Resale of tickets to sporting and entertainment events has long been an issue that businesses seek to control. However, since most ticket sale laws vary on a state by state basis, it becomes increasingly difficult to monitor given the loopholes that resellers can use to circumvent the law. In the digital era, it is easier than ever to resell tickets with the use of online marketplaces for sellers and buyers of tickets such as StubHub, SeatGeek, and TicketsNow. Nonetheless, going forward, it will be interesting to monitor the relationships of both the professional sports and entertainment industries with these marketplaces.
Earlier this month, the United States District Court for the Northern District of California dismissed a complaint by StubHub, alleging that the Golden State Warriors and Ticketmaster Inc. were in violation of the §1 or §2 of the Sherman Act by mandating that persons who purchase Warriors’ tickets cannot resell them other than through Ticketmaster. StubHub asserted five separate claims, first, alleging that the defendants engaged in “illegal tying” by mandating that persons who purchase primary Warriors tickets cannot resell them other than through Ticketmaster, which constituted a violation of §1. Second, they alleged that defendants violated §1 by engaging in “a series of coordinated agreements and acts to limit competition” in the “Secondary Ticket Services Market.” The third claim alleged that the defendants violated §2 by entering into a “conspiracy to monopolize the Secondary Ticket Services Market.” In the fourth claim, StubHub alleged that Ticketmaster has violated § 2 by “attempting to monopolize the Secondary Ticket Services Market.” The final claim alleged that defendants have violated §1 by “entering into exclusive dealing arrangements with respect to the “Secondary Tickets Services Market” and the “Primary Ticket Market,” and that, as a result, they have “excluded StubHub and other Secondary Ticket Exchange Services providers from the Secondary Ticket Services Market.”
In short, the Court dismissed these claims by StubHub by declaring that two separate markets for Warriors’ tickets did not exist. StubHub asserted that there was a Primary Market, which would encompass tickets bought directly from Ticketmaster, the Warriors’ exclusive provider of Primary Ticket Platform Services. In addition, StubHub argued that there was a Secondary Market, which is an exchange where people resell tickets that have already been purchased. The Court stated that there was only one market for Warriors’ tickets, as the “Primary” and “Secondary” Tickets are “commodities reasonably interchangeable by consumers for the same purposes.” Therefore, the Primary Ticket is designed to guarantee entrance to a Warriors’ game in the same manner that a secondary ticket guarantees entrance. Moreover, the difference in price between the Primary and Secondary Market Ticket is not sufficient to distinguish that these are two separate markets. In response to monopoly allegations, the Court stated the “natural monopoly every manufacturer has in the production and sale of its own product cannot be the basis for antitrust liability.”
The ease of facilitating transactions like this is something that we often take for granted in an era where money and property is easily transferred at the click of a mouse, or even with the tap of a thumb. Yet, the judge’s ruling here could open the door for other professional sports franchises to impose limitations on exactly consumers decide to resell our own tickets. Though this will likely frustrate many ticket-holders, the reasoning of the court based upon the claim presented to them appears to be fair. Still, this issue doesn’t seem to be limited to being an antitrust issue, and it seems likely other legal arguments such as property rights may be important to consider here. With that said, the defending NBA Champion Golden State Warriors are likely trailblazers for something other than their sensational play on the basketball court as a result of this case.
Jaymon Ballew is an editor on the Michigan Telecommunications and Technology Law Review, and a member of the University Michigan Law School class of 2017.