Two Central Connecticut entrepreneurs are riding the rising tide of online ticket reselling, turning small investments into companies generating hundreds of millions of dollars in sales.
TicketNetwork in Vernon and EasySeat in New Britain are taking different high-tech paths to leverage New Englander’s interest in sports and entertainment against a number of chronically sold out venues to create a marketing opportunity.
And in the process they’ve built two of the state’s fastest growing businesses.
Web-based ticket exchanges have flourished in recent years. Sucharita Mulpuru, vice president of Forrester Research Inc., estimates U.S. online secondary ticket sales reached almost $3 billion in 2010, up from $2.6 billion a few years ago.
That figure could climb as high as $4.5 billion by the end of 2012, according to Mulpuru.
The secondary market — fans and brokers reselling concert, sports and entertainment tickets online — is a fragmented yet lucrative business once dominated by primary sellers Ticketmaster, Live Nation and Tickets.com, among others.
And resellers are facing new challenges from sports teams, concert promoters and primary ticket sellers who are figuring out ways to cash in on the secondary market.
In 2007, eBay Inc. snapped up online ticket dealer StubHub for $310 million. A year later, the Boston Red Sox inked a deal with Ace Tickets to handle its seats and StubHub secured a five-year contract in 2008 to serve as Major League Baseball’s official source for secondary tickets.
That same year, primary seller Ticketmaster acquired TicketsNow for $265 million and most recently merged with concert promoter Live Nation in an $889 million deal.
TicketNetwork CEO Don Vaccaro and EasySeat founder David Evans are two of the independent ticket aggregators finding success operating vast online marketplaces.
Online ticket aggregators are doing for the market what Travelocity does for airlines, cruise ships and hotels — only better, said Mark Gottlieb, an attorney who specializes in business valuations for MSG: Accountants, Consultants & Business Valuators in New York and Stamford.
Fueling Connecticut’s secondary market are season ticket holders who want to sell a portion of their seats for the local sporting games, said Gottlieb.
Gottlieb said large metro areas provide ample venue choices for sporting, concert and theater events that attract tourists and shows.
“Because ticket brokerage is an almost exclusively local industry, brokers thrive in large, metropolitan areas affording the greatest number of selling opportunities,” said Gottlieb.
“With access to eight football games, 40 hockey games and 80 baseball games a year, the fans want to be able to resell the tickets they can’t use,” said Gottlieb. “Fans like these websites because they can find last-minute tickets to sought-after shows.”
According to Gottlieb, there are roughly 800 to 1,000 ticket brokerages in the U.S. averaging 10 to 15 employees and reporting annual sales of $3 million to $4 million.
TicketNetwork, which aggregates information on available seats from thousands of brokers, enables consumers to browse and purchase tickets for highly sought-after events in various cities.
“Unlike other ticket companies, TicketNetwork hosts an online ticket exchange and does not hold ticket inventory or sell tickets itself,” said Vaccaro. “This means there is little risk for TicketNetwork since the buyers and sellers own the ticket inventory.”
That strategy is in sharp contrast to the model developed by Easy Seat founder David Evans, who had experience developing proprietary point-of-sale systems and automated inventory controls for online ticketing agency SoldOut.com.
While EasySeat accepts some tickets on consignment, for which it charges a 15 percent fee on the final sale, the value “lies in purchasing tickets outright.”
Evans says holding ticket inventory is a risk his competitors avoid.
“It’s very capital intensive to carry inventory, so they have grown simply by being aggressive marketers,” says Evans. “Our growth has been self-funded, so we have been very successful in implementing our model.”
Both ticket resellers made Inc. magazine’s list of 5,000 fastest-growing private companies in the U.S. and the Connecticut Technology Council’s Tech Top 40, which recognizes the 40 fastest growing tech firms in the state.
