[Article] Halting scalping called long shot

Supply and demand drive ticket reselling, experts say

Churchill Downs guards the names of its Kentucky Derby ticket holders so closely that only two executives at the track have access to the entire list, the company has said in court papers.

It considers the roster a trade secret, and its security sentinels scan sites such as eBay to catch people who resell tickets bestowed on them by the track. Then it cuts off their future supply.

So how do thousands of tickets get on the Internet sites of ticket brokers across the country -- and into the hands of local scalpers like jeweler Bruce Gumer, who amassed 419 last year?

Ticket sellers, economists and law enforcement officials all cite the same irresistible force: The law of supply and demand.

"You can't stop it -- it's like trying to stop drug dealing," said John Schwartz, vice president of the National Association of Ticket Brokers -- "not that I want to make an analogy between ticket brokers and drug dealers."

Churchill Downs is not the only business that goes after scalpers: The Boston Red Sox and the New England Patriots also take away tickets from those caught reselling, and the Sox last November sued StubHub, the San Francisco-based ticket exchange, to try to staunch the flow.

Some rock bands have been even more aggressive. Tom Petty last year voided 1,400 fan club concert tickets that fell into the hands of scalpers, and to cut out brokers entirely, Coldplay auctions tickets online to registered fans only.

Big business

But as many as 1,000 ticket brokers operate legally across the United States, and between $2 billion and $25 billion is spent on concert and sports tickets in the so-called secondary market, according to various estimates of market research and industry sources.

The demand for Derby tickets is especially acute: In corporate America, the Run for the Roses trails only the Super Bowl, Masters, Final Four and college football's BCS championship game, according to a ranking by Tuchman Sports Enterprises, a New York-based marketing and hospitality company.

Experts inside the industry and out say that tickets to events like the Derby flow to resellers through a variety of means.

Finding tickets

Most come from ordinary fans -- especially season ticket holders -- who may unload their Derby or Oaks seats so they can afford to attend the rest of the year, said Schwartz, who owns Big Time Worldwide in Southfield, Mich.

Some brokers employ decidedly low-tech methods to buy tickets. Carl White, chief ticket officer for Atlanta-based WebTickets.com, posts signs that say "Derby Tickets" on utility poles around Louisville, and then transacts business in Indiana, where scalping is legal.

But ticket brokers also are willing to invest considerable money to help fans get their fix: For example, DerbyBox.com, of Jeffersonville, Ind., says on its Web site that it buys season boxes, personal seat licenses and club memberships from patrons of Churchill Downs.

Brokers say they also scour the classifieds -- and place ads themselves -- to snarf up tickets. Last week, the majority of the 108 people seeking Derby tickets at Craigslist.com's Louisville site appeared to be resellers.

Some pleading for tickets insisted they wanted them for themselves. They included "Cute SWF 1ST Timer looking for a DERBY ticket or someone to take me." (The woman, who would identify herself only as Lori, said last week that she was still waiting.)

Others with creative come-ons didn't respond to requests for comment.

They included one advertiser who pleaded, "Please help with Dad's last wishes, 3 Derby tickets needed" and another who said: "I am disabled and cannot afford scalpers prices. I need 10 tickets at face value."

VIP tickets resold

Experts say a sizable portion of the tickets that end up with brokers are known as "holds" -- tickets that venues hold back for VIPs, sponsors and industry insiders.

Eight years ago, for example, a Maryland horse trainer charged with scalping a ticket at the Derby had two other tickets that were originally issued to Gov. Paul Patton, whose staff insisted they had no idea how they ended up in his hands.

Last year, one of the people whose tickets ended up with Gumer turned out to be Churchill Downs track superintendent Raymond V. Lehr Jr., who in an interview denied selling tickets to the Louisville jewelry store owner. Gumer pleaded guilty last July to scalping 84 tickets.

Churchill Downs itself may have aided and abetted scalping this year when, seeking to dispel the notion that it's impossible to get tickets, it sold 1,000 reserved tickets April 14.

Some ticket brokers also resort to more illicit means.

The New York state attorney general found in a 1999 investigation that brokers often "pay illegal and substantial bribes" -- known in the business as "ice" -- to box-office employees, venue managers, security personnel and other insiders to score blocks of tickets for Broadway shows and concerts.

A Louisville Metro Police spokesman, Officer Dwight Mitchell, said he'd never heard of that going on here; Churchill Downs spokeswoman Julie Koenig Loignon wouldn't comment on whether any employees had ever been caught taking ice.

But the track has claimed that one broker -- DerbyBox -- "wrongfully obtained" the track's list of Derby ticket holders five years ago and solicited them for tickets.

The track called the list a trade secret and said in a lawsuit that it knew the list was misappropriated because the mailing labels used by the broker were "exact copies" of its own, down to misspellings and dropped periods on titles like "Mrs."

Joining them

Derby tickets have always been a sensitive subject in Louisville but have grown even more so in recent years as increasing numbers of them go to corporations.

Churchill Downs was criticized earlier this month for selling hospitality tents to two large ticket brokers, even though the track takes away tickets from patrons caught reselling their own. The policy applies to holders of reserved seats in the clubhouse and grandstand.

While Churchill Downs fights with resellers like DerbyBox.com, other sports franchises have chosen to join them.

Sports Business Journal, a trade publication, says that dozens of franchises in the four major professional sports now let fans scalp their extra tickets at the teams' proprietary Web sites or through exclusive agreements with ticket bulletin boards like StubHub. The teams get a cut of each transaction.

Last year, for example, the San Francisco Giants "Double Play" system processed 109,982 tickets -- the equivalent of nearly three home sellouts -- collecting a 10 percent fee from the buyer and seller on every sale.

"At the end of the day, the secondary market is like water coming over the top of Niagara Falls," Bernie Driscoll of TicketsNow said in February in Los Angeles at the annual meeting of the Concert Industry Consortium.

"You can put certain things in place, put a couple bricks across it, but you can't stop that force."

http://www.courier-journal.com/apps/pbcs.dll/article?AID=/20070430/DERBYFUN/704300415/1008/NEWS01