Ticketmaster fee structure exposed in Philadelphia bankruptcy case Ticketmaster fee structure exposed in Philadelphia bankruptcy case
Philadelphia’s famed Trocadero Theatre filed for Chapter 11 bankruptcy protection this week, and as a result the venue is seeking to break its ticketing... Ticketmaster fee structure exposed in Philadelphia bankruptcy case

Philadelphia’s famed Trocadero Theatre filed for Chapter 11 bankruptcy protection this week, and as a result the venue is seeking to break its ticketing contract with Ticketmaster, a deal it describes in court documents as onerous.

The 141-year-old threatre points back to an increase in fees that Ticketmaster made to its contract in 2008 as the main reason for the bankruptcy.

Ticketmaster was charging fees of between $3 and $6.50 per ticket, of which it would send back to the venue a royalty of 20 percent to 30 percent, according to the filing. On tickets with a face value of $10 or less, the “Troc” received 20 percent back, or $0.50. For tickets above $10, the venue received a royalty payment of 30 percent of the added fee, which for tickets above $25 would mean the Troc received $1.95 back (the added fee was $6.50 for tickets with a face value above $25).

In 2008, Ticketmaster amended the agreement to add two new fee levels; tickets from $25.01 to $50 incurred a fee of $7.50, and tickets above $50 incurred a fee of $8.50. The royalty percentages stayed about the same, with the Troc now receiving as much as $2.25 based on the $7.50 fee, and $2.55 based on the $8.50 fee.

“Subsequent to executing the Amendment, the Debtor has experienced a decrease in the sale of Tickets through the TM System due to the increase in the Convenience Charge,” the theatre states in the federal filing. “Rather than ordering Tickets through the TM System, customers purchased Tickets to the Attractions in person at the Facility Box Office to avoid the prohibitive Convenience Charge. The effect on the Debtor of the increase in the Convenience Charge has resulted in a reduction in the Royalties that it receives due to a decrease in the number of Tickets sold through the TM System.”

The bankruptcy filing lifted the lid off of one aspect of Ticketmaster’s long-standing business practice, and disclosed the negotiated royalty percentage with one of its clients. Such fees can vary among Ticketmaster’s clients, but they have long been criticized by consumers. However, many in the industry are not about to give up such a steady revenue stream.

Joon Associates, Inc., the Troc’s parent company, wants the bankruptcy court to break the contract with Ticketmaster so that it can sign a new deal with another ticketing company with more favorable terms.

If the motion is granted, it could set off a bidding war among the growing list of ticketing companies competing against Ticketmaster.

“In the Debtor’s business judgment, there are other ticketing agencies in the marketplace that can provide similar services as Ticketmaster, that do not require the same high Convenience Charges and Processing Fees,” the Troc wrote in the bankruptcy filing. “Moreover, these companies would pay twice the amount of royalties to the Debtor than the Royalties currently paid by Ticketmaster to the Debtor. Such a contract would result in a more profitable business arrangement than the contract with Ticketmaster.”

In the federal document, Joon Associates lists assets of $100,001 and $500,000 against estimated liabilities of $500,001 and $1 million. The venue grossed $2.3 million in 2008 and $2.1 million in 2009, according to the filing. Figures for 2010 were not disclosed.

Over the years, the Troc has hosted opera and burlesque shows, and it is currently a haven for indie rock, punk other forms of alternative music concerts.