Bundling the Games: The Jet Set Sports/CoSport Connection

9/8/2008

Last October, when Ellen Clark learned that her daughter had made the U.S. Olympic Sailing Team, she did exactly what the USOC had advised those interested in Olympics tickets to do — she went online to CoSport.com, the official ticketing website for the USOC, and typed in her request for seats at the sailing events. Even though Clark logged into the CoSport site almost immediately the day tickets went on sale, and even though, as she says, “sailing is not gymnastics, it’s not basketball; a lot of people don’t even know sailing is an Olympic event,” she was surprised to be told that no tickets were available. She was also surprised to find that there were no Opening Ceremony tickets available either — unless, that is, she wanted to buy a travel package that included a week-long stay in Beijing.

For Clark, that wasn’t a particularly attractive option. Her daughter would be in the Opening Ceremonies in Beijing all right, but then she and the sailing team would move to Qingdao, a coastal city some 350 miles away. So instead Clark decided to use what seemed her only remaining alternative: search the World Wide Web for other sources of Olympics tickets. What she found, like so many others, was beijingticketing.com. And like so many others, after spending more than $6,000 for Opening Ceremony, sailing, and other tickets, she found that she had been scammed, and no tickets were going to be delivered.

Unlike many others, though, Clark was not only able to get her money back, thanks to the good graces of American Express, but also able to get tickets to the events she’d hoped to see, thanks to the intervention of her local county legislator and her U.S. Congressman. The parents of another sailing Olympian, meanwhile, decided to bite the bullet and buy the CoSport travel package, which got them Opening Ceremony tickets, but resulted in their missing the first few days of their daughter’s sailing. That, says Clark, is something that she would never have considered doing. And she still wonders why, on the USOC’s official ticketing site, it was her sole choice.

As the investigation into the Olympics ticketing scams continues, others are wondering the same thing. When hopeful Olympics-ticket buyers were told by CoSport.com that no tickets were available, it’s clear that they often were not being told the whole story. In its July lawsuit against the alleged scam ticketing websites, the USOC and IOC admitted as much. Though by July 22, when the lawsuit was filed, tickets were considered almost impossible to come by, the lawsuit noted that, “Even as of this late date, there are tickets available for purchase in the United States as part of hospitality packages. Consumers who purchase (or believe they have purchased) tickets from Defendants [the alleged scam websites] are less likely to purchase such packages, and the USOC, which receives certain revenue from Jet Set Sports [the owner of CoSport.com] based on ticket sales, suffers directly as a result of Defendants’ conduct.” (Emphasis added.)

How many people ended up buying travel packages they weren’t interested in to get tickets, and how many people ended up not getting tickets because they didn’t want or couldn’t afford a travel package, is uncertain. But what is certain is that while the practice of bundling together tour packages with tickets to special events is common in the travel industry, with the Olympics that common practice has uncommon results. Normally, a travel agency will purchase tickets to offer as an incentive to a tour package. Rarely, though, is the travel agency the only source for those tickets. Jet Set Sports/CoSport, however, pays a fee to be the “official hospitality operator of the Olympic Games.” But as the president of a sports-management firm noted in a Portfolio story about Sead Dizdarevic, the man behind Jet Set Sports/CoSport, “A service monopoly isn’t like a Coke or a Visa sponsorship. You can always walk across the street and use your Amex card or drink a Pepsi. Not with this deal.”

The Portfolio article was written by Peter Waldman, a former reporter for the Wall Street Journal who has detailed more than once how Sead Dizdarevic went from being a small time travel agent in Staten Island, New York, to controlling Olympics ticket sales for not only the United States, but also Canada, Australia, and several European countries. It was a journey that passed through scandal at the 2002 Winter Olympics in Salt Lake City to end up with an estimated $200 million in revenue, against expenses of roughly $130 million, at the Beijing Games. The Salt Lake scandal centered on the allegation that bribes had been paid to IOC officials to guarantee Salt Lake won the Winter Games; according to one Salt Lake City official, it was Dizdarevic who put it in people’s heads that the Games could be bought. Dizdarevic was never prosecuted — only because, Waldman says, he agreed to testify for the prosecution — though the Salt Lake experience did, Dizdarevic says, cause him to change his business practices. The practice he ended up with was one that consists of two connected entities, Jet Set Sports, which deals with corporate clients, and CoSport, which deals with individual ticket buyers. Both sides of the company, though, are concentrated more on travel packages with tickets as the lure than straight ticket sales, since it is the packages that bring in the greatest revenue.

Though this business model has clearly been good for Dizdarevic, and brings the USOC millions of dollars in sponsor fees from Jet Set Sports/CoSport, the question being raised now is whether the model is good for the majority of those who want to attend the Olympics. Some Jet Set Sports/CoSport competitors have suggested that the relationship between Dizdarevic and the USOC may violate U.S. antitrust laws. Another issue is whether the linking of tickets with travel packages may be what drove so many Olympics tickets buyers in search of another option, and into the hands of scam ticketing websites.

In the wake of the Salt Lake City scandal, Dizdarevic was quoted as saying he was glad that it happened, because it helped reform the Olympics. "Now we have rules," he noted, then added, "We need one more [scandal], then the Olympic movement will be a true Olympic movement again." Depending on what happens with the inquiry into the alleged scam Olympics ticketing websites, he may get his wish. Though the impact on his business this time may be quite different from what it was before.