Teams Look for Their Cut Among the Ticket Scalpers

StubHub pays hefty sponsorship fees to be the official site for the resale of tickets. In Washington, for example, StubHub paid to be the preferred marketplace for the resale of tickets for the Redskins, Wizards and Capitals, with the Redskins' deal worth around $5 million over five years to the football team, according to StubHub representatives. StubHub does not pay the teams commissions on its transactions.

In addition to the Redskins deal, StubHub has signed on as the preferred ticket reseller with seven other NFL teams, two NHL teams including the Capitals, and two NBA teams, including the Wizards. TicketsNow has signed the Baltimore Ravens and plans to announce a deal with another NFL partner next week. RazorGator has four NFL partners, including the San Francisco 49ers and Philadelphia Eagles.

The revenue model calls for most teams to earn their share from sponsorship revenues, but eBay's Bettinelli said that could change if the revenue from the fee on each ticket resale soars.

Cutting a simple sponsorship deal "is a lot less work," Bettinelli said. He said teams may decide to run the ticket site themselves or demand a piece of the revenue on transactions if there is a big demand for their tickets. "The Red Sox may be in a different position than the Florida Marlins," he said.

Major League Baseball has decided that the fee on transactions holds more financial promise. Baseball has its own marketplace for secondary tickets on its in-house Web site, MLB.com, and it collects a commission on the price of every ticket that is resold on that site. On the Nationals site, for example, the buyer pays a 20 percent "convenience fee" plus a small handling charge. The "convenience fee" is usually split evenly, with the buyer and seller each paying 10 percent, in most MLB markets.

"This industry is alive and vibrant," MLB.com's Bowman said.

Team owners say it's not only about economics, but it also wins over fans.

Ted Leonsis, owner of the Capitals, said team owners were at first uncomfortable about doing business with the companies who resold their tickets, but those fears abated because of the revenue possibilities and the goodwill it created with season ticket holders who had an easy way to resell unused tickets.

"Owners initially thought that we were in competition with those people, until we realized that if something's good for your season ticket holders, it's going to be good for you," Leonsis said. "It opened up a new sponsorship category and the world didn't end."

MLB.com's Bowman said teams will follow ticket buyers on the secondary market closely to see if they can turn them into a full- or partial-plan season ticket holder. StubHub also plans to dig into the Redskins' 150,000-name long season ticket list as a way to spread its customer base.

The online companies bristle at being called scalpers or brokers. They argue that they provide a legitimate and honest marketplace for tickets that have already been purchased by a fan or someone else who now wants to resell them.

"We don't buy and sell tickets," said Fluhr, chief executive officer of StubHub. "We don't own the tickets. We become the official marketplace where season ticket holders can go to submit their tickets for sale."

The competition between the Internet marketplace companies is becoming fierce, with new partnerships announced every day. Although the teams partner with the online ticket marketplace site, ticket holders are free to resell their tickets on any site, including eBay, or any of the other sites.

Proponents say the revolution in the Internet ticket industry makes it easier for season ticket holders to sell their tickets, and buyers do not have to stand outside an event and seek out sellers. Critics say it increases hoarding and speculation and ultimately raises ticket prices.

"There's nothing wrong with being a season ticket holder and not being able to use your tickets and reselling them," said Paul Bauch, a Chicago attorney who unsuccessfully sued the Chicago Cubs over their involvement in the secondary ticket market. "What's happening in the marketplace is people aren't buying them as a fan, but are buying them to speculate."

Analysts say the new companies are trying to build a brand around trust and individual service that eBay may find difficult to provide because of its size.

"There are efficiencies that StubHub, RazorGator and TicketsNow can bring to the table that are more efficient than eBay," said Sucharita Mulpuru, a senior analyst at Forrester Research specializing in online retail. "They have lists of interested consumers, relationships with brokers and they stand behind their sale with money-back guarantees. They have found a niche that does not make sense for a company like eBay to expend resources on."

Don't bet on it, said Bettinelli.

"We look and see what's happening as validity to what we've been doing for a long time, and this gives us more reason to continue to invest," he said.