Ticket Seller’s System Gains Entry to Big Leagues

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Ticket Seller’s System Gains Entry to Big Leagues
CEO Adam Kanner at ScoreBig’s Hollywood headquarters.

Los Angeles has long been home to some of the biggest players in ticketing for live events, but one Hollywood startup is looking to stand out from the crowd.

In its first four years, ScoreBig Inc. has become the outlet mall equivalent for tickets to sporting events and concerts. The company works with teams, venues and brokers to peddle unsold tickets at a discount.

Several sports executives call ScoreBig a friend to the live-event industry because its bidding system – where a buyer essentially determines the value of a ticket – fills empty seats without using attention-getting discount promotions that tend to diminish the value of the regular-price tickets.

That’s the reason ScoreBig has garnered some big-name partners, including a recent $10 million investment led by a New York fund run by David Checketts, former chief executive of Madison Square Garden Co. ScoreBig is using the cash infusion to launch a marketing campaign and continue to grow its business.

The company does not disclose which teams or venues it works with, but on a recent Wednesday, the ScoreBig website advertised tickets for events including upcoming Dodgers games, a Selena Gomez concert in Las Vegas and the “Sleeping Beauty” ballet at the Ahmanson Theatre.

Chief Executive Adam Kanner points out that those tickets could have been supplied through brokers and not directly from the venue or organizing group. It’s that uncertainty, he said, that helps ScoreBig fill seats without hurting their brands because the buyer doesn’t know who’s doing the discounting.

Here’s how it works: The company offers tickets at various prices, but doesn’t list the exact amount of the discount available. Instead, it lists the face value of the ticket, the average discount (savings range up to 60 percent) and the general location of the seat – for example, top deck at a Dodgers game.

It is then up to the would-be buyer to name the price they are willing to pay for the ticket. So, for example, a person could bid $100 for a $200 Lakers ticket. If ScoreBig approves the price, the fan can buy the ticket directly through the website. If ScoreBig rejects the bid, the fan must wait 24 hours until bidding for that ticket again. The fan can then bid higher, lower or the same price and fail again or succeed.

That’s because ScoreBig changes that magic threshold for each ticket based on demand through a practice called dynamic pricing. This means that the successful offer of $100 one day might be a losing bid one day later.

“We’re able to protect pricing through opaque discounting,” Kanner said. “You are guaranteed to save, but how much you save is up to you.”

The service works well for a casual consumer, one who would attend an event if the price is right. ScoreBig’s business is built on the idea that rising ticket prices are pricing out such casual fans, equating to billions of dollars in losses due to empty seats. Industry executives say that about 40 percent of all available tickets go unsold.

The problem for venues extends beyond just ticket sales, said Scott O’Neil, a ScoreBig board member and chief executive of the Philadelphia 76ers.

“In the team sports business, season tickets drive the majority of the revenue for the team,” he said. “But teams also often share in the ancillary revenue such as food sales and parking. So the more we can get people into arenas and stadiums, the better.”

Alternate options

Industry heavyweights Ticketmaster Entertainment Inc. in West Hollywood and AXS.com, the ticketing arm of Anschutz Entertainment Group in downtown Los Angeles, command the direct ticket sales business.

But ScoreBig is one of several L.A. startups trying to create alternate options. Others include Westwood’s Razorgator.com, which acts as a ticket reseller, and Burbank’s Crowd Seats, which offers Groupon-like deals.

Kanner said ScoreBig isn’t meant to be a Ticketmaster competitor. He equates purchasing tickets on ScoreBig to going to the Nike outlet for a pair of sneakers. You’d go there for discounted shoes, not the latest Air Jordans.

Courtney Brunious, assistant director of the Sports Business Institute at USC’s Marshall School of Business, said ScoreBig has carved out a niche in the crowded ticketing industry as a new option that’s not a primary provider or a reseller. That’s the same strategy employed by discount website Priceline.com for the hotel and airline industries.

“What ScoreBig has done is created an avenue for these franchises and teams to utilize the inventory they still have while protecting their brand,” Brunious said. “It gives the team a little more control over the tickets than they have with the secondary market.”

Unlike some ticketing companies, ScoreBig does not make money off the customer by charging a service fee. Instead, the company splits revenue with the ticket providers.

Marketing push

Kanner, a former marketing executive at the National Basketball Association, co-founded ScoreBig in 2009 with Joel Milne, who had previously started another ticketing software company. What began as two guys working on two separate coasts – Kanner in New York and Milne in Los Angeles – has now turned into a 65-person outfit.

The company retains a small office in New York, though Kanner has moved to Los Angeles. The majority of employees work out of ScoreBig’s Highland Avenue headquarters, which is festooned with sports jerseys given to employees after their one-year anniversary. They can take them when they leave.

ScoreBig recently expanded its lease to cover the entire first floor of its building. Kanner said he is hesitant to grow his staff too large, but he noted that the company does plan to hire. The new space would allow him to increase ScoreBig’s head count by 30.

The company has raised more than $30 million in funding over the last four years from investors including Bain Capital Ventures in Boston and U.S. Venture Partners in Menlo Park. Most of that money has been used to build the company’s technology, including its dynamic-pricing algorithm that determines the base value of each ticket.

ScoreBig’s recent $10 million infusion is part of an ongoing series C round. It was led by Checketts Partners Investment Fund and will be used to market the service to potential customers.

David Checketts, who led the fund’s investment and has worked with several professional sports teams during his career, said marketing is a key next step for ScoreBig.

“I think we need to tell the story,” he said. “We really need to let the consumer know about this option. The company has already been growing dramatically but this will add some rocket fuel.”

Kanner declined to specify how large the ScoreBig audience has become, but said the company grew about six times in revenue and eight times in transactions last year.

ScoreBig is testing television ads and expects to buy radio spots. The company also has signed a deal with United Airlines to provide tickets in exchange for airline miles. United is advertising the deal at airport terminals and on planes.

Kanner said the advertising push is all about creating brand recognition. Otherwise, some consumers remain skeptical about the deals the company is offering.

“People are so conditioned to pay more and pay fees,” he said. “They’re like, ‘How is this possible?’ It’s possible because we’ve changed the business model. Trust me, we make money. We just do it differently than anybody else.”

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