Promoter will probe ticket sales

Back - Index - Submissions - - What is RSS? Date: Dec 21, 2099 Source: The Denver Post Submitted By: By G. Brown Denver Post Special Writer Dec. 19 - The manipulation of concert ticket sales to benefit House of Blues Concerts and local ticket brokers goes beyond Denver, according to former employees of the promotion company and documentation shown to The Denver Post. And the chief executive of the national corporation that owns House of Blues Concerts said Saturday that he was launching an investigation of the allegations. "Based on recent Denver Post revelations, we are initiating a comprehensive review of our newly acquired concerts division's ticket subscription programs,'' said Greg Trojan, president and CEO of House of Blues Entertainment Inc. "It is House of Blues' philosophy and mandate to be consumer-friendly and discourage the reselling of tickets on any level.'' The Post previously reported that over the past two years, the House of Blues Colorado operation secretly sold prime seats at several of its concerts for a premium to ticket brokers, who then resold them at several times their face value. Those seats were taken off the market before the public had a chance to buy them. But sources with first-hand knowledge of financial and contractual dealings at House of Blues Concerts (formerly known as Universal Concerts) say the promoter has regularly sold tickets to brokers in several other markets across the country as a way to boost profits. California-based House of Blues has contracted with brokers in Dallas, Atlanta and San Diego as well as Denver since May 1998, according to former employees, who requested anonymity. One source showed The Post a letter from the promoter's corporate office specifying how tickets were to be sold to brokers. The practice was carried out under the direction of company President Jay Marciano and Daniel Segal, the head of sales, at corporate headquarters in Universal City, Calif., the sources said. "We were told we had to do it. It was Marciano's brainchild,'' one ex-employee said. House of Blues officials have said repeatedly that the company didn't knowingly sell to brokers. Marciano, the company's California-based chief, was not available for comment on Saturday. House of Blues Concerts, which was sold in July by Seagram Co. to House of Blues Entertainment, is one of the nation's largest concert promoters. It operates outdoor amphitheaters across the country, including Fiddler's Green (an 18,000-capacity concert venue in Arapahoe County), and exclusively books entertainment events at the University of Denver's new Ritchie Center. As The Post reported last month, House of Blues is embroiled in a ticket-scalping dispute with the Backstreet Boys, one of the world's biggest-selling singing groups. The group's management said more than 1,000 House of Blues-controlled tickets for prime seats at the Backstreet Boys' Oct. 31 show at the Pepsi Center fell into the hands of brokers. Since then, the Backstreet Boys and the rock band Pearl Jam, both of which have used House of Blues/Universal as a promoter in the past, have announced they will switch to other promoters for concerts next year. Sources say that 65 seats in the pit and front sections at Fiddler's Green have been sold under contract to local brokers without making them available to the general public under an unadvertised season-ticket program. Former employees also say that such sales took place in other House of Blues markets as well. In House of Blues' contracts with seasonticket holders, there is language specifying that tickets purchased cannot be resold for more than face value to any third party. But House of Blues documents show the deals with brokers used a different version of the contract, deleting the line about resale. Brokers paid a one-time seat fee good for a concert season, ranging in each market from $1,500 to $1,000 for each pit or orchestra seat - nearly double the fees for regular season-ticket holders. In Dallas, 70 seats in the prime sections at Starplex Amphitheatre were sold under contract to a wholesaler to other local brokers. He paid a $130,000 annual fee to House of Blues for the rights to purchase those tickets for the 1998 and 1999 concert seasons. In San Diego, 36 prime seats at Coors Amphitheatre were sold under contract to a broker who paid nearly $54,000 in annual seat fees for the privilege of buying those tickets for the 1999 concert season. In Atlanta, 34 seats at Lakewood Amphitheatre were sold under contract to one man for $44,000 a year in seat fees. It could not be determined if he was a broker, but the contract under which he purchased the tickets also deleted the language prohibiting resale. "They (brokers) get first right of refusal for all the tickets, then they're also allowed to order more, and they go at the higher price,'' according to one source. "House of Blues' little catch phrase is, "Well, they're legitimate businessmen.' '' Former House of Blues employees say the practice was a way for House of Blues to increase its profits on the concerts. "(A promoter) can't make money on the music anymore - it's impossible with the band guarantees and percentages. The only way you make money is through your ancillary revenue,'' an industry source said. Laws regulating resale of tickets vary from state to state. In Denver, the Colorado attorney general's office said it did not appear that any laws were violated by the sales to brokers. However, the practice is generally frowned upon in the music industry. It means that fans who stand in line at outlets to buy tickets for some high-demand shows promoted by House of Blues have less chance of getting prime seats, or else have to pay huge markups to the brokers. In the city and county of Denver, ticket brokers are barred, but they operate legally out of stores in some surrounding areas, especially Arapahoe County. The brokers also sell tickets through newspaper advertisements and over the Internet. Comment on this item. Next Item: Discord With Record Labels Threatens BMG's Big Moment Prev Item: RIAA's Top-Selling Act Of 1999?