StubHub Will Strike Out v. Yanks
Last week the New York Yankees began the 2013 season against their bitter rivals the Boston Red Sox. Off the field and in the courtroom, they’ve made another rival: online ticket giant, StubHub.
The Yankees jumped out to an early lead against the eBay subsidiary when the wealthiest team in baseball was granted a preliminary injunction against StubHub in March.
StubHub had been planning to open a store on East 161st Street in the Bronx – directly across the road from the “House that Ruth Built”. The Yankees, ever mindful of their own ticket sales, sued StubHub, claiming the online marketplace would violate state law by reselling tickets within 1,500 feet of the Stadium. Now StubHub’s plans for a storefront are on hold, but StubHub is appealing and the next hearing is scheduled for April 16.
Bronx Supreme Court Judge Lizbeth Gonzalez had some harsh advice for StubHub’s attorney Salvatore A. Romanello, telling him that if StubHub’s arguments on appeal were not sound, the ticket seller could be facing some serious penalties.
But though the media reported that StubHub was stirring up a turf war in the heart of Yankees Universe, they didn’t explain what law was being violated or whether StubHub could make a comeback in court.
We decided to step up to the plate, investigate the law and weigh the odds. We did, and we’ve determined that if StubHub were to make a comeback against the Yankees, they’d need to do what the Red Sox did against the Bombers in 2004 – pull off a miracle.
For those of you unfamiliar with StubHub, it’s a company that allows users to purchase tickets online for sporting events, concerts, etc., from other users who post tickets to the site. The online marketplace gets the majority of its inventory this way, from season ticket holders and other individuals that re-sell tickets through the site. StubHub, of course, makes a nice little profit off the arrangement.
StubHub also renewed a five-year deal with Major League Baseball in December of last year, making it the Official Fan to Fan Marketplace of MLB.com. When the deal was finalized, the Yankees, Cubs and Angels each opted out of the agreement, teaming with StubHub’s main competitor, Ticketmaster, instead.
Now back to the case.
The media reported that the Yankees are claiming that the StubHub ticket office across the street from the Stadium would violate state law. So, first things first: what the heck is this law?
According to the complaint, New York Arts and Cultural Affairs Law §25.11, also known as the “Venue Protection Law”, states that “No person, firm, corporation or not-for-profit organization… shall resell, offer to resell or solicit the resale of any ticket to any place of entertainment having a permanent seating capacity in excess of 5,000 persons within 1,500 feet from the physical structure of such place of entertainment.” The penalty for violating the law is a Class A misdemeanor, a fine of $1,000 or twice the amount gained by the resale.
It seems simple: if any individual or company is reselling tickets at a large venue, it has to be more than 1,500 feet away from the event’s venue.
StubHub admits its proposed store would be within 1,500 feet of Yankee Stadium. But rather than just moving a little further down the road and avoiding a good old fashioned turf war, StubHub is claiming that it doesn’t actually sell or resell anything at its storefronts. In its response to the Yankees motion for a preliminary injunction, StubHub argues it’s not a reseller at all – it’s an online marketplace that connects individual sellers to individual buyers. StubHub says the storefront would only provide a convenient location for customers to pick up and drop off the hard copies of the tickets sold online.
But the Yankees are quick to point out that StubHub offers “Last Minute Services” – a feature that allows buyers to purchase tickets up until the beginning of an event and pick them up at a “convenient” location. That’s all well and good but under the Venue Protection Law it has to be convenient from at least 1,500 feet away. The Last Minute Services feature is critical in understanding why the StubHub storefront would, indeed, violate state law. Here’s why.
The Venue Protection Law prohibits the resale, offer to resale or soliciting the resale of tickets by any person or corporation within 1,500 feet of the venue. StubHub’s claim that their site connects individual buyers and sellers is beside the point. If anyone or anything is reselling or offering to resell tickets within 1,500 feet of Yankee Stadium it would be in violation of this law. That’s what makes scalping tickets around a stadium also illegal.
Strike one, StubHub.
By definition under the same law, “resale” includes: “sales by any means, including in person or by means of telephone, mail, delivery service, facsimile, Internet, email or other electronic means…”
Here’s where the Last Minute Services really become a problem. Any tech-savvy buyer on an iPhone could easily purchase tickets from inside the StubHub facility, wait for the tickets to be printed, and pick up them up minutes later. Seems to me that the definition of resale includes just about any type of sale – including those online or by mobile phone. So if this weren’t seen as falling under the definition of resale, I’m not really sure what would.
And lastly, opening a store across the street from Yankee Stadium would probably amount to outright solicitation or offering to resell tickets to fans within 1,500 feet of the stadium just by catching the attention of spectators before and after games and concerts. Strike three. Swing and a miss.
The Yankees aren’t being unreasonable with StubHub, either. They’re perfectly fine with one of StubHub’s convenient locations as long as it’s not within 1,500 of the stadium. Even Judge Gonzalez agrees. She recommended that they move the location further away from the stadium to comply with the law.
StubHub would be wise to settle this and ease on down the road. Though it pains this diehard Red Sox fan to concede any kind of win to the Yankees, my bet in this courtroom battle is on the Pinstripes.
UPDATE, April 17, 2013: StubHub’s attorneys must have rethought their decision to take on the Pinstripes at trial since they reached a confidential settlement with the Yankees after seven hours of closed door negotiations. For now the fate of the storefront remains uncertain, but we’re guessing StubHub will either be moving down the street or closing shop on game days as part of the deal.