Comcast Spectacor and Paciolan Finalize Strategic Alliance
November 10, 2004
Two-and-a-half years after discussions commenced, Paciolan and Comcast Spectacor have reached agreement on a strategic alliance that brings Comcast Spectacor in as a minority owner of Paciolan and retains Patron Solutions, to be renamed New Era Tickets, as a Comcast-controlled company using Paciolan's technology platform.
John Hnanicek, president and CEO of Paciolan, characterized yesterday's announcement as "an acceleration of the sea change that has been going on for several years [in ticketing]. It's a significant bread crumb in that whole trail of evidence that the industry is changing to enablement."
Enablement is the model Paciolan has preached under former leader Jane Kleinberger and today's regime lead by Hnanicek. "Peter [Luukko, Comcast Spectacor Ventures president] has always been about enablement. He's been drinking Jane's Kool-Aid since before I was. I think what Comcast learned [over the two years] was that if you are going to do it, you have to go with the only established software company out there."
Talks were heating up for the last four to five months and the last month has been about lawyers, paperwork and client notification. What changed? Hnanicek saw Comcast, which launched Patron Solutions two years ago, recognizing that the pace of technology changes quickly and "the requirements of what software providers needed to give to their venues who wanted to take control was getting so significant that the right way to pursue their enablement strategy was to team up with a software company who already had the product and was leading edge." Luukko says Paciolan was "two to three years ahead of us" in terms of technology. It was easier to partner.
Luukko said that "very rarely do we make minority investments, but we feel with the direction of John Hnanicek and being involved strategically in this case makes a lot of sense for our future growth as a company. In addition, we'll be setting up New Era Tickets which will be our own company within the deal, so what we're really doing is having the ability to have our own ticket company while at the same time we have a piece of the whole. We have an interest in Paciolan and own New Era Tickets." In essence, New Era is a customer to Paciolan.
That may be a model for other venues interested in their own ticketing operation, though Comcast's company is unique in composition. "I think the model could certainly be set up in other cities," Luukko said.
Neither would specify the dollar or percent of Comcast's minority interest beyond "several million dollars." While Paciolan used to be specific about investment monies, this differs in that Comcast is a strategic investor, Hnanicek said. "It marks a shift at Paciolan from a financially backed growth company to having strategic investors who have long-term sports and entertainment industry interests. It just really solidifies the fact Paciolan is going to be the largest, most dominant independent provider to the industry for the long haul."
Comcast's ties in sports, including the Philadelphia 76ers basketball and the Philadelphia Flyers hockey teams can help, of course, but the company, which owns Global Spectrum private management firm, also has some fierce competitors, like SMG, which manages nearly 200 buildings worldwide. "We are a technology provider and we talk to and sell to SMG buildings as we would anyone else," Hnanicek said. "Comcast relationships don't preclude us from our mission."
Rather, he sees it as "one more step that's going to reduce the fear of change in the industry. No one argues that people need to shift to controlling ticketing. There's a lot of fear about 'Can I do it?' It's just one more piece to the evidence trail," which he said started in earnest with the signing of baseball teams, then Thomas & Mack Center, Las Vegas, followed by the Ottawa Senators, then the Charlotte Bobcats, and, a continuing 2005 initiative, "all the midsize arenas we signed this year."
In the new world, Paciolan will continue to sell its solution to venues that desire complete control over ticketing, Hnanicek said. New Era will sell Paciolan technology with add-on phone room and outlet management services for those organizations not of the size or readiness to take on that responsibility.
Both said current Patron Solutions clients will find the transition financially seamless. "For the same fee, they are now getting much better technology." Hnanicek said. "A lot of the time on this deal was spent developing positive solutions and transitions for Patron Solutions patrons."
New Era's strategy is three-fold - to be the ticketing operation for Wachovia Complex, which includes the Wachovia Spectrum and Wachovia Center, Philadelphia, when the Ticketmaster contract expires; to provide a value-added service to try to win business with Global Spectrum-managed buildings (which number more than 40), and to provide Paciolan technology and their phone room service to other venues that want that level of service, Hnanicek said.
New Era will become the ticketing company for Wachovia Complex in October of 2006 when the current Ticketmaster deal runs its course, Luukko said. Fred Maglione, formerly president of Patron Solutions, will head New Era Tickets and Dave Homan will be COO..
Luukko will join Paciolan's board of directors.
"I've always felt there was room in the marketplace for another company other than Ticketmaster. But this transaction certainly isn't an anti-Ticketmaster deal," Luukko stressed. "It's a good business opportunity and the ability to have control of our own destiny, which we think is important as entrepreneurs." - Linda Deckard
Article originally published in Venues Today e-newsletter
