Bowing to pressure from brokers, the organizers of Ticket Evolution, the broker-owned ticket exchange promoted by Golden Tickets owners Ram Silverman and Steve Parry, are reducing the percentage amount they intend to claim from the new company.
Under the original plan presented last week, Silverman and Parry said they were going to take 10 percent each, and Drew Gainor of Ticket Cloud, LLC, the Web site’s developer, was going to also receive 10 percent. In addition, 15 percent was being withheld for the future management team, which has not been named.
Those shares added up to 45 percent of the exchange, which would have left brokers who invested in the new endeavor with a total stake of 55 percent., which left several brokers angry that they were not receiving a big enough stake in the company, which they were largely funding.
To assuage those concerns, the organizers have restructured the percentages to give brokers a significantly bigger slice of the pie. “We are increasing the brokers share from 55% to 80%. This extra 25% is being pulled from the management stock reserve and 5% each from Steve and me,” Silverman wrote in a letter this week to potential broker investors. “If and when we need management or key man stock, we will have that available if we do not reach the maximum allocation on the offering.”
The company is looking to raise a total of $4 million in funding from broker investors by the middle of August; initially the organizers sought to raise the money by the first week of next month but extended it by a week. Ultimately, they believe they will need to raise at least $8 million for development and to begin operations.
Shares in the company will be sold for $1 each, and broker investors must buy at least 8,000 to 10,000 shares, according to the organizers.
Despite Ticket Evolution’s current momentum (last week’s presentation drew hundreds of interested brokers), the initiative faces serious hurdles. The exchange will be competing against more established ticket marketplaces StubHub, TicketNetwork, Razorgator and Live Nation Entertainment’s TicketsNow.
In addition, the company’s chosen software platform, Ruby on Rails, was recently voted one of the least popular among developers in a survey by software developer market research firm Evans Data Corporation. Of 12 platforms surveyed, Rails ranked 10th overall, while Microsoft’s .NET was rated the top. Rails also ranked at the bottom for performance and near the bottom in other related categories.
Besides the other exchanges, Ticket Evolution also faces competition from possibly two other broker-owned ticket exchanges being developed.
“You might also have heard that there is a second group of brokers who are trying to gain traction in the market,” Silverman wrote. “This group is being spearheaded by Steve Lichtman and is trying to attract an exclusive group of some of the larger brokers. We are not a part of this group! We are not sure if this group is part of The World Ticket Broker Organization because everything seems to be so secretive.”
Contacted by TicketNews, Lichtman, owner of Prestige Entertainment, denied the claim. World Ticket Board Organization recently launched a Web site, under the direction of a broker supposedly named Steve Rogers, but the name may be a pseudonym, according to several industry sources.
“As for as me being Steve Rogers or being affiliated in any way with The World Ticket Board Organization, I unfortunately have to state this is just not true,” Lichtman said in a statement. “From what I hear, Steve Rogers owns a large quantity of Miami Heat season tickets, and I’m stuck with a bunch of worthless Knicks [tickets], so clearly he is far smarter than me. I, along with the rest of the industry, am looking forward to the day when he rips off his mask for all the world to see.”
In addition to World Ticket Board Organization, the exchange that is allegedly rounding up support is believed to boast the involvement of former TicketsNow executives and other major brokers, but the former TicketsNow officials are believed to have signed non-compete agreements, according to one broker with knowledge of the group. That entity also may be initiating discussions with Ticket Evolution to combine forces.
Part of the impetus for the creation of Ticket Evolution was a feud Silverman and Parry had with TicketNetwork over fees and other issues.
“It appears as if there are numerous groups forming exchanges looking for brokers to fund them,” said Don Vaccaro, founder and CEO of TicketNetwork. “I truly believe that if these folks thought they would be successful they would self-fund these endeavors, instead of making their money off of fees, or free stock, from other brokers’ investments.”
TicketNetwork is the parent company of TicketNews.