By Jordan Kobritz
The coronavirus has brought live sporting events to a halt, and no one can predict when the games will return.
For now, the major leagues’ position is games are “postponed” and will be played sometime later this year. But even if that’s true, playoffs or seasons are likely to be compressed and/or disrupted again, games could be canceled, take place far from teams’ home facilities or played without fans in attendance. The loss of revenue will be in the billions-of-dollars and the unknowns make it difficult to plan ahead.
In the face of such uncertainty, one thing most leagues have in common is their refusal to issue refunds to ticket holders, relying on contract law or standards of practice to support their position. Normally, their stance wouldn’t raise an eyebrow; it’s standard practice to hold on to ticket money for postponed games until they are rescheduled. At that point, most teams’ official policy usually consists of two options: use the ticket for the rescheduled game or exchange it for a ticket to another game.
But these aren’t “normal” times, something teams know but are reluctant to acknowledge to their fans, many of whom are out of work because of the pandemic and need cash now. Out of desperation, some fans have brought lawsuits seeking a refund, which so far has proven fruitless.
The latest legal action was filed on April 20 in U.S. District Court in Los Angeles. Two fans from New York who purchased tickets to the Mets and the Yankees sued Major League Baseball, MLB Commissioner Rob Manfred, the 30 MLB teams, and several ticket resellers including StubHub, Ticketmaster, Live Nation and Last Minute Transactions. The Plaintiffs are requesting “full restitution, an accounting of all MLB tickets sold for the 2020 season (including season tickets, single game purchases, and public seat licenses), a declaratory judgment that Defendants’ conduct of continuing to sell tickets for the 2020 MLB regular season violates California law, as well as a disgorgement of profits from tickets sold during the 2020 MLB season,” per their complaint.
They are alleging violations of California’s Consumer Legal Remedies Act and Unfair Competition Law and of civil conspiracy.
It’s no surprise that ticket resellers where also named as defendants. StubHub for example has an agreement with MLB to sell and resell season and game tickets. By some estimates, they are holding approximately $1 billion in ticket money on behalf of MLB teams. Similar to the teams’ position, they justify holding on to fans’ money — interest free — by saying the games have been postponed, not cancelled, and will be rescheduled at a later date.
Until recently, StubHub’s official policy stated, “If the event is postponed, ticket buyers can choose to either attend the event on the new date or resell the ticket. If the event is postponed to a future, undetermined date, StubHub will email the ticket holder as soon as the details are announced.” You can’t get much more arrogant or unsympathetic than that.
As a result of fan backlash and political pressure, StubHub issued a revised policy which would give holders to canceled events a credit of 120% of their purchase price. The credit could be used toward a new purchase within the next 12 months, rather than a refund.
Government intervention may be next, even before the litigation is resolved. Congressmen Frank Pallone Jr., D-N.J., Chairman of the House Energy and Commerce Committee, Katie Porter, D-CA and Bill Pascrell, D-NJ have all criticized policies that offer future credits in lieu of refunds, calling on ticket companies to refund fans’ money.
Beyond the legal and political pressures leagues and teams face, their current policies are potentially devastating from a public relations perspective. Teams need fans. Approximately 40 percent of MLB revenue comes from game day operations and Forbes has estimated that figure to be 75 percent for the NHL. Teams should be making every effort to work with their fans, rather than taking positions that may alienate them forever.
The teams’ and StubHub’s goal is to retain as much cash as they can for as long as possible. While understandable from a cash flow perspective, the better business play – short and long term – is to voluntarily refund fans’ money before the government or courts order them to do so.
Jordan Kobritz is a non-practicing attorney and CPA, former Minor League Baseball team owner and current investor in MiLB teams. He is a Professor in the Sport Management Department at SUNY Cortland.
