Super Bowl Ticket Scandal

By Chris Kidd, Special for  USDR

Getting tickets to the Super Bowl is the dream of most people, but in the case of Super Bowl XLIX, it became a nightmare for hundreds. Sports & business attorney, Roger R. Quiles, Esquire joined Kevin Price and co-host Chris Kidd on the Price of Business on Business Talk 1110AM KTEK (on Bloomberg’s home in Houston) to talk about this
year’s Super Bowl Ticket Scandal. Click this link to hear the entire interview.

Hundreds of fans who had already paid thousands of dollars for their Super Bowl XLIX tickets discovered, just days before the game, that the tickets they had purchased were not available. Some fans had already mad the trip to Phoenix, Arizona and paid for hotels and all their other travel arrangements.

Sports reporter Darren Rovell, in his ESPN.com article

Resale Sites Renege on Tickets reveals on fan’s Super Bowl nightmare:

Daryl Kikucki, a 37-year-old regional service manager for a jet company in Seattle, is a Seahawks season-ticket holder who sold his ticket to the NFC Championship Game so that he could afford to go the Super Bowl. He bought a $2,100 ticket listed on SeatGeek, which pulled the seat from a company called Prominent Tickets.

“Due to unforeseen circumstances, we have not received our normal allotment of Super
Bowl inventory,” read an email sent from the company to Kikuchi. “In our 26 years of
business, we have never seen a market with such limited availability to the public … If the
tickets were out there, we would rather pay to fill your orders, but we cannot buy tickets that
do not exist.” The company’s terms and conditions, which a customer must check, absolves it from
liability but does not represent that tickets that are listed might not be in its possession.”Now when I think about this game, I get sick to my stomach, knowing I’m not going to be in the stadium,” said Kikuchi, who added he had no choice but to take the company’s offer of two times what he paid.

Price of Business contributor and co-host Chris Kidd, said upon hearing this story he immediately thought of Roger Quiles, who in addition to being a sports and business attorney is an expert in contract law. Chris Kidd, a financial coach and professional investor, who teaches his clients to be more sophisticated investors, knows a thing or two about short-selling when it comes to stocks, asked Roger if these ticket brokerswere essentially short-selling Super Bowl tickets.

Quiles said,“Yes, that is exactly what it is. And for those that aren’t aware, when you’re short-selling tickets, basically what you’re doing is, you have a ticket broker who is selling a ticket that they do not own yet, at that time, for a price above where they think the market will end up. And then they go and purchase another ticket for less than that amount that they sold it for, and they pocket the difference as profit. So what happened here is that ticket brokers grossly underestimated where the market was going to end up and sold tickets for much lower than they should have. So instead of operating at a loss, as they would’ve if they had purchased tickets for above the values that they sold them for, a lot of these ticket orders didn’t get filled.”

Some of the ticket brokers returned the money to the buyers, but many who had purchased Super Bowl tickets already purchased flights and made travel arrangements were unable get travel refunds. Some had already made it to Phoenix and checked into their hotels. StubHub, an online ticket site actually has in their terms and conditions that
if a broker doesn’t come through with tickets as promised then they will acquire replacement tickets for the purchaser. There were several hundred cases on StubHub alone where this happened, and StubHub made good on their promise at their own expense, and certainly took a major hit financially.

Kevin Price posed a question about what the fallout was going to be and what consequences could be ahead. Roger Quiles says individuals who purchased tickets and didn’t receive any sort of refund, could sue based on contract theory. He says, “Their damages would be the amount they laid out for the tickets, plus any other reliance damages. Reliance damages are going to be the airfare, the hotel, as so on, that everyone would have booked ancillary to the Super Bowl itself, assuming that they had these tickets.” What Roger says will probably end up upsetting people is contract theory is just about making a person whole. Quiles continued, “So if the contract is breached then you only get the value of the contract. You don’t get more than that for your inconvenience. So, if you paid $500 for the tickets, all you’re going to get is $500. You’re not going to get $500 plus another couple thousand because you missed out onthe Super Bowl.”

Kidd asked if this (short-selling tickets) was an illegal practice, and Quiles said it technically is along the lines of fraud, but the buyer would have to prove that the ticket broker never planned on acquiring the tickets and had the intent to defraud buyers “If you’re fully committed as a broker to getting these tickets and basically passing them along to your buyer, you’ve already absolved yourself of all intent to defraud, because you’re trying to make good on your contract… But if there is an exhibited pattern and practice of this happening, in particular with one individual or one company, then you could start seeing an attorney general get into the matter defrauding consumers and
such.”

Attorney, Roger Quiles, says the number of individuals affected by this could be in the several thousands range. Some ticket brokers have issued refunds, or like StubHub, acquired tickets at their own expense to make sure their customers got their tickets to the Super Bowl. Most who have issued refunds are requiring the customers to sign
something stating they will not pursue any legal action related to this ticket fiasco. It appears one broker, Brian Peters, also mentioned in Darren Rovell’s ESPN.com article was hurt as bad as, or perhaps even worse than, those customers who ordered Super Bowl tickets from his company Ludus Tours. Customers who had purchased tickets
through his company received the following email Thursday of Super Bowl week:

 
“I have bad news to report from Scottsdale,” the email read. “I do not believe that my
suppliers are delivering tickets to me … I am sincerely sorry for this situation. For what it is
worth, I will not have a functioning business once the dust settles from this event. I assure
you that I am not profiting from this circumstance, and that I will do everything in my power
to resolve it for you.”

One issue that could have led to the ticket problem is the way that Super Bowl tickets are distributed. Roger says, “The NFL completely controls how Super Bowl tickets are distributed, and only about 2 percent of all Super Bowl tickets are actually released to the public for purchase, and the rest is all determined by the NFL in terms of
percentages of who gets what.” Of course the teams playing get a percentage of tickets and the host team gets a percentage, then the rest get gobbled up by ticket brokers and resellers who sell the tickets in the secondary market. Arizona Attorney General Mark Brnovich suggested that it could be possible for the NFL to help alleviate market
manipulation in the future by holding tickets back and not releasing them until closer to the game .

The Super Bowl is a one of a kind event, and a once in a lifetime experience for many people. While this one will certainly be a memorable event to everyone who bought tickets or attended the game, this one may be a sour memory to many because of this ticket scandal. This will undoubtedly change the way many look at buying tickets going forward, and consumers will be a lot more cautious and research potential ticket brokers before making future purchases.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.