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Legal Top Stories
Could tout litigation against Ticketmaster impact on merger?
By CMU Editorial | Published on Tuesday 6 October 2009
The timing of this lawsuit is key. As Ticketmaster and Live Nation try to convince the US authorities that the two companies merging is a swell idea (their merger is still awaiting government approval), the former is facing a lawsuit from a leading ticket tout who claims the ticketing giant tried to manipulate the growing secondary ticketing market, and that they ripped him off in the process.
Ticketmaster say the lawsuit is “meritless”, and it may well be for all we know, but the allegations in the litigation will surely be considered in passing by those deciding whether or not to approve the live entertainment sector’s big merger.
Given that the ticketing giant has tried to distance itself from the whole online ticket touting game – albeit mainly since the Bruce Spingsteen-led backlash against its own US-based secondary ticketing website TicketsNow – some of the allegations in the lawsuit could be damaging. It alleges Ticketmaster wanted to position itself at the heart of the online ticket resale phenomenon, and that they were willing to release tickets straight onto the secondary market in order to push up ticket prices.
The litigation has been launched by Chuck Lombardo, a ‘ticket broker’ who has been buying and reselling tickets for over two decades, since 1995 via his company Elite Entertainment. According to TicketNews, he claims that in 2007 he was hired by Ticketmaster to “advise, consult and assist” on the growing secondary ticketing market, of which the ticketing giant wanted a cut.
As part of that relationship, Lombardo says he re-sold tickets to some high profile tours – including those of Van Halen, Def Leppard, Kanye West, Neil Diamond and New Kids On The Block – on Ticketmaster’s behalf, ustilising various online ticket resale sites, including TicketsNow, which the ticketing giant acquired in 2008. He also later resold tickets on the secondary market on behalf of Ticketmaster’s artist management division Front Line, in particular for an Eagles tour.
After those projects, Lombardo claims Ticketmaster offered him a more permanent contract, which would see him join the ticketing giant’s pay roll, and them cover the staffing costs of Elite Entertainment. This later developed into talks for Ticketmaster to acquire Lombardo’s company outright.
This is where things started to turn sour, with Lombardo claiming that senior execs at Ticketmaster played hardball in those negotiations, threatening, he claims, to have him “blackballed” from the live industry if he didn’t comply with their demands. Some sort of agreement was signed and then, Lombardo says, Ticketmaster basically stopped talking to him, even though he had contractual commitments to the firm. In the meantime Ticketmaster had done another deal with one of Elite’s rivals.
The lawsuit reads: “In a nutshell, Ticketmaster used plaintiffs’ knowledge and expertise to build its secondary ticket platforms, inducing plaintiffs to provide their services, knowledge, expertise, and contacts with false promises that Ticketmaster would acquire Elite and of full employment for Lombardo and Elite’s key employees with Ticketmaster. However, once Ticketmaster got what it needed and induced plaintiffs, by means of false promises and economic duress, to sign the Settlement Agreement purporting to release any claims against Ticketmaster, and to accept less compensation than was owed for the services provided to Frontline and Ticketmaster, it ruthlessly cast the plaintiffs aside, without regard to the irreparable harm done to their business and to Lombardo’s ability to earn a living”.
Of course the crux of this lawsuit, really, is the deal between Lombardo and Ticketmaster, and his claims it was signed under duress, and on the basis of misrepresentation, and that the ticketing giant did so to screw him over.
But probably of more interest to anyone considering or lobbying against the Ticketmaster and Live Nation merger is the ticketing firm’s alleged active interest in the secondary ticket market, presumably to push up ticket prices. Some might question whether a combined LiveMaster might not also play the secondary ticketing game, and given their combined power in the industry whether that might be considered unfair to consumers, or simply anti-competitive.
In the context of the merger, this contractual squabble between the world’s biggest ticket agent and a prominent ticket tout could have wider implications. Even though Ticketmaster seem confident they’ll win should the dispute go to court.
