By James V. Grimaldi
Washington Post Staff Writer
Sunday, December 20, 2009; D01
Four years ago, the Cleveland Browns turned to federal prosecutors when they discovered a member of their sales staff secretly selling tickets to broker Mark Klang. He admitted to paying the salesman $5,000-a-month kickbacks for access to tickets and personal seat licenses.
Today, Klang is selling Browns tickets through the NFL's ticket sales Web site at NFL.com.
Klang's journey from vilified scalper to NFL business partner is a sign of the times.
For years, the NFL did whatever it could to combat scalping, routinely pressing police for arrests and scouring classifieds for brokers scalping season tickets. Team owners demonized ticket brokers as greedy, unscrupulous predators.
Most of those former adversaries now supply tickets to the NFL's Web site as the league vies for a piece of the growing, multibillion-dollar secondary market for tickets. Twenty-five of 32 teams in the NFL allow broker sales through the teams on NFL Ticket Exchange, the league's newly relaunched ticket-reselling site run by Ticketmaster.
In a rollout this fall, hundreds of the country's online brokers have begun selling professional football tickets on the site at face value or above. Brokers use special software to upload their inventories in real time directly onto the NFL site.
The shift has come as most states have relaxed ticket scalping laws and the Internet has transformed the process of ticket buying. "Laws have made it easy for people who bought tickets to resell them legally," said Eric Grubman, the NFL's executive vice president and president of NFL Ventures. "Our fans were really clamoring for it as something that they really wanted to do, easily, securely and above the board."Not quite free market
Brokers simultaneously post their tickets on multiple sites, including their own Web pages as well as NFL Ticket Exchange. On the NFL site, Ticketmaster's software automatically bumps the price as much as 15 to 30 percent, depending on the game and the team's arrangement with Ticketmaster, according to internal company documents obtained by The Washington Post. The fees usually are split with participating teams, spokesmen for several teams said.
"They're basically taking brokers' tickets and putting a service charge on them," said Tom Patania, president of Select-A-Ticket in Riverdale, N.J.
On NFL Ticket Exchange, broker tickets are not labeled as coming from brokers but from "ticket holders." The league maintains it does not deal directly with those formerly known as scalpers.
"We don't have a deal with ticket brokers," Grubman said. "Our deal is with Ticketmaster."
Neal Gulkis, spokesman for the Browns, also distanced the team from Klang. "The Browns do not have a relationship with [Klang's company] Amazing Tickets," Gulkis said. "Our agreement is with the NFL and Ticketmaster."
The site is not a truly free market. Brokers are prohibited from selling tickets at less than face value, although they can sell for above face value.
"To maintain a quality marketplace throughout the NFL Ticket Exchange, each NFL team has specified price floors and ceilings per Section and Row," according to a Ticketmaster e-mail sent to participating brokers.
A Ticketmaster competitor, Don Vaccaro, chief executive of Ticket Network, which also posts broker tickets, said he does not require a minimum price for tickets and criticized the practice as harming consumers. "Make no mistake about it. Floor pricing is done for nefarious purposes," Vaccaro said. "There are a lot of industries, in theory, if they could do it, would prohibit folks from selling their products for less than face value."
In an interview, Ticketmaster spokeswoman Hannah Kampf said the exchange offers consumers a secure way to buy tickets with a guarantee that they are not counterfeit. She declined to discuss in detail the broker sales, the service charge or the floor prices. In an e-mail, she said the prices and fees "are determined by the League and/or individual teams."
In past years, NFL teams supported laws banning various forms of ticket scalping and often played a cat-and-mouse game with brokers, who had to resort to acquiring tickets through straw purchases and classified ads.
The laws were strict. Past ticket-scalping scandals have involved players, coaches and in one case the spouse of then-Los Angeles Rams owner Georgia Frontiere. In 1988, Dominic Frontiere was convicted of tax evasion for failing to pay income tax on about 3,200 tickets he scalped to Super Bowl XIV, held after the 1979 season in Pasadena, Calif. He was sentenced to a year in federal prison and fined $15,000.
When online sales started to soar on Craigslist, eBay and StubHub, the league initially continued its hard-line stance. "We view it as unethical and in some cases against the law," League spokesman Greg Aiello told USA Today in 2002.
That was then.
"It is no longer Ratso Rizzo in the dark alley selling you tickets," said Stephen Happel, an economist at Arizona State University and expert on scalping. "It is a legitimate business selling tickets."
The new relationship spilled into public view this year with a scandal that ensnared the Washington Redskins. The Post reported in September that the team had sold thousands of tickets to brokers, bundling lower-bowl general-admission tickets that were easier to scalp with harder-to-sell premium-priced seats. Redskins officials denounced the practice, blaming rogue employees they said had violated team policy.
In an interview earlier this year, Redskins General Counsel David Donovan explained why the Redskins have a policy prohibiting sales to brokers. "We would much rather put tickets in the hands of fans than someone who flips them at a profit," he said.
Yet hundreds of tickets to Redskins games can be found selling for above face value on the NFL Ticket Exchange by clicking on the Indian head team logo. For Monday night's game with the New York Giants at FedEx Field, there were tickets in Section 121, Row 5 selling for $279 apiece on the NFL site. By analyzing the notes accompanying the tickets and talking to brokers who have access to the database, The Post determined that the tickets were posted there by StageFrontTickets.com of Laurel. StageFront was selling the same tickets on its own site for $258 apiece.
Four tickets to the Nov. 15 Redskins-Denver game in Section 142, Row 12, were on sale for $222 apiece on NFL.com. The tickets had been uploaded to NFL.com from www.GreatSeats.com, where they cost $209 each, a Post analysis shows.
Sales of this sort appear to conflict with team policy posted online stating, "Resale of individual tickets for individual games is only permitted through the Washington Redskins authorized fan-to-fan ticket marketplace, currently, StubHub."
Karl Swanson, vice president of the Redskins, said that the policy only applies to selling an entire season ticket block, not individual games.
"We do not enforce [the individual resale rule] except in instances where there are wholesale scalping going on," Swanson said in an interview earlier this year. "We realize they can sell tickets for the Dallas game and pay for the rest of the season, and if that works for them, then that's great."Some teams opt out
Major league sports have been moving toward partnering with the brokers and resellers on the secondary market for several years. The first deals were with StubHub, a site owned by eBay where season ticket holders can sell their unused tickets.
Those deals have been for the most part marketing arrangements -- where StubHub pays a flat fee for stadium advertising and an on-site box office for its ticket. The Redskins and four other NFL teams -- the Chicago Bears, Cincinnati Bengals, Houston Texans and Tampa Bay Buccaneers -- have deals with StubHub.
"You have this attitude that brokers were taking money out of the owner's pocket, but then along came StubHub, which allowed [teams] to make money scalping the tickets themselves," Happel said.
Season ticket holders for the five StubHub teams are encouraged to resell their tickets on StubHub. For example, Washington Redskins rules prohibit season ticket holders from reselling tickets on NFL Ticket Exchange. Individual game resales are allowed only through StubHub, according to the rules.
"Since we don't participate in NFL Ticket Exchange, we don't have any control of what tickets may be sold there, including whether they allow brokers to sell our tickets," Swanson said.
In addition to the Redskins, six other of the league's 32 teams do not allow broker sales: the Arizona Cardinals, Jacksonville Jaguars, Kansas City Chiefs, New England Patriots, Philadelphia Eagles and San Francisco 49ers.
"We didn't want to go down that road," said Kirk Dyer, vice president of ticket sales for the Denver Broncos, one of the teams that opted out of the program. "We didn't want to see our tickets sold for above the price we set for them."
"It was their prerogative [to opt out] and we understood it," said Neil Glat, the NFL's senior vice president of corporate development.
Some teams still take a hard line toward brokers. In Massachusetts, where the Patriots play, resale of tickets above face is illegal and fans who scalp their tickets could have their season passes revoked, said New England spokesman Stacey James. The Patriots allow only season ticket holders to make sales on NFL Ticket Exchange to others who have paid to be on a Patriots waiting list. Both the buyer and seller are registered on the site using exclusive user names and passwords.
"By reselling to fans on our season ticket wait list, we maintain a higher degree of security by knowing that fans attending the game maintain some accountability for their actions," James said.