Scalpers find niche in Olympic market

[23 November 2009]

By Christine Willmsen and Ron Judd

The Seattle Times (MCT)

SEATTLE — The thriving black market for 2010 Winter Olympic tickets is a textbook case of supply and demand.

The demand part is simple: Record numbers of fans from Canada and the U.S. want to attend the Games.

The supply side is more interesting, because it reveals one of the Games’ enduring dirty secrets:

Many, if not most, of the tickets being sold by scalpers come from privileged insiders — the “Olympic Family” of sponsors, national Olympic committees, officials and others — who get to buy their tickets well ahead of the public.

The practice is strictly forbidden by the International Olympic Committee, but stubbornly persists.

Officials with the Vancouver Organizing Committee (VANOC) insist these Games will be different: that ticket chicanery by insiders will be curbed.

“I just can’t personally accept that there’s going to be fewer tickets available at face value to the public in this country because members of the Olympic Family are ... getting those tickets and then scalping them,” said Dave Cobb, VANOC’s deputy CEO.

Cobb threatens to take action if he discovers that insiders are reselling the bar-coded tickets on the black market. “We can cancel them all with one push of the button,” Cobb said.

VANOC’s threat to void tickets — which may be held by fans who paid dearly for them and traveled thousands of miles — is seen by many in the ticket and travel industry as laughable.

“It’s always been a joke,” said Don Dow, owner of a Medford, Ore., sports travel company. “They put threats out there and everyone in the event world says, ‘Whatever.’ “

The former University of Washington football player, like most resellers, won’t divulge where he gets the 300 or so Vancouver tickets he plans to sell in travel packages for affluent clients. Dow is not an authorized reseller. Other companies pay millions of dollars for that status.

In the U.S., the sole sanctioned ticket dealer is CoSport, a New Jersey company that dominates the business worldwide. But CoSport’s supply of tickets, especially for high-demand events, is limited. So fans are turning to unofficial suppliers, online and on the streets.

Buying or selling tickets on the black market in British Columbia or in the U.S. is not illegal, but technically such sales violate Olympic rules.

Cobb said the public can get gouged. And, he points out, the potential for fraud is high.

Tickets for the 2010 Games have not yet been printed. Buying a ticket now buys only the promise of a ticket in the future. Official-looking Web sites have been known to take fans’ money and run.

It’s a risk, but one that some fans already are taking.

The key problem with policing the ticket pipeline is that it operates on trust.

About one-third of Vancouver’s 1.6 million tickets are sold at face value to the Olympic Family buyers. Once in their hands, it’s impossible to control where tickets might stop on their path to the turnstile.

Even admitting that profiteering occurs is a sensitive subject for Games organizers. And to truly enforce the rules, VANOC has to deal with wealthy sponsors, who provide half the Games’ revenue, as well as with some 70 national Olympic committees, whose members are some of those nations’ more distinguished citizens.

But Cobb is realistic about ticket scalping by insiders.

“We’re not naive enough to think that we’ll eliminate (it) altogether,” he said.

In the past, Olympic organizers threatened to yank sponsorships and publicly embarrass national committees that sold their tickets on the black market. But organizers rarely followed through.

VANOC has taken several steps to reduce the problem.

First, Cobb’s staff has made it clear to all those groups that their priority status for tickets is a privilege that must not be abused.

Next, VANOC systematically tracked ticket orders from at least 70 national committees. Some, for example, had a large number of requests to high-demand events, but had no corresponding hotel reservations.

Suspicious orders were flagged, “and we didn’t fill them,” Cobb said. “We would talk to them — we got very little argument.” He would not identify the offending national committees, saying there were only a handful. “But it only takes a handful to really corrupt the system,” he added.

The final step in policing the tickets will be enforcement — actually buying a sample of printed tickets from brokers, then using bar codes to trace them back to the original purchasers.

Violators of the resale rules risk losing their entire allocation, Cobb said.

Whether VANOC would risk offending a foreign nation or major sponsors is another matter.

Cobb insists the threat is real.

VANOC’s threats don’t seem to scare ticket brokers who see easy profits from the Games.

Like many in his business, Dow relies on old friends in the sports world and deep contacts within the Olympic Family to buy tickets he bundles into packages.

Dow Events caters to corporate clients wanting royaltylike treatment in Vancouver and Whistler. Most of his clients will attend two events per day and stay for several nights at one of three hotels, where he has a lock on up to 100 rooms.

While VANOC has done little to deter Dow and other small operators in the U.S., it has sued two Canadian companies, claiming they advertised tickets they won’t be able to deliver. It also alleges the companies illegally used Olympic images and logos in their promotions to give the impression they were an official source of tickets.

One target was Coast2Coast Tickets, a Vancouver-based company that boasted on two of its Web sites that it could guarantee tickets to the public.

VANOC’s lawsuit, filed in March, seeks to prohibit Coast2Coast from selling tickets. It also wants the company to divulge the source of its tickets. The suit is pending in British Columbia Supreme Court.

The other company that found itself in a courtroom fight is Roadtrips, a small Winnipeg, Manitoba, firm that has been creating luxury travel tours for 17 years.

Owner Dave Guenther says he buys Olympic tickets from a secret source and packages them into travel trips mostly for U.S. and Canadian residents.

He claims VANOC has tried to shut down his business to protect one man — Sead Dizdarevic, primary owner of two companies that serve as the official ticket and hospitality provider for the Vancouver Games.

One of the companies, CoSport, controls all ticket and travel packages in America. The other, Jet Set Sports, is the official travel-package provider for Canadian sponsors and the public for the Vancouver and London 2012 Games.

“VANOC has been defaming us and misrepresenting facts and doing so in a calculated effort with Jet Set to preserve a monopoly,” Guenther said. The parties settled the case and agreed to keep details confidential.

These lawsuits seem to have done little to curb some online resellers., for example, was hawking gold-medal hockey tickets for $6,161 each this month — eight times the face value. And was offering Opening Ceremony seats — which have a $1,100 face value — for $5,950 each.

Cobb said VANOC can’t sue each and every scalper. Otherwise, “we probably wouldn’t have time to prepare for the Games.”

Even so, Olympic officials say, those few lawsuits can protect fans who gamble on tickets that change hands several times before the event.

Roadtrips, for example, failed to deliver promised tickets a year ago at the Beijing Games. Like other unofficial travel operators, Roadtrips took some risks — securing hotel rooms and some 9,000 tickets from its sources.

Roadtrips relied on assurances from an East Coast company that said it would deliver 326 Opening Ceremony tickets directly from Olympic Family, according to a federal lawsuit filed recently in Pennsylvania. But the middleman never delivered the tickets to Guenther.

Roadtrips clients who thought they had purchased guaranteed tickets were furious when, the day before Beijing’s Opening Ceremony, they discovered they wouldn’t be inside the Bird’s Nest stadium watching history unfold.

Guenther settled out of court with clients, giving refunds and additional compensation. He called it an “unfortunate circumstance.”

Within a couple of months, VANOC will actually print those 1.6 million tickets that have been the subject of high hopes, lawsuits, finger-pointing and controversy.

And as usual, many tickets will make their way into the hungry black market.

Which poses a dilemma for Olympic officials in Vancouver: What if a sponsor resold tickets to one of its suppliers or customers? Or what if a die-hard fan spends a life savings on tickets from a scalper who originally bought them from an Olympic Family member? Will those tickets be invalidated?

Are Vancouver Games officials really going to risk turning fans away at the turnstile?

Dow and others predict that if fans are left literally out in the cold, they will go very publicly ballistic.

“I think you’d have a near riot on your hands,” he said. “People would be angry — and rightfully so.”

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