Wednesday, July 04, 2007

Ticket touting goes to Westminster

The draft evidence from the Department of Culture, Media and Sport's investigation into ticket resales has been published online, and Phil Davies MP has come out of it looking pretty deft. First up were Paul Vaughan of the Rugby Football Union; Alex Horne from Wembley and the FA, and Nicholas Bitel, representing Wimbledon. Davies heard their desire to ensure that 'genuine' fans could get to their events, and then sucked a thoughtful tooth:

I think the prawn sandwich brigade was a reference to all the tickets you people sell to the corporate clients, rather than the tickets that touts sell on to a handful of people at events, so I am not sure the prawn sandwich brigade is a good argument for you if you really want genuine fans there. Perhaps you should not give so many tickets to your corporate clients. That hardly seems a way of getting genuine fans in. What I want to ask is: can you give us any examples of where the Government regulates the secondary market of anything; where the Government regulates the price and the sale of the secondary market in anything?

Mr Bitel: In tickets, yes.

Q7 Philip Davies: Can you give me one industry where the Government regulates the price or the secondary market of anything? No. I cannot either.

Mr Vaughan: There are probably a number of markets where the primary market is actually regulated rather than the secondary, because there is no secondary market for it.

Q8 Philip Davies: The Government does not regulate the secondary market, so when people sell art and think, "I can get �90 for this art", and somebody thinks, "Great I'll pay �95 for that and I can sell that on for �200", the Government does not regulate that because that is the way the world goes round.

Mr Bitel: The Government does regulate it.

Q9 Philip Davies: The whole world goes round on people buying things and selling them on.

Mr Bitel: It is a criminal offence to sell on your ticket for London Underground, for instance.

Q10 Philip Davies: Why are tickets any different from anything else that people buy and think, "Actually I could sell this at a profit"? Why should tickets be different from anything else?

Mr Bitel: Tickets are not a commodity. I think that is the basic flaw in that particular analysis. Just in the same way as the Government regulates the laws into who comes into private land, we are private land and we regulate who comes into our grounds or stadia; and in the same way we are issuing a licence in the same way as a landlord issues a lease. If you are a landlord you can refuse to sell the lease onto whoever you wish to. We are issuing a licence to enter into our land to particular people, named individuals; and very often they are named individuals for a particular reason. For instance, we have issued tickets to wheelchair users because we want to have a certain number of tickets available to wheelchair users, and we are seeing those tickets being touted to the general market, to non-wheelchair users. We think that is an inappropriate use of the free market.

Hold on a moment - did the solictor representing the All England Club just suggest that they're using disability as a way of determining who can and can't buy certain tickets for their event? Is that even legal?
Q11 Philip Davies: Who loses out on ticket touting; who are the losers?

Mr Vaughan: If I could just answer that. It is the opportunity cost to the sport potentially. We are trying to reward players, volunteers and schoolchildren, people we want to encourage to stay within the game. At the end of the day the sport loses because if we do not enable them to keep on getting their tickets they will not belong to clubs and the sport will shrink. I believe if you spoke to your own club within this august body here, they do not sell the tickets on because they genuinely want to use them. If you looked at the differential it is an opportunity cost to the sport. The secondary market exists because we price them lower. If we priced our tickets at an economic price - there are some prices going on at the moment from viagogo for the England v Wales game February 2008. Firstly, we have not even printed the tickets; we have not even designed the tickets; and they are going at a rate currently of somewhere in the region of �592 each. We are pricing them, they say within here, of between �20 and �65: that is wrong.

So, Vaughan is suggesting that the people who buy tickets at a mark-up don't want to use them? Is there a hitherto undiscovered group of people snapping up cup final tickets at a mark-up and then burning them? Is this something to do with the KLF?

Of course, Davies was having none of this, and tried his "who is hurt here" question again:
Q12 Philip Davies: Who is losing out because somebody is selling it on for �500? You have got bums on your seats; you have sold the ticket at the price you wanted to; the person who has paid �500 is happy to pay �500; the person who is selling it is happy to sell it; who is losing?

Mr Vaughan: Are you suggesting that the sport should actually charge �500 to start with?

We imagine he was doing some sums on the back on the envelope here; it's interesting he couldn't, apparently, understand a simple "if you price a tickets at one level, and someone pays that level, even if it is sold on for more, how can you lose when you have achieved the price you wanted" question.
Q13 Philip Davies: No, I am just asking: who is losing out?

Mr Horne: The example that Paul is highlighting here, it could be the end user who may be happy to pay �500 for a ticket, but that ticket does not exist yet; it is not in the hands of viagogo and they have no right to enter into that transaction.

But selling stuff you don't have in your hands isn't a crime - that's exactly what the futures market and hedge funds are based on. If you then fail to keep up your side of the bargain, the law already will be able to intervene. So there's not any clear reason for new legislation there, is there?

Horne continues:
From a consumer perspective the RFU are somehow being linked with a transaction they have no control over.

No direct control of - but isn't the case with tickets sold through official agents, too?
Mr Bitel: For example, yesterday we put tickets on sale via Ticketmaster; these are last minute tickets that became available; someone bought one of those tickets at the proper price and two minutes later put it on sale on eBay. So they never had any intention of coming along, but they just decided to buy it and resell it. The people who lost were the next people in the queue who wanted to buy that ticket and lost the opportunity of buying the ticket at the regular price.

Frustrating, perhaps, but if Wimbledon really wanted that to not happen, they could arrange their ticket sales in a way that would prevent that happening. Why go running to the government demanding laws simply because you're too lazy or mean to invest in your own ticketing system?
In another case, we have seen tickets which we have issued for schools, intended for schoolchildren, being touted via eBay in that particular case. Who have lost out: the schoolchildren who cannot come to the event. There are a number of people who lose out from ticket touting.

Q14 Philip Davies: With a limited number of tickets only so many people can go, so the person who won out was the person who paid the tout for the ticket. If they had not had them they would have lost out. A punter somewhere would have lost out one way or another, whether you had ticket touting or not, would they not? One of them would not have been able to go.

Mr Horne: To use the children analogy, it is unreasonable to allow an open market to have adult access into an area that has been specifically designed to be sold for children. A similar analogy you could use for football.

Adrian Sanders saw an obvious flaw in this chimera of adults pretending to be children to take advantage of under 16 sales: they don't look like children:
Q15 Mr Sanders: If you are under 16 you go through a different turnstile at a football ground. Why can you not issue a ticket that is under 16 only with some form of ID? Therefore, somebody who is over 16 turning up, or looks over 16, will not be allowed in. It will be obvious that they fraudulently purchased a ticket. Actually is not the answer in your own hands?

Apparently, the (now defunct, but not at the time) Department of Trade and Industry won't let them, says Wimbledon:
Mr Bitel: If you cannot stop someone from selling on a ticket then why should that be? If you see the evidence from the DTI who have complained that Glastonbury put photos on people's tickets to prevent them being sold on, it is not just a question of the answer in our hands. We have got the DTI saying to us on occasions, "It is unreasonable for you to put a ticket condition which prevents it being sold on". In those cases of the schoolchildren it would be unreasonable apparently, according to the DTI, for us to prevent them being sold on from schoolchildren.

Oh, really? Didn't the DTI suggest rather than instruct, and weren't they talking about tickets being sold like-for-like - not that it was unreasonable to refuse to allow an adult to use a child's ticket; that's just a ridiculous claim.

Bitel pulled on another of his hats:
I am Chairman of the Major Events Panel of UK Sport and we are seeing more and more major events saying to us, "If you wish to bid you have to protect the tickets". We are seeing that. The Rugby World Cup is one example. I know Scotland have a desire to bid against England maybe and others. Scotland maybe together with Wales, and maybe Ireland. Almost certainly the IRV is going to say, "You have to have this type of legislation in place". The Cricket World Cup is another example. The Caribbean Islands - nine different sovereign nations introduced laws to outlaw ticket touting for the Cricket World Cup as part of a prerequisite of obtaining that event. I think if Britain wishes to attract more major events in the future we are certainly going to have to see that type of protection being extended. I think extending it to 2012 gave a legitimate expectation to a number of these major international sporting organisations that Britain will do likewise for their events as well.

So, we're now asking the UK Government to start legislating in order to bend to the whims of private, self-appointed bodies like UEFA?

Later, Harvey Goldsmith appeared, making his pledge that he's interested in the 'real fans':
We are a business. We are here 365 days; we are not just for the odd concert that you read about in the newspapers causing a furore or just had huge demand. We are actually a business and we are here all the time, and we are presenting events and concerts all through the year to many fans who are real fans of music; they buy the records; they follow the artists and they come back more than once. They want to be able to see their heroes and those artists they support. They do not want to pay inflated prices for them; and we spend a huge amount of time when we define what our ticket prices are on how that is made up. It is not just plucked in the air. Ticket prices are a combination of what the costs are; what the breakeven point is; what a fair margin is; what we think that act can stand in the marketplace in a fair way. We are not out to rip-off or take advantage of our customers.

We're always fascinated by the concept of "real fans" - the people who throw the term around usually are very distant indeed from any concept of actually supporting anything. For example, there was that patronising "You're the real fans" campaign from Coke last year, when executives representing a Georgia based soft drink company signed off on telling people who go to lower-league matches how "real" they are - as if two decades of trudging to a ground with no roof to watch a stream of nil-nil draws counted for nothing until Coke validated it.

And I'm a little lost by this train of thought anyway - did I somehow count as an unreal Fall fan the time I bought my ticket in the street outside the Lomax for a fifty per-cent mark-up? Was my fandom intact when I then bought a ticket for a later gig at the box office? Or is real fandom like virginity, and once it's gone, it's gone?

Leaving aside that Goldsmith has run through the irrelevant explanation of how events set their prices - presumably nobody thought that these events were "plucking prices from the air"; if events sold tickets at prices which didn't provide them with a return that situation wouldn't change if the tickets were used by initial purchasers, or sold on fourteen times - what does he mean when he claims that fans "do not want to pay inflated prices for" tickets? Clearly they do, or there wouldn't be a secondary market and hence no need for anyone to worry.

The sports guys suggested that people were paying over the odds for tickets they didn't want to use; now Goldsmith is suggesting that people are bidding on eBay for events featuring bands they're not arsed about. What strange people are out there. Apparently.
I know it sounds a bit strange, because in the way you are asking the question you are saying, "Okay, everybody should be able to resell tickets. They should do want they want". That is not our business. We are a business; we are not here to supply parasites who are there to monopolise and capitalise on what we are trying to do as an industry. That industry is pretty far and wide. Not only do you see the front face of it as a concert or what you read about, but remember what goes into getting those artists to that - the employment values; the production values; and all the rest that goes in it, that is what supports our industry. We are not here to create a marketplace for someone else who puts nothing back and just takes out.

But don't the touts pay a price for the event which - as Harvey had just laboriously explained - has been set to give everyone a fair return? It's not like they're stealing tickets, is it?

Philip Davies wondered if this would all be a good use of police time:
What evidence have you got that any government legislation or any ban would eliminate ticket touting? If we stopped people on eBay selling tickets are you really na�ve enough to think that would be the end of ticket touting, and it would not just be driven underground? Who is going to police this? Are you really asking that my local police force that are stretched for resources, and people who ring up with burglaries and cannot get somebody to come, you are saying that my punters should expect the police to scrap all their burglaries and their shoplifting and come and rescue you from the situation you have got yourselves into?

Mr Goldsmith: The police are there anyway. I went to Wembley Stadium two Saturdays ago and from coming out of the station - because it was the first time I had been there and wanted to experience it as if I were regular customer - I counted 23 policemen with their flak jackets ready for World War Three, machine guns and God knows what else - Wembley Station. Walking down the steps, more policemen. I counted about 12 or 14 Wembley stewards also patrolling up and down. Then I was confronted, at my count, with 43 ticket touts who were harassing people coming through trying buy, trying to sell; trying to do some deal; pushing people, "Can you buy this one". The 23 policemen were there whether the touts were there or not. All they had to do was look one stage further and protect the public who genuinely wanted to go to Wembley Stadium to see a show, who were not there for a riot and do not want to be harassed by these people.

So Goldsmith is saying that the police out there - supposedly for public order - have got so little to do with their time they could be acting as ticket stewards too? "Hold me gun for me, Max, I'm just going to check this guy's name against a list of people who bought tickets at the box office..."

Rob Ballantine was asked by Helen Southwell what would happen if people could no longer sell on tickets they simply couldn't use. Rob Ballantine made it clear they weren't going to offer refunds:
Mr Ballantine: For a resale what we are planning to do, what we cannot do is offer complete refunds. For example, Glastonbury last weekend, a �20 million outlay to build a site, pay the artists, get everything ready, torrential rain the week before; ten thousand people probably find they had a relative die or something meant they could not attend and they would ask for a refund; that would make the Glastonbury organisation go bust. That is �2.5m they need to refund and people do not make those sorts of profits. That festival would end overnight. We therefore cannot issue complete refunds for people who simply change their minds because we build the event depending on the ticket sales. Once a promoter guarantees the artist the money and the venue, then the artist goes and designs that tour, the expenses are taken on and that money is on the table. If then the customers come up and ask for a refund two days before and you have not got a chance to resell them that is where promoters would be going bankrupt left, right and centre. What we will offer though is a resale policy if you cannot attend the event for whatever reason, as soon as there is any sort of legislation to help out because otherwise we are simply going to be acting as a clearing house for touts.

So, in other words: at the moment, the reselling of tickets stops promoters going bust and stops people who aren't able to use their tickets losing out. So, erm, we should change that, then.

Ballantine projected a fearful world of the future without new laws:
The strength of feeling of this is incredible out there. It is absolutely unbelievable. The industry feels that this is a real turning point for us, and we are desperately trying to hold on to our members. We do not operate like the RFU, who commendably look after the schools, or Wimbledon. We are a bunch of individual entrepreneurs and we are trying to hold everybody until we get through this process before people say, "I'm sorry, but I've had enough of everybody else making it on the secondary market. We are now going to auction percentages of our tickets". Those people will just explode onto the market and replace the touts that are selling on the secondary market, and the public is going to lose out hugely. That is what we are coming here to day, "Please protect the public from what is an inevitable economic explosion".

Oddly, though, there's not been any suggestion I've seen yet that the legislation should prevent events promoters from auctioning tickets. Perhaps that should be built in, then - otherwise we might get the impression that all the music and sports industries are interested in is clearing out the competition so they can have the auction action to themselves.

[Thanks to Ian; it should be noted the above segments have been prepublished neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.]


TickEx said...

Hi, this made interesting reading. Our research shows that Fans do not want touts, but do want to have the opporunity to resell tickets. has developed the first vertical search engine for tickets. It has the largest database of tickets on the web so comparison shopping is made easy.

I think this is one way to combat the issue by making the market more transparent.

Cobardon said...

Well done for printing the key pits, and insightful comments as ever.

Goldsmith's waffle about 'breakeven' prices was pathetic.

That's got bugger all to do with it in certain clear cases - why would U2 tickets be starting at £75 or thereabouts for their last tour when lesser acts would charge less than half? (I saw them on the POP tour for about £3o - next tour(with their scaled down sets etc, five years later prices had doubled. Which costs had doubled then, eh? In fact, U2 just realised they could get much more cash back for the gigs.

Clearly, the ticket agencies do supply and demand based pricing. No problem with that, as if you want to pay £75 to see U2, go ahead...but to pretend that it's otherwise is lying.

Aaron said...

fantastic post Simon

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