Claiming the primary ticketing giant is trying to illegally squash competition, the Cleveland Cavaliers and partner Flash Seats Monday filed a federal lawsuit in Ohio against Ticketmaster alleging the company is violating state and federal anti-trust laws.
The lawsuit was filed “to stop Ticketmaster’s ongoing campaign to utilize its substantial market power in ticketing service to exclude actual and potential competition,” according to the Cavs and Flash Seats, and they complain that Ticketmaster is “coercively seeking to enforce its primary-ticketing contracts (relating to the direct sale of tickets to the public) with the Cavaliers and other customers.” Ticketmaster is doing this by requiring the Cavs “to use only Ticketmaster’s own secondary-ticketing program (relating to the resale of tickets) or none at all,” the team added. Ticketmaster does not offer an electronic, paperless secondary-ticketing product using anything resembling the Flash Seats technology. . .
The Cavaliers are the first professional sports team to use Flash Seats’ technology, in part because the company is owned by Camelot Ventures, a venture capital firm that includes Cavs owner Dan Gilbert.
At press time, Ticketmaster said it was still reviewing the matter and planned to issue a statement later today. The Cavs are trumpeting the lawsuit on its website under the bold title “Enough is Enough.”
On the strength of stellar play by superstar LeBron James, the Cavs had their best season in team history in 2006-07, making it all the way to the NBA finals for the first time. The team is anticipating record ticket sales for the 2007-08 season.
In a prepared statement, Flash Seats CEO Sam Gerace said, “We believe fans suffer from less competition and less innovation due to the Ticketmaster business practices we address in our lawsuit. We further believe Ticketmaster is trying to prevent the Cavaliers and numerous other professional sports teams from offering their fans the ability to buy and sell tickets on any secondary-marketing exchange Ticketmaster does not own, as well as preventing fans from enjoying innovative new technology products that are not Ticketmaster’s. We feel it is time to put a stop to these practices.”
According to Len Komoroski, president of the Cavs and the Quicken Loans Arena where the team plays, both sides tried to negotiate a deal for several months, but once the Cavs finally came to the conclusion that Ticketmaster allegedly appeared to not want a deal, the team and Flash Seats sued. “How can Ticketmaster be allowed to prevent a team from offering a service to its fans that Ticketmaster itself does not offer? Should pro sports teams simply be limited to offering only services that Ticketmaster decides to offer? We think the answer to that is very clear. No,” Komoroski said in a prepared statement.
Ticketmaster’s secondary ticketing offering is its TicketExchange program, which the Cavs and Flash Seats contend is inferior to its own system.
Komoroski said that Ticketmaster believes that the Cavs’ “conduct in making Flash Seats available to its season ticket holders violates Ticketmaster’s exclusive rights.” The Cavs have a contract with Ticketmaster for the sale of individual game tickets in the primary-ticketing market, but the exclusivity provision “has never been applied, and was never intended to apply, to the secondary-ticketing market for season tickets or the manner in which season ticket holders transfer or resell their tickets to other fans,” he added.