Practical tips for sports rights holders concerned about the secondary ticketing market

Published 20 December 2016 | Authored by: Daniel Alfreds

With the holiday season fast approaching many people reading this article may be attending sporting events and directly contributing to the UK events sector estimated to be worth a staggering £42.5 billion in 2016[1], of which £2.3 billion is spent in sport[2].

With that in mind, this article examines the current state of the secondary ticketing market, reviews the most relevant legislation and contractual laws that govern secondary sales, and provides practical advice to event owners on engaging with the secondary ticketing market including:

  • A description of the secondary ticketing market; 

  • Legislation governing the secondary ticketing market;
    • The Criminal Justice and Public Order Act 1994
    • The Consumer Rights Act 2015 

  • Contractual protections (ticketing terms and conditions)

  • Official secondary selling regimes

  • Comment and practical tips for event owners on engaging with the secondary market 

 

The Secondary Ticketing Market 

The secondary ticketing market is essentially any resale of an event ticket that is not bought through an event owner themselves or their agent and it is estimated that around 10-30% of event tickets end up there. The extent of the market can be seen in examples like the Six Nations Tournament in 2009 in which tickets were made available only to member clubs, and not the general public, though it is estimated that 15-20% of around 78,000 tickets ended up in the secondary market[3]

The word “touting” is a rather broad-brush term that can lend itself to various stereotypes of the secondary ticketing market. The Department for Culture, Media and Sport stated in its 2008 report into the secondary ticketing market (2008 Report) that the word touting brought to mind: 

shady characters, in a murky market, who may mislead consumers, deliver counterfeit tickets or fail to deliver any tickets at all [4]”.

Whilst this may have been the general perception 10 years ago, the rise of secondary ticketing online has completely changed the image and the availability of secondary tickets on both the authorised and unauthorised secondary market.

The authorised market consists of ticketing companies like Ticketmaster or StubHub who are reselling tickets on behalf of event owners or through approved schemes. The unauthorised market consists of a variety of players from “bedroom touts” who sell their spare tickets through facilitation websites like eBay to sophisticated organisations buying thousands of tickets for the intentional resale at a higher value. 

Touting is seen as a problem for event owners for several reasons including:

  • ticket prices for many sporting events are kept artificially lower than what they would likely receive on a pure open market as a policy decision to enable grassroots and average fans to attend. Touts risk pricing out fans by contributing to events selling out quickly then only making tickets available at high prices; 

  • from a public safety perspective, event owners may need to know who is in attendance. If a ticket is bought under one name and then a different person attends, issues may arise; and 

  • risks of a brand name being tarnished through touts not delivering tickets, whilst arguably very unfair on the brand, are likely.

There is no defining legislation within the UK that deals exclusively with the secondary ticketing market but rather a hodgepodge of domestic laws, EU regulation and general contractual remedies. This article will go through the most relevant to event owners and provide practical advice to engagement with the secondary ticketing market.

 

Legislation governing the secondary ticketing market

Criminal Justice and Public Order Act 1994 (CJPOA)

Section 166 of the CJPOA states: 

“It is an offence for an unauthorised person to:

  1. Sell a ticket for a designated football match; or
  2. Otherwise dispose of such a ticket to another person[5]”.

The legislation is relatively clear in what it is seeking to achieve – individuals cannot resell tickets to certain football matches. The limitation is immediately apparent in the fact that it solely relates to football.

The scope of the CJPOA is also interesting as on the face of it one would assume that it applies to all football matches. However, a “designated football match” is defined in the CJPOA as only matches played by a Premier League, EFL, Conference, League of Wales club or the English and Welsh national teams. In effect this means that whilst a ticket for a Champions League game played in Europe between an English and Italian club is subject to the CJPOA, the Champions League final between Bayern Munich and Borussia Dortmund held at Wembley in 2013 was not. 

The legislation was also introduced before the Internet gained a foothold on the secondary ticketing market so there were concerns that it was limited to face to face transactions. As a result there have been several amendments to the CJPOA. One particular amendment by the Violent Crime Reduction Act 2006 (VCRA) extended an offence being committed to:

  1. offering to sell a ticket;

  2. exposing a ticket for sale;

  3. making a ticket available for sale by another;

  4. advertising a ticket for sale; or

  5. giving a ticket to a person who pays or agrees to pay for some other goods or services or offering to do so. 

The CJPOA does however provide a provision which allows the Secretary of State to apply section 166(1) to any sporting event with over 6,000 ticket sales. Interestingly however, this power has never been used and fits in with the general approach by successive governments of not interfering with the primary and secondary ticketing markets as can be seen in the Government’s response to the 2008 Report.[6]

Consumer Rights Act 2015 (“CRA”)

One of the significant conclusions of the 2008 Report was that full scale regulation into the secondary ticketing market should be considered a last resort and, if needed, be “light touch”. Prior to the passing of the CRA, the Unfair Terms in Consumer Contracts Regulations 1999 and Consumer Protection from Unfair Trading Regulations 2008 had placed an emphasis on consumers being treated fairly and being provided with sufficient information when purchasing a ticket on the secondary market. 

The CRA consolidated various bits of law dealing with B2C sales and, for the first time, provided guidance to the information needed for sales in the secondary market. 

Section 90 of the CRA states: 

(2) The seller and each operator of the facility must ensure that the person who buys the ticket (“the buyer”) is given the information specified in subsection (3), where this is applicable to the ticket.

(3) That information is -

(a) where the ticket is for a particular seat or standing area at the venue for the event, the information necessary to enable the buyer to identify that seat or standing area;

(b) information about any restriction which limits use of the ticket to persons of a particular description; and

(c) the face value of the ticket.[7]” 

The law explicitly calls out that both the seller of the ticket and the “operator of the facility” must provide the information in Section 90(3). As almost all unauthorised secondary ticket sales take place through facilities such as eBay or Gumtree, this placed a direct burden on both the seller of the ticket and the website on which it was sold. 

This may be seen as an invitation for event owners to carefully monitor facilitation companies for breaches, however, the reality is that most websites ensure by default that certain information is provided by the seller before being able to submit an ad so that they do not fall foul of the law.

There is the valid fear that as secondary sellers are forced to input information before listing their tickets the more unscrupulous may just provide false data leading to an increase of miss-selling. Internet users have become much more sophisticated over the years and sites like eBay encourage trust through a “star” system[8] and most sensible consumers are unlikely to rely upon a Gumtree advert selling premium tickets at knock down prices.

 

Ticketing Terms and Conditions

In nearly all ticket sales it is common to find some form of restriction on the re-sale of tickets to third parties. For example, the Tottenham Hotspur ticketing terms and conditions state:

2.7 Under no circumstances whatsoever is a season ticket holder, member or match ticket holder permitted to sell any tickets to a third party, unless through the Club’s official Secondary Ticket Exchange Scheme, operated with StubHub.[9]” 

Whilst we will come onto the exception noted with regard to StubHub, the premise is clear: no resale of tickets “under any circumstances”. However, whilst Spurs are clear to assert their position, whether this approach is valid needs to be carefully considered as all contracts concluded on a B2C level are subject to consumer fairness provisions within the CRA. Section 62(4) states that:

A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer[10].” 

It therefore needs to be determined whether putting a blanket restriction on resale by consumers is contrary to the CRA. A wider debate comes into play around this as often event owners prevent the return or cancellation of tickets, their argument being that the certainty of numbers allows them to adequately provide staff as well as ensure revenue streams.

If a consumer cannot actually attend an event and has no practical way of returning tickets to an event owner, then it could conceivably be considered unfair to prevent the resale to third parties.

The effect of an event owner getting the fairness balance wrong under the CRA would be for the contractual term to be unenforceable and not be binding on a consumer thereby allowing resale as the consumer sees fit. 

It would therefore arguably be better if a minimal obligation was placed on consumers, for example, not to resell for a profit, rather than not sell at all. Whilst not the purpose of the case between the RFU and Viagogo (more detail can be found here[11]) this was the approach taken by the RFU. This case went all the way to the Supreme Court who did not comment that such an approach was unfair.

 

Official Secondary Selling Schemes

It is now becoming increasingly common for event owners to officially resell their tickets via a secondary supplier like StubHub. Back to our Spurs example, it is not a “free for all” however, as there are specific conditions for when it can be used:

5.1 Platinum, Gold, and Silver Members will be able to use the Club’s Official Ticket Resale Service to re-sell tickets to home games they are unable to attend. The Service will be made available when a match has sold out."[12] 

If we link this back to the CRA and the consideration that a lack of options for consumers to resell their tickets is unfair, perhaps giving an option (albeit a prescriptive one) helps to address this balance. 

Providing an official secondary market for event goers is a win-win scenario for event owners as it provides another source of revenue (typically they receive a revenue share of any resales), ticketing sales can be easily tracked for safety requirements, limitations can be put on the sales and consumers are provided with a safe environment in which to operate.

 

Comment and practical tips for event owners on engaging with the secondary market 

There is a wide range of legislative means by which event owners are intended to be protected from touts. Football[13] and special events like the Olympics[14] (which had specific legislation dedicated to ticket sales) have been given specific legislation to curb the reselling of tickets but the vast majority of the sports market is not covered.

The fact that ticket prices are kept artificially low as a policy decision by sports creates a clear gap between how much they are sold for in the primary market and what is received in the secondary one. Mixing ticketing pricing policy with the technological advances of the internet has created a sophisticated market in which large scale profits are easily achievable.

Whilst there are constant calls for reform of the secondary ticketing market, most recently to make ticketing “bots” (computer algorithms that automatically buy tickets) unlawful[15] (a move made in the US last week as Obama signed in the Better Online Ticket Sales (“BOTS”) Act 2016[16]) there is the on-going view by government that the market should be self-regulatory as can be seen in several statements on the matter including the Government’s response to the 2008 Report. 

The biggest hurdle to self-regulation by event owners is the CRA which posses the risk of making a contractual resale term unenforceable. Without testing a term in court, there are some practical steps that event owners can take to ensure that the secondary market is dealt with in a way that satisfies the event owners:

  1. Allow tickets to be returned at face value (minus an administrative fee) to the seller up until a reasonable cut off time, such as the week before the event. An email can then be sent to people on a waiting list to be re-sold by the event owner.

  2. Allow secondary reselling but limit this to a maximum amount of tickets per person that is likely to be in line with how many a legitimate fan may have bought, perhaps 4. 

  3. Encourage the confidential sharing of information about companies or individuals that are known to be hoarding and selling tickets. Whilst the legalities of such an approach will need to be considered, event owners could then try to prevent sales to such people. It would however need to stay confidential as there is a risk that if the general public became aware of this it may drive the secondary market underground via the use of fake names. 

  4. Event owners could closely monitor and liaise with secondary ticketing websites (or instruct one of several companies that provide such a service). This would help identify tickets that are being sold in contravention of the Terms and Conditions and allow event owners to either contact the person and directly cancel the ticket or, as in the RFU v Viagogo case,[17] attempt to obtain an Norwich Pharmacal Order[18] to reveal the sellers’ identities.

 

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About the Author

Daniel Alfreds

Daniel Alfreds

Daniel trained at a top City firm and qualified into the commercial team of one of the world’s largest blue chip companies prior to joining Couchmans LLP. Daniel is a commercial sports lawyer advising on a range of matters with a particular focus on data, betting, integrity and sponsorship.

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