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Score one for Ticketmaster.  In the ongoing battle to gain footing in secondary ticket markets, Ticketmaster has inked a high profile deal with the NFL to handle league sponsored resales.

The new service, named the NFL Ticket Exchange, will be hosted by Ticketmaster (Interactive Corp) and accessible from NFL licensed websites including NFL.com.  The site will go live in time for the 2008 season.  Both the NFL and Ticketmaster will jointly promote and market the offering.

Ticketmaster already hosted ticket exchange services for 18 of the 32 teams in the NFL.  The newly signed deal will expand the reach to the entire league.

Ticketmaster’s strategy of securing tickets by partnership follows a similar effort employed by more established secondary sellers Stubhub and its cousin Viagogo (Viagogo was founded by one of Stubhub’s founders to provide a similar service in Europe. In August,  they raised funds, expanded and entered the U.S. market).

In Europe, Viagogo established itself through partnerships with several leading soccer (football) clubs including Chelsea, Manchester United and Bayern Munich.  Stubhub (owned by eBay) has done similar n the U.S..   They  previously signed a five year deal with Major League Baseball to handle resale of season tickets through official team websites.

No official word has been released regarding pricing structures for the NFL and Ticketmaster relationship.  On the team exchanges already in place, ticket resales are limited to face value pricing and Ticketmaster assesses a transaction fee similar to the “convenience” and “handling” charges they tack on to original sales.  The league-wide service may operate similarly, or it may allow name-your-price tools (subject to different State laws) with Ticketmaster taking a percentage of the transaction as a fee.  Whichever structure, the probability is high that Ticketmaster will share some of the resale revenue with the NFL.

Ticketmaster’s executive vice president Eric Korman acknowledges they’re an underdog in the secondary market. 

Secondary markets are generally governed by supply and demand with dynamic pricing.  Through classified ad services like Craigslist, or in online auctions via eBay, their Stubhub subsidiary, or on sites like Razorgator, fans will pay premium prices for hard to come by seats or highly desirable events.     In these markets, the companies act as platforms rather than vendors.  It’s a different animal than selling the tickets originally.

Anti-scalping laws on the books in some States also complicate matters. In Massachusetts, for instance, selling tickets for more than $2 above face value is illegal despite lawmakers moving to open the market.  Under those laws, Stubhub was sued and, in October, forced to reveal the names of 13,000 people who bought or sold New England Patriots tickets in violation between 2002 and 2007. 

That lawsuit was reportedly brought  after fans whose tickets were revoked for violating the team’s season-ticket resale policies sold invalid season tickets on Stubhub.    With more than 50k people on the waiting list for Patriots season tickets, and $125 tickets reselling for as $650 a ticket, the Patriots contend their interests was, and remains, in protecting their fans. 

The Patriots case underscores what seems to be one of driving factors in sports leagues willingness to enter deals like the one reached between Ticketmaster and the NFL: security.  As Ticketmaster’s Eric Korman told the Associated Press, with these partnerships “it’s going to be safe, it’s going to be reliable, it’s going to eb efficient.  When you show up at the gate you’re ensured that the ticket is going to be valid.”

What Korman left out is the other obvious motivation: the bottom line.  Secondary markets are incredibly lucrative, especially when pricing is open. Some analysts estimate the secondary markets could generate upwards of $10b a year.

In December last year, when eBay acquired Stubhub for $310m, Stubhub, purely a reseller, was the 5th most visited ticket vendor on the web.  According to ComScore, they were generating approximately 1/6th the gross traffic at Ticketmaster.  Since, Stubhub’s traffic has improved.

Event ticket prices keep going up (between 1996 and 2001 concert ticket prices were up 61% but the consumer price index was up only 13%.  By 2003 the average ticket price had increased 95% over seven years earlier). Ticketmaster’s fees meanwhile (sometimes called the Ticketmaster Tax), though perceived high, aren’t able to increase all that much. Secondary markets have the potential to be a substantial, and unrestricted, contributor to the company’s net income.  

The support of a major sports league like the NFL won’t hurt.  And the NHL, NBA and Nascar are still up for grabs.

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