Location: Los Angeles. The time: the beginning of 2020 AD, before the great pandemic strikes. Life is generally good. Especially in the local sports scene. For perhaps the first time ever, both the Lakers and the Clippers are shaping up as candidates to win the NBA title, with their joint venue likely to emerge as both a staple and the center of the NBA Finals. The Dodgers – always a strong draw – not only come to training in the spring armed with a World Series caliber team, but the franchise is set to host Major League Baseball’s All-Star Game in 2020. The rams and chargers are both ready to christen finally a new stadium in Inglewood, part of a shiny $ 5 billion entertainment complex, the city̵
So it was that Barry Rudin expected that 2020 would be the most profitable fiscal year of his career. Which says something. The owner of Barry’s Tickets, Rudin, has been Southern California’s largest broker for decades. He started his business in high school in the early ’80s and drove out of his parents’ home in the San Fernando Valley, and he continued as a student student at USC, acquiring and sending tickets between classes. He then earned a small fortune broker tickets at the 1984 Summer Olympics. Since then, he has been front, center and court in the ticket game. So much so that while his business is mostly run online, he has his own office in the Luxe Hotel in Figueroa, a block away from the Staples Center.
Then came COVID-19. You would be hard pressed to name an industry that has not have been negatively affected by the pandemic, but sport has obviously been hit particularly hard. For all sports virtues and binding forces, there are few activities that are less consistent with social distance than squeezing into an arena, standing shoulder to shoulder with other fans, and screaming at the top of your lungs.
Even after games began to resume this summer, significant financial pain remained without fans. Nearly one-third of Major League Baseballs estimated $ 10 billion in revenue comes from ticket sales. Tickets account for 22% of NBA money – a loss of over $ 500 million during the pandemic.
Then there are ticket brokers and dealers. In Los Angeles with the Staples Center (capacity: 20,000), Dodger Stadium (56,000) and the new SoFi Stadium (up to 100,000) all closed… with the Coachella Music Festival (250,000) canceled so far … with the Hollywood Bowl (17,500)) on breaks … and without even Pac-12 college football this fall, Rudin’s expected year of plus $ 50 million is suddenly shaping up as a net loss. He will be lucky to unload a quarter of the approximately 200,000 individual tickets that he had planned to sell in 2020. “As you would probably expect,” says Rudin, “it has been brutal for us.”
He is not alone. With stadiums and arenas and theaters empty – with the exception of the odd interloper – and all the unsold seats gathering dust, the ticketing business has been penalized all over the world. The share price for Live Nation went from $ 75 per share. Stock on Feb. 19 for less than $ 30 a month later. Viagogo, which owns StubHub, has suffered deep losses; the company faces a class action lawsuit over its slow customer payback, while StubHub cut two-thirds of its employees. Countless smaller brokers and dealers who are unable to handle the liquidity crisis have come to a complete standstill. “Put it this way,” says Rudin, “if you did not have savings in the bank, you would have many problems. You have zero income – you went from what you sold to, literally none income – so your bank looks at you differently. ”
Distilled to its essence, the business model for reselling tickets is quite simple: Barry’s Tickets and its competitors buy seats from teams, venues, existing season ticket holders and other online sources. Rudin and his staff then turn around and sell these tickets at something above face value. Margins vary, but profits can be significant.
With no games or concerts staged in front of fans – no supply, no demand – the whole business model collapses. It’s not just that revenue is declining to $ 0.00. It is also the timing and the cash flow. While Rudin repaid his customers’ payments immediately and did well with his creditors, the teams and venues and credit card companies were slower. “I’ve spent tens of thousands of dollars on American Express buying tickets over the years, and I’ve always paid on time,” he says. “Why do I wait a month to six weeks to get my money back, especially when I need it, in these times?”
He has also already been asked to make his traditional 50% payout for next season tickets (and he paid for Chargers seat licenses at SoFi Stadium – money due on 28 February). “The teams do not give us all our money back; they keep it until next year, ”he says. “But [as a reseller] you can not say to your client: Hi, I’m sticking to your money until next year. I am good at it. ”
Rudin says that while most teams eventually refunded money from canceled games, the speed varied. He quit the LA Kings as an organization that acted quickly. Others were considerably less fast; some of these teams still owe him a partial refund. (And while he was waiting to get his money back, the S&P 500 rose more than 30%.)
There is also the issue of staffing. Without income, Rudin was forced to lay off employees – he reduced a workforce numbering 44 at the start of the year to five full-time employees. He received a payslip protection program [PPP] a loan that he estimates saved him 25% of his losses. “To be forgiven, you had to hire everyone back in the first month, even if you did not need them,” he says. “Then the employees realized that if they were put on temporary dismissal status, they would get additional weeks of health benefits. So I fired them again, which helped expand their benefits. ”
Although Rudin does not sell any tickets, he still has overhead, such as continuing to platform his website. He still has a rented office in Calabasas. (The downtown Luxe hotel office is now used as an emergency room, so the rent has dropped out.) He has also had to retain his full accounting staff to handle repayments, transfers and bookkeeping. “You just lose money every day,” he says. “You pay a credit limit down without anything coming in.”
But wait. There is more. Barry’s Tickets does its most lively business in the mail season, especially when local teams are involved. Rudin says the most profitable football game in the company’s history was the USC-Texas 2006 Rose Bowl Championship. Given that COVID-19 hit in mid-March, Barry’s tickets missed out on all of its biggest revenue opportunities, especially in the NBA, where visions of a Lakers-Clippers Western Conference final once danced in Rudin’s head. Six months later, with that LA dream, only a Clippers win away from becoming an Orlando bubble reality does not matter.
In recent years, Barry’s tickets – like most independent brokers – have endured plenty of challenges and business gyrations. StubHub, SeatGeek and dynamic ticketing became the overall trajectory for dealers. In sports, the formation of On Location allowed some teams to control the secondary market themselves. When the Dodgers went to the World Series in 2017, Barry’s Tickets had more than 1,200 seats at Dodger Stadium. Afterwards, Rudin says, the team made a consolidation deal that effectively cut out local brokers like his.
The same technology that makes it easier to sell than ever, and that allows Barry to run the vast majority of his business online, can also be an obstacle. Ticketmaster recently upgraded its technology to use IP addresses in hopes of identifying dealers and blocking their attempts to purchase parts of tickets. “Even before COVID,” says Rudin, “it was getting harder and harder for a broker to succeed.”
But these changes, in retrospect, were blips compared to this existential crisis. Brokers and dealers prepare for the equivalent of mix-ups at the ticket window. Months after months without anyone sold tickets were unthinkable.
Miserable, as business has been in 2020, Rudin sees some room for optimism. First, he predicts that when sports fans and concertgoers finally return, there will be a thundering ticket demand. “The moment there is a treatment or a vaccine, the taps will continue and people will go to concerts and sports like crazy.” He believes the bright, shiny object that is the NFL’s newest venue, SoFi Stadium, will attract fans no matter how the Rams and Chargers play.
Rudin also suspects that when turnstiles begin to rotate again and fans return in search of tickets, fewer competitors will be around to share in the bounty. “You are trying to create opportunities out of a crisis,” he says. “If you can survive this, you’ll get out of it with an edge.”
On a personal level, he cut back and sold his home at the right time, and he made some money investing in the stock market. He also got a glimpse of his future. “I get a taste of what retirement will be like,” he says. “Then I have to get back to work. It’s not the worst thing in the world. ”
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