VANOC Files Suit Against Ticket Reseller Roadtrips

9/15/2009

Ticket sales for the 2010 Winter Olympics in Vancouver are in full swing, and already controversy is in the air.

On May 11, 2009, VANOC filed suit against Winnipeg-based ticket agency Roadtrips, alleging their resale of Olympic tickets violated the contractual terms of ticket sales. Roadtrips has found itself in hot water before, failing to deliver a number of opening and closing ceremony tickets to customers for the 2008 Beijing Games.  VANOC has also filed suit against Coast2Coast Tickets, which has yet to respond.

While not an official VANOC or Canadian Olympic Committee (COC) sponsor, Roadtrips is selling, and guaranteeing, individual and package tickets to the Olympics, with high-end packages starting at around $4,000.  According to VANOC, selling tickets so far above face value amounts to unjust enrichment at their expense and is a violation of the contractual terms by which all tickets are sold.  Specifically, VANOC alleges that Roadtrips has violated the provision stating that no tickets will be resold for monetary gain except through official VANOC channels.

While only official VANOC and NOC sponsors are allowed to resell tickets to the games, Roadtrips has shot back at VANOC.  In its counter-claim Roadtrips has accused Jet Set, official hospitality sponsor of VANOC, and Tickets.com, seller of tickets in Canada, of conspiring to keep companies like Roadtrips out of the market.  They have also alleged that the contractual terms by which the tickets are sold are illegal, having the effect of unduly restricting the secondary market participants and violating the Competition Act.

VANOC has threatened to cancel the tickets sold through Roadtrips, ultimately depriving the end-consumer of a chance at a once-in-a-lifetime Olympic experience.

But to understand what's really going on up in Canada, you need a little bit of background on...

Jet Set and CoSport

Jet Set and CoSport, founded by Sead Dizdarevic, sponsor VANOC, the COC and the USOC.  Through Jet Set’s contract with VANOC as official hospitality sponsor, the company is the exclusive provider of high-end hospitality packages to Vancouver 2010.  CoSport has a similar agreement with the USOC whereby they are the exclusive seller of tickets in the US.

Jet Set has effectively cornered the market on Olympic Tickets, and this has allowed them to get their hands on substantial numbers of tickets and turn tidy profits in the process.  In Beijing, Jet Set controlled about 330,000 tickets through its sponsorship deals and spent some $130 million on the games.  Dizdarevic estimated that Jet Set would see a profit of about $70 million on the games.

Like Beijing, Vancouver 2010 promises to be hugely profitable for Jet Set.  Beginning a relationship with VANOC in 2006 when Jet Set provided their accommodations and tickets to Torino, the two inked a deal in 2007 which made Jet Set the official hospitality sponsor.   

While it remains to be seen how many tickets Jet Set will sell for Vancouver, CoSport has already sold around 100,000 tickets in the US alone.  This amounts to about 6.25% of the 1.6 million tickets VANOC has made available for the games.  And while this might not sound like a lot, consider the fact that this could amount to anywhere from one-third to one-half of all tickets destined for international sale.

And there are likely more tickets out there for the two companies to sell.  Mark Lewis, president of Jet Set, estimates that the company will handle 150,000 to 175,000 clients in Vancouver and this doesn’t even include the purchasers of CoSport’s 100,000 tickets.

So What?

Ok, fine. These guys are sponsors, they pay a lot of money to do this and they are entitled to make a profit.  Surely they are not completely ripping off customers like they allege against Roadtrips.

Wrong.  CoSport sells tickets in the US for about 30% more than what VANOC sells them for in Canada.  And if exchange rates are taken into consideration, the mark-up is about 50%.  But we’re not done yet.  Don’t forget about shipping fees and “fulfillment” fees.

For shipping, tack on an extra $35 per order.  The only other option is to go to the one will call office in Canada, located in Vancouver, and pick them up.  If you're going to Whistler, tough luck.  Enjoy your side-trip in Vancouver. 

And then there is “fulfillment.”  For that, add on about $6. When Seattle Times columnist Ron Judd bought a pair of $34 tickets for the 50k cross-country race, his grand total was $109.  That’s $68 worth of tickets, and $41 for shipping and convenience.  In Canada, those tickets would have run you about $40.  So for a grand total of $109, you too can purchase $40 worth of Olympic tickets from CoSport, the official and exclusive ticket agency for the USOC. 

But what about the packages?  Roadtrips was selling tickets marked-up in packages, not just individual tickets.  Jet Set’s packages put those of Roadtrips to shame.  Packages including tickets to the gold-medal hockey game sold out long ago, some priced as high as $34,000.

The Lawsuit

VANOC has basically alleged that Roadtrips sales of tickets violates the contractual terms by which all tickets are sold.  But the contract VANOC is basing its complaint on is not with Roadtrips, it is with the original purchasers of the tickets.  VANOC suspects that tickets sold to companies like Roadtrips come from members for the Olympic Family: sponsors, NOCs, and members of the media.  VANOC has even asked Roadtrips to disclose the source of its tickets. 

But in trying to enforce this contract, VANOC is ultimately punishing the end-consumer. They are threatening to cancel all tickets sold by Roadtrips, dashing the hopes of Roadtrips ticket holders and putting out of pocket anyone who purchased tickets to Vancouver through the company.

By doing this, and restricting the secondary ticket market, VANOC is forcing US customers to go through CoSport, which raises the possibility that CoSport could be a driving force behind this lawsuit.  In the wake of the lawsuit, VANOC has cutback on ticket allocations to members of the Olympic Family, making these tickets available to Canadian residents, as well as Jet Set, which seems to keep stumbling upon tickets to sell.  And the more tickets they have to sell, the more money they make.