Eric Schneiderman for Attorney General

NFL to halt floor pricing on ticket resales, N.Y. AG announces

November 15, 2016

As published by The Buffalo News on November 15, 2016.

The NFL has agreed to halt a league-wide practice of imposing floor prices on tickets sold on the busy secondary marketplace, Attorney General Eric Schneiderman announced today.

The settlement ends an anti-trust investigation of the Bills and several other teams for what Schneiderman has called a “fixed game” of ticket re-sales that kept prices artificially high.

“Under the NFL’s price floor scheme, fans were forced to pay inflated prices for even the least desirable NFL games. That is a slap to both sports fans and free markets,’’ Schneiderman, New York’s top government lawyer, said in a written statement today.

The agreement includes no admission of wrongdoing or anything identified as a financial fine. The NFL has agreed to reimburse the states $102,100 to cover the costs of their investigations.

The NFL took exception to Schneiderman saying that fans paid inflated prices for what  the “least desirable games.”

The NFL is “pleased to have reached a favorable settlement” with the attorneys general, the league said in a statement, and noted it dropped its league-wide floor price policy in March, effective with the 2016 season.

The investigation began as a review of ticketing policies by the NFL and several teams, including the Bills, New York Jets, New York Giants, New England Patriots, Philadelphia Eagles and the Pittsburgh Steelers. State attorneys general from New York, Ohio, Pennsylvania, Massachusetts, Florida and the District of Columbia were conducting the investigation.

At issue was a league-wide policy, embraced by the NFL’s 32 teams, that tickets re-sold on the NFL Ticket Exchange – and related, NFL-sanctioned web sites — not be priced lower than face value.

The Exchange is the official re-sale marketing entity run by Ticketmaster. The probe also investigated other individual team ticket pricing practices, though the settlement document did not elaborate on that aspect.

The deal, a nine-page agreement, notes that the NFL halted the floor pricing mandate in 2016 while the multi-state investigation was underway.

The agreement, a copy of which was obtained by The Buffalo News, states that the NFL will not seek to bring back the ticket policy and that it will not “directly or indirectly” take any actions that might encourage agreements with NFL teams to have ticket price floor policies for regular season games. The settlement does not preclude price floor policies for tickets to events primarily distributed by the NFL, such as the Super Bowl and Pro Bowl.

However, the arrangement with the NFL does not mean price floor policies will necessarily disappear at all the league’s 32 teams. The agreement states individual NFL teams can  “unilaterally” make those decisions.

“In the meantime, I encourage every NFL team – and every team in professional sports – to heed the call of all sports fans and remove price floors from every team-authorized secondary ticket market,’’ Schneiderman said.

Further, the agreement ends what the states said could have been their legal right to bring action against the NFL for any variety of lawsuits under state or federal laws pertaining to unfair competition, deceptive trade practices and price discrimination. None of those claims were advanced in the settlement today, and the deal ends any legal action the attorneys general may have been contemplating over ticket pricing policies.

The settlement document also includes what appears to be a key clause for the NFL, The state attorneys general say their investigation has not “identified an injury to consumers resulting from the league-wide ticket exchange price floor, alone or in combination with other ticketing practices.’’ It also said there was no evidence uncovered that the NFL “interfered” with team efforts to reduce instances of ticket fraud.

“The settlement agreement confirms that the State AGs have concluded their two-year investigation and did not identify any injury to consumers resulting from the league-wide Ticket Exchange price floor, alone or in combination with other ticketing practices,” said NFL spokesman Brian McCarthy. “The agreement contains no findings of wrongdoing by the League or its member clubs and does not require the NFL to change any of its current ticketing practices.”

McCarthy added that the resale marketplace is “robust and highly competitive” for NFL tickets. “The NFL wants our fans to have numerous, convenient, consumer-friendly options through which to buy and sell game tickets, and the settlement agreement reflects that commitment,” he said.

The agreement today ensures the NFL does not promote or require that its 32 clubs “implement ticketing technologies or practices that are designed or intended to substantially impede or preclude the ability of consumers to buy or sell tickets on secondary ticket exchanges unless permissible under applicable law.’’

Fans who try to sell their tickets on the NFL Ticket Exchange, but are denied because of a price floor established by a home team, will have to be immediately informed that the team’s individual price floor policy was the reason.

Today’s settlement involves only the NFL. In January, Schneiderman released a report following a three-year investigation in which he said consumers lose ground – and money – to a flourishing re-sale industry for tickets to pro sports contests, concerts and even a visit to New York last year by Pope Francis. The study looked at a range of problems, including price floor policies by the NFL.

Another issue was the increasing use of ticket “bots,’’ which are illegal computer programs brokers use to beat consumers in the rush to buy up tickets to popular events. Brokers then turn around and dramatically jack up prices of those tickets. The state Legislature in June further cracked down on the use of “bots” by brokers.

At the time of the report’s release, officials said a number of NFL teams were being looked at for ticket pricing policies related to price floors, though they declined to identify the teams. On the first page of today’s settlement agreement, several of the teams, including the Bills, are identified as among the teams that state attorneys general were looking at for “certain ticket practices.”

In his January report on problems in the ticket sale industries, Schneiderman noted that many NFL teams encourage or insist that ticket holders to a game use the NFL-sanctioned Ticket Exchange when trying to sell those tickets. The requirement especially hit season ticket holders who were willing to sell tickets below the printed price for games that were not especially popular, or late in the season when a team was out of a playoff hunt.

The practice hits buyers, too, the report said, because they are “fooled into believing” that the market sets the price they are paying for an event – and not some unknown price floor edicts.

“The more aggressive sports leagues and individual teams push ticket buyers and sellers to use their ‘official’ secondary markets, the more serious this problem becomes,’’ said the January report.

The price floor policies did an end-run around the intent of a 2007 state law pertaining to ticket re-sales that lawmakers hoped would help lower prices, especially for events less in demand.

Schneiderman, the report at the time said, believes there is little positive in price floor policies. “They tend to expose the public to the full costs of the new ticket economy, while depriving the public of the benefits,’’ the report said.