Legal Issues

by Mike Masnick


Filed Under:
accounting, booking, concerts

Companies:
ticketmaster



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.

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  1. identicon
    MD, 8 Dec 2011 @ 6:31am

    Corporate Fraud?

    The problem is Danny is probably right. Wholesale fraud is bad for business. Consistent fraud can earn the participants RICO violations, which is worse than just fraud. Stealing to make yourself a millionaire makes sense; stealing to make someone else an extra million on ther 10-million salary makes no sense, if you will eventually do 20 to life for it.

    Either the fraud was simple - sell X tickets, report (X-10,000)to the client. A quick audit of the database shows the fraud.

    Or, it's part of the programming. Database backups, logs, etc. will show the result. If a serious audit team digs in, the database should give them a list of everyone who bought a ticket and even what seat. Since these tickets have to be paid for, a list of charges to VISA etc. should be easy to reconcile.

    It occurs to me the way to do this is to set up 2 event sales, and distribute the tickets between then and report on only one - but a good audit would find this in no time too. Plus, we're back to conspiracy territory. If you are messing with the database or web site, it involves low-level employees with no reason to keep their mouth shut.

    The record company and Hollywood accounting tricks are out in the open. They expense things that are outrageous, but true. One favourite I recall was to sell the hit movie to TV as a package with a bunch of real floaters; then distribute the revenue evenly, although the money was obviously paid just to get the one movie broadcast rights. Legal but shady.

    The one instance I recall that was outright fraud was when Herbert was invited to talk about "Dune" at some campus. He expressed surprise, since he had only sold 3,000 copies in the whole USA. "Huh?", said the campus bookstore guy. "We've sold that many just in this bookstore."

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