Technological advances make it easier than ever to purchase tickets for live sporting events via secondary ticket exchange. These advances create intense competition in the secondary ticket exchange business, as companies seek to capture revenue from fees. The battle over the secondary marketplace has now led to litigation in the case of StubHub, Inc., v. Golden States Warriors, LLC & Ticketmaster, L.L.C., Case No. 3:15-CV-01436 (N.D. Cal. 2015).

On March 29, 2015, StubHub, a leading provider of secondary ticket exchange services, filed a Complaint alleging that the Warriors and Ticketmaster illegally imposed restrictions on Warriors season ticket holders and other ticket purchasers that prevented them from reselling their tickets on any secondary ticket exchange, other than the one provided by Ticketmaster, or else risk having their season ticket subscriptions or smaller ticket packages cancelled. StubHub has also alleged that this is a restraint on trade and unfair competition.

According to StubHub’s Complaint, an exclusive agreement with the National Basketball Association (NBA) makes Ticketmaster the sole primary ticket sale provider for NBA teams, including the Golden State Warriors. StubHub also alleges that the Warriors used exclusive control over the primary sale of tickets through the Ticketmaster platform to require season ticket purchasers to sign an agreement stating that sale or resale of tickets by “unauthorized means” is prohibited and that “authorized” resale means the use of Ticketmaster’s NBAtickets.com platform. StubHub further alleges that the Warriors have enforced these agreements by cancelling, or threatening to cancel, the season ticket subscriptions of individuals who sell their tickets on secondary exchanges other than Ticketmaster and that this has led to an 80 percent decrease of Warriors tickets listed on StubHub in the last year.

StubHub argues that the alleged conduct restrains trade by forcing Warriors ticketholders to use the Ticketmaster secondary exchange platform and constitutes unfair competition by giving the Warriors and Ticketmaster two exclusive opportunities to capture revenue from the fees collected on ticket sales. StubHub invokes Sections 1 and 2 of the Sherman Act, California’s Cartwright Act, California’s Unfair Competition Law, and restrictions on tortious interference with prospective economic advantage. The case is currently in the very early stages of litigation in the Northern District of California.

The case could have a major impact on how ticket sales take place in professional sports. By contract, Ticketmaster is the exclusive provider of primary ticket sale platforms for all NBA teams and also operates secondary ticket exchange services for those teams. Additionally, Ticketmaster provides these services for other professional sports leagues, concert venues, and for other organizations hosting live events. If StubHub is successful, it could mean significant changes throughout the sports industry, for those providing secondary ticket exchange services, and for the teams themselves.