponsorship has taken many forms from many teams over the years and is very common. The size and breadth of these sponsorship deals grew alongside the secondary market.

The NFL, looking to capitalize on the secondary market for its own event , outsources the sale of travel packages, complete with hotel room blocks held by the NFL and pre-game hospitality tied to the game, to companies who build out sales teams and take the risk on the event. In exchange, these companies get a cut of the sales and, more importantly, the ability to sell other events such as the Masters, Kentucky Derby or UFC to the customers they meet selling for the NFL.

With the tournament switching locations each year, it really is the perfect event to outsource and has allowed PrimeSport to cross the line between broker and primary seller, something secondary providers and marketplace have been aiming to do for years. The deals continue to get larger. Those deals were in the hundreds of thousands annually.

The content provider is simply locking up some of the upside early and focusing on their core business, putting on the event while outsourcing the cost, time, and energy of the secondary market to those who already understand it and have experience with it. Given what is happening on the macro side of the secondary market, with mega-brokers, billion dollar marketplaces, and sponsorships everywhere, many pundits in the live events space believe the days of the old-school ticket broker are coming to an end.

The participation numbers, however, show a different trend. There are over 10, small-time ticket brokers trying to get an edge on the system every day. These brokers still buy season tickets in bulk and sit on them, diversifying their portfolios by buying from a number of different teams and looking to pay off the season with the biggest games, selling the down games for whatever they can get for them. Completing orders and selling at a low cost helps brokers in their standing with some marketplaces.

The adverse effect on the market caused a number of teams to take action to create a price floor and try to eliminate very low-cost tickets. They open up dozens of credit cards, join every fan club, use services that alert them to on-sales and special codes, and spend their entire day trying to beat the system by buying up tickets.

The common fan, who wakes up and lines up on a Saturday with one or two credit cards and a tablet or two ready to buy tickets at on-sale, stands little chance against even the small brokers who have dozens of browsers and cards open and at the ready.

The lengths many of these brokers will go to seem extreme to the common fan. However, when done full-time, the practice can be lucrative. Brokers will fly to the city of the on-sale and stand in line knowing there are tickets on hold for those on-sales. They will hire day labor to stand in line with them because there is usually a 4-to-8 tickets per person limit.

It really is a sight to behold. Despite the terrible public perception, ticket brokering is a lucrative business for many, where the top guys at the small firms are easily clearing six figures in net profit annually with some in the millions. However, there are many occasions where the teams or entertainers really do want their best fans to experience the event. Many acts carve out tickets for fan clubs and require membership. The goal is to get those engaged with the band to buy the tickets and attend the show.

The primary ticket sellers, promoters and even the content have begun to get smart to the brokers in fan clubs and are attempting measures to limit the number of great seats that end up in the wrong hands. Live events are more popular than ever and, for a myriad of reasons, brands are flocking to align with the event or performer through sponsorships and activation. One of the more effective activations is the sponsorships credit card and payment companies execute to gain special access for their members.

Companies such as American Express and MasterCard afford their cardholders access to premium tickets and to pre-sales to live events through sponsorship deals with Live Nation, AEG, Major League Baseball, and many others. If there is an angle, ticket brokers will take it. Brokers will open up numerous cards of all kinds to assure they have access to these pre-sales in bulk. When there is money to be made, however, and the cards held in the name of the business, it is well worth the time and energy for brokers to assail the offers.

Those participating are doing so to make a profit first. Whenever there is an opportunity for a profit in a capitalist marketplace, there will be those who jump at that opportunity. Pressures from fans, the entertainers and teams, and even politicians are helping the market make strides towards efficiency. As that occurs, the loopholes ticket brokers have been exposing will close.

Technology can close many of these loopholes and it already exists. The issue is not the technology, however, it is where we are on the t echnology adoption life cycle for the fans. Any new technology takes time for all users along the adoption curve to adapt to and accept. In the meantime, we will continue to hear tales of a rigged system, leaving fans upset and pointing fingers. The system is rigged.

Tony Knopp is CEO of TicketManager , where he is responsible for the day-to-day technology and management of over 30 million sports tickets annually.

Tony previously held positions as an early member at StubHub and with AEG Worldwide, and has over 15 years experience in the technology and ticket markets. You are commenting using your WordPress.

You are commenting using your Twitter account. You are commenting using your Facebook account. Notify me of new comments via email. The Fields of Green Menu. Menu Search The Fields of Green. As the ticket market has matured and the secondary market has gotten more legitimate, some of these larger deals have made their way out from the shadows and become more formal and turned into sponsorship or business deals May 9, ; Kansas City, KS, USA; A fan holds up a pair of tickets for the Spongebob Squarepants at Kansas Speedway.

The Tens Of Thousands Of The Little Guy Given what is happening on the macro side of the secondary market, with mega-brokers, billion dollar marketplaces, and sponsorships everywhere, many pundits in the live events space believe the days of the old-school ticket broker are coming to an end. Bruce Springsteen and the E-Street band have been the subject of major inquiries into ticket scalping.

Her team attempted to sell up to 70 percent of her tickets through a fan club brokered by Songkick, who then dropped the ball with a terrible information security blunder.

Adele has since followed. Brokers, as usual, have found a way around these measures. The most high-profile and recent of the primary vs. Tom Petty had success doing the same with his shows in Los Angeles, however the demand for those shows was nowhere close to the estimated 10 million people trying to buy tickets to see Adele. Card Deals Live events are more popular than ever and, for a myriad of reasons, brands are flocking to align with the event or performer through sponsorships and activation.

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