Many facets of the live entertainment business have been affected by the coronavirus shut downs. With all touring halted for the next few months, everybody is feeling it, from major corporations like Live Nation, to the dudes working the door and the bartenders who are used to serving you drinks. Ticket brokers (or scalpers) like Stubhub, VividSeats and SeatGeek are also feeling the crunch hardcore right now.
Sales are virtually dead on all of these sites right now, according to Billboard, and with many customers asking for refunds for postponed or canceled shows, places like Stubhub are struggling with a cash liquidity problem.
The reluctance to issue refunds is causing a liquidity crisis for brokers and resale sites like Stubhub, which has tightened payout rules and is trying to clawback millions already paid to brokers to help process refunds and exchanges. Earlier this week Stubhub announced it was temporarily furloughing two-thirds of its employees — about 300 people — while sites like TicketNetwork have had to "enact adjustments and cost cutting measures" in response to the crisis.
Stubhub has already cut their staff by two-thirds, but some analysts warn the worst is yet to come if the sports seasons end up canceled. Gary Adler, the executive director of the National Association of Ticket Brokers, which represents these scalping companies is floating the idea of approaching Congress for a part of the bailout that was recently passed.
"The number of canceled events due to COVID-19, including some of the biggest that exist, has made it extremely difficult for those in ticketing (and live events in general) to stay afloat," he tells Billboard. "We would like to see ticketing and live events put in the same category as airlines, hotels and cruise lines when it comes to applying relief. Right now, the ticketing industry is essentially at a complete halt with no end in sight. Income for the people working in this sector and providing valuable services to consumers is essential and warranted."
Obviously, many venue owners and musicians are critical of the idea because these companies are not "essential" categories like airlines, and many see them as opportunists that inflate pricing of shows for everybody else. As Dallas Observer's Garrett Gravley put it:
I’m sorry, what “valuable services” are being offered by scalpers, exactly? There’s no real value that they offer to consumers whatsoever, especially considering that a ticket purchased directly through Ticketmaster or AXS is just as redeemable for an event as one purchased through a third party. In fact, it could be argued that they are actually detrimental to consumers since they make event access more restricted and make ticket holders pay more for no reason other than through the existence of artificial demand.
Stubhub has previously paid sellers as soon as the sale of the transaction is complete. But due to all the cancellations and postponements, going forward Stubhub says "all sellers, including brokers, are paid after event date."
Stubhub is also offering credit to customers. Instead of a refund for the tickets they bought, buyers are offered a credit on Stubhub for 120% of the value of the ticket, which might end up being the better deal if you consider yourself willing to go to shows soon.
Billboard notes this strategy can backfire if the company does go out of business:
But that tactic could backfire explains Kahn, who said brokers could retaliate by refusing to fulfill orders, especially if they feared one of the marketplaces was at risk of insolvency. In 2016, now-defunct ticket seller Scorebig was placed into receivership after finding itself short on cash and unable to raise new money. Many brokers were never paid for tickets they listed and sold on the site, resulting in six and seven figure losses. Many brokers canceled the tickets they sold on the site leading to fans unwittingly showing up to games and concerts and being being denied access.
"That's why I think a bailout is unlikely — ticket brokers will do anything to protect their losses, even if it hurts the business long term. That will anger the politicians and make any kind of aid unpalatable," said one secondary market consolidator who wished to remain anonymous. "And that's too bad because they could use the help — there will be more cancellations in 2020 than the previous 30 years combined."
In the interest of full disclosure, Metal Injection should note that we have an affiliate deal with Stubhub.
[via MetalSucks]
