Does Ticketmaster Undercount Tickets Sold To Underpay?

from the concert-accounting dept

Over the years, we've noticed some questionable "accounting" practices in various parts of the entertainment industry. There's recording industry accounting, where labels make a ton of money and most musicians end up in debt. There's Hollywood accounting, where some of the most successful movies of all time are somehow declared "not profitable" so they can avoid paying actors any residuals. Then there is music performance rights accounting, where only the top 200 touring acts get to collect royalty money.

So what about ticket sales for events? Eric Goldman points us to an ongoing lawsuit, in which a producer of events, Club Escapade 2000, is suing Ticketmaster for severely undercounting ticket sales at an event. The event was a soccer match held at the University of Texas El Paso's stadium between two Mexico City soccer teams.
According to Plaintiff, the event was “extremely popular” — traffic was backed up on the highways and news outlets reported large crowds of twenty to forty thousand people attending... Much to Plaintiff’s surprise, Defendant reported that it had sold only 13,151 tickets.... These numbers seemed too low to Plaintiff, and Plaintiff began an investigation of Defendant’s audit reports... Plaintiff allegedly found that on the day before the event, March 24, 2009, Defendant reported that the number of tickets sold was 14,408... The very next day, though, the reported number of sales dropped to 11,098... According to Plaintiff, this was suspicious because there were no refunds or exchanges... Based on this suspicion, Plaintiff hired an expert in digital imaging who examined the video footage of the soccer match... The expert estimated that attendance was likely as high as 24,311.
Kinda makes you wonder if this is standard practice... and if this is why the legacy entertainment guys seem to assume that all fans want to screw them over. Perhaps they're just used to every one else they run into trying to screw them over.

Filed Under: accounting, booking, concerts
Companies: ticketmaster

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  1. icon
    Danny (profile), 8 Dec 2011 @ 5:35am

    Auditing is possible

    I am a semi-regular at Techdirt, and I was Director of Systems Support at Ticketmaster back in the 1980s; my knowledge of TMs systems and business practices is definitely dated. Nevertheless, I may be able to add some light.

    Who knows what business practices are at TM today, though I would be very surprised if those practices included outright fraud at high levels. Low level fraud, if it existed, would be caught fairly quickly by the audit controls inside of the database. High level management wouldn't tolerate low level fraud as it would damage the brand--not with the general public (TM, I think, only marginally cares about this brand as it skates just on the legal side of monopoly for any given client event), but with promotors and arena managers who have the ability to shop competing ticketing systems.

    Occam's Razor suggests the more likely cause of many less ticket sales than people at the event are: people crashed the event; the promoter sold tickets off the system; the promoter issued comps and didn't register them in the system.

    Nine of this explains how the sales would have dropped 3,000 just before the event. But, again, this could be as simple as someone misreading or misunderstanding a report. The TM Audit report is like a balance sheet in that it is a snapshot at any given point of time. The TM Sales report breaks down sales by seller over a given period of time. The first step in auditing the event would be to reconcile the two -- and there are tools within the TM system to do just that.

    When I was at TM, the data was stored in B-trees in a hierarchical database. It would have been impossible for someone without extremely deep database knowledge to hide sales without leaving an audit trail of their behaviors. I don't know what the current database system is.

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