Golden Knights Lawsuit vs StubHub Dismissed, What’s Next?

 

The Vegas Golden Knights lawsuit against StubHub has been settled out of court. According to court records, on September 27, the Judge in the case issued the order dismissing “all claims and counterclaims with prejudice.” There was a monetary judgment listng the defendant, StubHub, as the debtor and the plaintiff, Black Knight Sports and Entertainment (VGK), as the “creditor,” or party owed. The precise terms of the dismissal are unclear at this time. So far, a request for comment from the Golden Knights has been unanswered.

 

Black Knight Sports and Entertainment filed the lawsuit in June against StubHub claiming breach of contract. Among the allegations in its complaint, the team claims that before the Golden Knights had clinched a playoff berth, Stubhub sent a communication to their customers, including VGK season ticket holders, inviting them to “Sell your Golden Knights playoff tickets, cover your season ticket cost.” The team claims that StubHub did this without their knowledge and that VGK would have objected for many reason including a contradiction with the team’s planned resale and season ticket-holder plan “The Knight’s Vow” which offered season ticket holders a lower price for playoff tickets for agreeing not to resell them. 

 

Also in the complaint, VGK alleged that six days before Conference Final series against Winnipeg began, StubHub sent an email to the Golden Knights stating that “unless VGK agreed to enable resale of restricted tickets, StubHub would take any and all necessary actions, “including turning off the integration and opening our marketplace to all VGK ticket holders.”

 

“Such actions would have encouraged ticket holders to break the Knights Vow-an enforceable contract for the licenses (tickets) between VGK and patrons. StubHub’s ultimatum threatened to turn VGK’s historic inaugural season from an experience that encouraged fan loyalty and hometown spirit into a “scalping” money-grab,” the Knights claimed.

 

The terms of the agreement also called for the Golden Knights to receive a portion of the profits from the resale of playoff tickets through the StubHub site. The suit alleged that a week after season ended on June 7, StubHub issued an accounting of the sales, showing that VGK’s one-third share of the post-season secondary ticket sales profits was $1,449,583. StubHub then determined, on its own, that if not for VGK’s Knights Vow policy, the profits would have been higher, so they adjusted the teams’s portion to $254,875 with the difference being split between StubHub and AXS.

 

The team sought to recover those monetary damages owed under the terms of the contract, arguing that “the prerogative to set prices and the terms of ticket sales belongs exclusively to VGK” and that “VGK is entitled to protect the integrity of the purchasing rules and pricing structure it implements, in its discretion.”

 

VGK also asked the court to terminate the contract with StubHub, freeing the team to contract with a different secondary market ticket seller.

 

What does the end of this case mean going forward?

 

Who a new secondary market ticket reseller might be is an important issue for season ticket holders. Recent reports accounted how some season ticket holders have had their season tickets revoked by the team for violation of the team’s policy of only allowing sales through StubHub, who last season was the only authorized third-party reseller. 

 

The team’s standard season ticket holder agreement states, in part, that: 

“I acknowledge that the spirit of being a season ticket member is to support the team and not generate financial gain . . . In the event that I cannot use a ticket to a home game and desire to sell such ticket (in accordance with Nevada law), I may utilize Vegas Golden Knights’ preferred re-sale ticketing provider. I acknowledge and agree that my ticket resale and/or trade activity may be monitored and tracked by the Vegas Golden Knights. In the event that (a) I sell, attempt to sell, or engage a third party to sell on my behalf a substantial portion of my Vegas Golden Knights tickets to the seats for home games, or (b) Vegas Golden Knights determine that I have sold tickets to the seats for home games for the primary purpose of generating financial gain or benefit for the me, Vegas Golden Knights reserves the right to pursue all legal remedies, immediately upon written notice to me.”

 

The vagueness of the wording of this agreement has left many season ticket holders wondering if they are in danger of losing their tickets. What constitutes a “substantial portion” of tickets? What if one sold their seats only on the authorized reseller, but the team determines that they sold too many? How does the team determine if a ticket holder sold their tickets “for the primary purpose of generating financial gain? If the team was as bad last year as most had predicted and T-Mobile was 30% below capacity, I don’t think the team would care who sold tickets through where if it helped put butts in the seats. 

 

A popular theory being floated on local sports radio shows is that this was (and still is) a cash grab. But, many argue, that now the team is the one trying to grab more of the cash. The team made money off the initial season ticket sales, then by forcing ticket holders to only sell through StubHub, ensure themselves even more cash by taking a percentage of those sales as well. And by partnering with StubHub in the first place, the had “inside” information as to what price people were willing to pay in the secondary market for playoff tickets. By knowing that people were paying $120, for example, on a $50 face-value upper level ticket, they could then adjust the next round’s face value to $100. This would give the team the majority of the profit available rather than the season ticket holder. And if the next round people paid $200 for the $100 ticket, the subsequent round would be priced at $180 and so on. It was, at the time, a brilliant strategy to know what the market would bear and adjust accordingly to maximize revenue. 

 

Where does this policy leave those who forked over the money for season tickets before they had a player under contract or had even purchased a puck? Take a family of four who shelled out $4400 for four upper level tickets, agreeing to a three-year term. Things happen in life, so suppose they had some issue where they couldn’t make as many games as they had hoped and had to sell tickets to all the weekday games. Well, the team could now determine they violated the rules by selling “a substantial portion” of their tickets and revoke their seats. Because the team was a surprise success last year, now there are reportedly 6,000+ fans on a waiting list to buy tickets. Maybe the team can now sell those tickets for 30, 40, maybe 50% higher due to the high demand. Its a win-win for the team. But are those on the waiting list really diehard hockey fans wanting to support the team, or are maybe are some of them opportunists who want to jump on the bandwagon and try to grab some of that cash too?

About the Author

Tom Ross