A new rival for a ticket giant
November 10, 2004
By Daniel Rubin, Inquirer Staff Writer

Comcast-Spectacor, owner of the Philadelphia 76ers and Philadelphia Flyers, will venture into the ticket business when its contract with Ticketmaster expires in 2006.

Though the move is not likely to result in lower ticket prices or service charges, the Philadelphia company says it would offer consumers more for their money by directly selling seats at its two venues, the Wachovia Center and the Wachovia Spectrum, which host about 400 events a year.

Comcast-Spectacor announced yesterday a "several million dollar" investment in Paciolan Systems Inc., a company in Irvine, Calif., that calls itself the oldest player in the fast-growing in-house ticketing industry.

The deal puts Comcast-Spectacor in control of its own seats and begins a rivalry with Ticketmaster, the world's largest ticket seller.

Consumers will benefit because, for example, it will be easier to include the cost of parking and concessions on tickets, said Peter Luukko, president of Comcast-Spectacor Ventures. Down the road, concert or sporting event patrons could swipe electronic tickets and enter automated parking lots without having to deal with attendants.

"Ticketing is becoming exciting," Luukko said. "We want to control our own destiny."

For Comcast-Spectacor, a unit of Comcast Corp., it will produce more revenue. In the last several years, tickets have become "a profit center where they used to be a cost center," said Gary Bongiovanni, editor of Pollstar, a concert-industry newsletter. "It is another way to make money."

Typical convenience and processing fees can greatly increase a ticket's price. One example: A $36.50 Ticketmaster seat to the Nov. 30 concert by the rock band Korn in Trenton carries additional costs of $9.40, a 26 percent hike.

Comcast-Spectacor's existing ticket-management business, Patron Solutions, will be renamed New Era Tickets. New Era will seek to sell tickets in many of the 41 other venues - from the John Labatt Centre in Ontario to the University of Miami Convocation Center - that Comcast-Spectacor operates in North America under the name Global Spectrum.

"From ticket-price standpoint, nothing will change," Luukko said. "It gives us some flexibility with service charges and lets us be a little more variable in our pricing [for] some family-type shows."

Luukko said that by collecting data about its ticket buyers, Comcast-Spectacor would be able to inform fans when other events they might like were coming to town.

Paciolan was founded in 1980, and its business has taken off in the last five years as people buying tickets to sports and entertainment have grown comfortable shopping on the Internet, said John Hnanicek, the company's president and chief executive officer. He would not release information on revenue or profit.

Since then, Paciolan has taken over ticket sales for two NBA teams, two NHL teams, and five Major League baseball teams, including the Phillies. It also handles tickets for the Philadelphia Museum of Art.

Ticketmaster, which sold 100 million tickets valued at $4.9 billion last year, including all charges, has seen a number of smaller firms challenge its position as software developments have made it easier and cheaper to enter the business.

A Ticketmaster spokesman would not comment.

"The Internet has eliminated the need for phone rooms and big ticket outlets, and it has allowed arenas to directly control their relationship with customers," Hnanicek said. Paciolan software is used in the sales of 25 percent of tickets to live events in the nation, he said.

"Fees seem high, and people don't seem to feel that they are treated well," he said. "Now the venues get to control both of these issues."

In general, handling and service fees have not dropped as new ticket sellers have emerged, Pollstar's Bongiovanni said. Pollstar estimates that revenue from major concert tickets reached a record $2.5 billion last year.

"Most of the alternative-ticketing systems have fees that are generally comparable" to Ticketmaster's, he said. "They might be a little cheaper."

Ticketmaster, Bongiovanni added, has developed deals in recent years with facilities and larger promoters where they share revenue through rebates or guarantees in contracts.

>Article originally published in the Philadelphia Inquirer
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