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'Everyone Else Will Likely Go Out of Business': Why Most Ticketing Companies Won't Survive COVID-19

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Ticketing companies are bracing for no revenue and the potential for unprecedented refund requests as live music events disappear from the calendar because of the spread of COVID-19, the disease caused by the novel coronavirus.

"I can't tell you how many times over the last week or two, where I have just thought to myself, 'Thank God this didn’t happen when I was running my ticketing company,'" says Todd Sims, founder and former chief executive Flavorus, which was bought by See Tickets in 2016. “What if, seven or eight years ago, Flavorus and Insomniac faced this? We wouldn’t have made it through this; it would have been end game. Those companies will survive now but only because they’re owned by much larger companies.”

So how will things shake out? Not great for most ticketing companies — layoffs have already been announced at ShowClix and Audienceview, which bought Vendini last year, with more on the way.

"The only ones who are really going to survive this are going to be the ones with the resources to make it through. You’ll see a landscape at the end of this that is Ticketmaster, AEG, See Tickets will make it through by proxy because they’re owned by Vivendi. Eventbrite will make it through because they have a very large war chest at their disposal," predicts Sims. "Almost everyone else will likely go out of business."

One issue that makes ticketing companies particularly vulnerable is that many now play an important role financing shows and festivals. The mass cancellation of events and festivals caused by the outbreak of coronavirus, many partially funded by ticketing advances, has left ticketing companies particularly vulnerable.

"Generally, I did not advance money to promoters until the show was over unless I was comfortable with who they were--which happened in rare cases," explains Fred Rosen, who was Ticketmaster CEO from 1982 to 1998. "When I advanced money, Ticketmaster secured it in various ways and always got paid—in some cases, we even received liens," says Rosen.

In order to incentivize venues and promoters to grant their long-term exclusive ticketing rights, ticketing deals may include a substantial advance, extra ticket fees and/or the ability for their clients to pre-settle shows—meaning, the ticketing company will advance the client ticket sales money from future shows. In recent years, competition between ticket companies has led to more promoters with less financial security accessing ticketing money prior to an event’s completion. Promoters have used these advanced funds without restriction, paying corporate overhead and legitimate show-related costs like artist and venue deposits.

Some promoters, however, have used the money to cover past losses or blown it on extravagant expenses. Fyre Fest founder Billy McFarland was advanced ticketing money for his ill-suited event far in advance, much of it disappearing into a cloud of private jet exhaust long before the festival production bills become due.

Refunds become the ticketing company’s problem when a promoter does not have the money to issue refunds. The name of the ticketing company, not the promoter, appears as the vendor on the credit card bill.

When Ultra Music Festival postponed its 2020 Miami festival to March 2021, the company promised to honor 2020 festival tickets at either the 2021 or 2022 festival in Miami. The festival did not offer refunds. Ultra sold tickets through Showclix Inc. via a white label ticketing company Ticketfreak, LLC (Ultra Festival partner, Adam Russakoff, serves as the company's Managing Member). But even though Ultra stands behind the legal language of its ticket purchase agreement, fans unhappy with the festival’s decision may still dispute the charge through their credit card provider and pursue a chargeback. How many fans seek refunds and how the credit card companies handle such requests will determine Ultra’s fate.

(Billboard made multiple attempts to contact Marc Jenkins, chief executive of Showclix owner Patron Technology but did not receive a response. Earlier this week, Patron let go of 30 percent of its staff).

When a fan wants a refund, credit card companies generally have obliged — in addition to the ticket price and possibly the service fee, any promoter or ticketing company is also responsible for a per transaction chargeback fee that ranges from $15 to $35. If any promoter does not have the funds to issue refunds, then the liability for the money flows through the ticketing company, the Independent Sales Organization (ISO), the sponsoring bank, and finally Visa, Mastercard or American Express.

"The industry is going through an aberration -- and the public's not going to lose any money on these shows. In the end, if you’ve got a festival and they don't want to give your money back to you, charge it back on your credit card," Rosen says.

If an event is postponed, not all fans demand refunds.

"We've seen instances where the ratio was 50/50 on refunds versus keeping tickets," says Boris Patronoff, chief executive for See Tickets North America. "If you communicate well and tell the fans you can get a refund or keep your ticket, and you’re clear and you’ve been treating them well in the past, you will have people that will support you and they will keep their ticket to go to the show."

Ticketing companies are connecting with their promoter and venue clients and reassessing their policies. Eventbrite paused advanced payouts to its clients and is working on solutions within its ecosphere and beyond.

"That spans from lobbying efforts, like the recent letter we sent to White House and Congressional Leadership on behalf of event creators across America, to refund reform that preserves the loyalty of the ticket buyers so critical to live music’s eventual return," says Andy Donner, Eventbrite's svp of music and corporate development, via email. Earlier this month, Eventbrite chief executive Julia Hartz wrote Pres. Trump and requested the federal government make SBA Economic Injury Disaster Loans available nationwide, approve as many loan types and loans as possible and send direct payments to individual taxpayers.

Despite the economic uncertainty, See Tickets is "continuing pre-settling funds with some promoters and we've adjusted with others after a discussion with them," Patronoff says. "If the promoter is doing all the right things with a clear plan while being fully transparent with the consumers and us and if it makes business sense then we support them. At the end of the day it's a question of mutual trust and experience.”

Sims said advances are part of an ongoing debate — "Is it more important that a festival holds onto the funds and continues to be a viable business, supporting the community and creating jobs, and jobs for the other businesses in the community? Or are these customers the waiters and the Uber drivers that need that $100 more than the festival does?" says Sims.

It's not just about asking who's responsible, "but asking about how am I going to be able to help get through this," says Rev. Moose, Marauder co-founder and managing partner, and producer of Independent Venue Week. "If as a consumer, the promoter or venue is an institution in which you believe, people are more likely to show some leeway. If it's a mega-corporation and a faceless being, I don’t know that people have the same expectation,"