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StubHub! Ignored Ticketmaster for Two Years Before Lawsuit
By Alfred Branch, Jr.
Ticketmaster warned rival StubHub! on five separate occasions that it believed the upstart was violating its exclusive contracts between venues and Ticketmaster, only to be virtually ignored every time, according to Ticketmaster’s 77-page lawsuit against StubHub! obtained by Ticketnews.com.
The brief, filed last week in Los Angeles Superior Court, outlines a pattern of alleged wrongdoing and malfeasance by StubHub! toward Ticketmaster that dates back at least two years, which contributed to the decision to file suit. Most recently, Ticketmaster said it believes StubHub! acted improperly as it relates to the current Rowdy Frynds tour featuring Lynyrd Skynyrd and Hank Williams Jr....
“Over the last two years, StubHub repeatedly has acted (both on its own and jointly with others), in contravention of Ticketmaster’s contractual rights for its own commercial gain, most recently in concert with artists representatives and/or promoters in connection with certain [unknown] Defendants, has improperly obtained tickets to sell or auction to the public, for its own commercial and financial gain, by inducing Ticketmaster’s venue clients to deliver premium tickets to StubHub for sale on its website as part of the overall deal placing the act at the venue,” the lawsuit states. “Ticketmaster is informed and believes, and thereon alleges, that certain [unknown] Defendants obtain these tickets for StubHub by making it clear to Ticketmaster’s clients that if they refuse to provide a stated quantity of premium tickets to sell or auction to the public via StubHub (and thus breach their contracts with Ticketmaster), Ticketmaster’s clients might not be considered as venues for future live entertainment events.”
At the heart of the lawsuit is Ticketmaster’s belief that it has exclusive ticket-selling rights at virtually all of the 20 venues where the Rowdy Frynds tour is playing, and that StubHub! as the tour’s “official Premium Ticket provider” is a breach of those contracts. StubHub! is auctioning tickets in several of the front rows at most of the venues.
Ticketmaster wrote StubHub! about similar alleged contractual violations on August 17, 2005; October 10, 2005; December 16, 2005; July 27, 2005; and March 23, 2007, but StubHub! continued with its business practices and didn’t respond to the letters, according to the lawsuit.
The impetus for the suit is partly because Ticketmaster has seen the proliferation of secondary ticket seller websites and brokers in recent years, and those new businesses have taken large chunks of the market away from the perennial ticket giant. This is Ticketmaster’s proverbial line in the sand.
In the lawsuit Ticketmaster’s contracts with venues are described as an exclusive right for it to sell tickets on behalf of the venue. “This exclusivity generally is expressed in Ticketmaster’s client agreements through language that grants Ticketmaster the exclusive right to sell ‘all Tickets for the Sellable Capacity [i.e., tickets other than season or ‘house’ seats] for every Attraction, via any and all means and methods, including, without limitation, on the Internet, by telephone, computer, IVR, television, clubs, or outlets, or by any other means of distribution.’ These agreement also typically require Ticketmaster’s clients to ‘ensure that the entire Sellable Capacity for every Attraction shall be made available for distribution on the TM System in accordance with the terms and conditions set forth in this Agreement,” the suit states.
Ticketmaster believes the exclusivity is crucial because the company provides “extensive service and sophisticate ticketing technology, among other things.”
How much Ticketmaster might seek in damages would be determined during the civil trial, according to the company. Ticketmaster alleges that StubHub! deliberately misled several venues as to where the premium tickets would end up. Ticketmaster has its own ticket exchange and auction site where tickets are routinely resold for above face value.
“Ticketmaster is informed and believes that Defendants’ intentional interference with Ticketmaster’s contracts with its clients, including the Tour Venue Clients, was committed with oppression, fraud and malice, and with intentional and reckless disregard of Ticketmaster’s rights under these contracts and other applicable law,” the lawsuit states. “Ticketmaster is informed and believes that at all times Defendants have been aware that they were and are interfering with valid contractual relationships.”