Ticketmaster's Hail Mary Pass

Amid IAC's breakup drama, the ticketing giant wants to be the NFL's official reseller

by Spencer E. Ante

Randy Moss (#81) of the New England Patriots celebrates with Matt Light (#72) after catching a touchdown against the Baltimore Ravens on Dec. 3, 2007 Getty Images

Ticketmaster is close to securing a multiyear deal that would make it the official ticket reseller for the National Football League, according to a person familiar with the negotiations. Both parties have agreed on the major terms, though the deal could still fall apart. Another bidder, the online ticket reseller StubHub, is said to be considering a last-minute counteroffer.

In exchange for the exclusive right to sell pro football tickets in the secondary market, Ticketmaster would have to pay an annual fee, likely to be in the range of $15 million to $20 million a year. The NFL asked for terms similar to a deal that Major League Baseball signed this past August with ticketer StubHub to become its official ticket reseller. The NFL and Ticketmaster declined to comment.

Ticketmaster Bulking Up?

The deal underscores the growing importance of the secondary ticketing market as it emerges from the shadowy world of scalpers and enters the mainstream through Internet marketplaces. Increasingly, season ticket owners and other ticket holders are using various Internet exchanges to unload their tickets on a game-by-game basis. It also reflects the rising pressure on Ticketmaster to beef up its business, as the company preps for the possibility that corporate parent IAC/Interactive (IACI) may put it up for sale. Ticketmaster also stands to lose its huge contract with concert-promoting giant Live Nation (LYVAL) at the end of 2008.

The NFL auction attracted several companies, including StubHub, TicketsNow, and London-based reseller Viagogo. But Ticketmaster was the only company willing to bid at or close to the asking price of the NFL, say several sources close to the deal. StubHub President Chris Tsakalakis said in a prepared statement: "The company is naturally interested in aligning with one of the most recognizable entities in sports, but we're also extremely confident in the competitive position we currently possess acting as an independently run marketplace for fans."

The NFL's terms are similar to a deal that Major League Baseball signed this past August with StubHub to become its official ticket reseller. That deal, says a source familiar with the terms, required StubHub to pay Major League Baseball $10 million each year for the rights to resell tickets, along with a $5 million annual payment that goes toward marketing for baseball teams. As part of the deal, StubHub and MLB also share the fees generated from ticket sales. Baseball tickets are the top-selling category on StubHub.

But the NFL deal may be a lot less lucrative, partly because of the fragmented nature of the league's ticketing agreements. Unlike Major League Baseball, which set up a subsidiary to manage the Internet and ticketing operations of all 30 of its ball clubs, the NFL has not centralized its ticket resale business under a single roof. Individual football teams have been free to license their ticket reselling rights, and many have struck multiyear deals already with various players to do so.

StubHub, which is owned by eBay (EBAY), controls ticket reselling for eight NFL teams, including the Indianapolis Colts, San Diego Chargers, and Chicago Bears. Those deals typically last for three to five years. And Viagogo recently signed an exclusive multiyear deal with the Cleveland Browns to resell tickets.