Class Action Challenges NCAA Ticket Sales

NCAA, Ticketmaster operating an illegal lottery?

By Joseph S. Enoch
ConsumerAffairs.com

May 28, 2008

• Class Action Challenges NCAA Ticket Sales • NCAA Ticket Lottery Ties Up Fans' Money for Months

A nationwide class action lawsuit alleges the National Collegiate Athletics Association (NCAA) and Ticketmaster operate an illegal lottery in which thousands of consumers pay nonrefundable fees for the very slim opportunity to get tickets to the popular Men's and Women's basketball tournaments.

ConsumerAffairs.com was the first to report on the issue April 4 after a reader told us he paid $72 in nonrefundable “service charges” that were not returned to him even though his application was not drawn for the 2009 NCAA men's basketball tournament.

Aside from the service charge, the NCAA also makes consumers pay the full price for the tickets and holds onto the cash for up to nine months, presumably making profit off the interest.

The ticket applications for the early rounds for the 2009 men's basketball tournament were due March 1 and required the consumer to pay about $200 plus a $9 service charge for each ticket. Consumers could apply for as many as eight tickets.

“The bastards kept our money for nine months and then had the gall to keep our $72!” the consumer wrote in an e-mail. “Given the sheer number of applicants for tickets versus the number of available seats, they have to be making a killing on this.”

The consumer wished to remain anonymous for fear of being blacklisted from future NCAA events.

Final Four and Championship tickets for both the women's and men's 2009 tournament were purchased directly from the NCAA's website where consumers completed an online application that again enters a competitive lottery.

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Consumers can submit up to 10 applications, two tickets each, for those games, but are charged a nonrefundable $6 service charge for each entry. The tickets cost as much as $170 each.

For these last two rounds, the NCAA sits on the cash for five months before informing consumers whether they are one of the lucky few with a ticket. The application does not specify when a refund, minus the service charge, will be made.

Early-round applications were submitted to the arenas where the games will be played, rather than to the NCAA. The arenas received a small cut from the service charge, but most of it went to the NCAA, said an official at the Greensboro Coliseum in Greensboro, N.C., host to six games of the first two rounds of the 2009 men's tournament. The official asked to remain anonymous because he was not authorized to talk about the matter.

The suit also seeks damages for a much smaller number of consumers who entered ticket lotteries for the NCAA's hockey tournament.

Tantamount to gambling

The suit alleges that these lotteries are illegal because they are tantamount to gambling, which only charities and the state can operate in California and Indiana, where Ticketmaster and the NCAA are headquartered, according to court documents.

In our last story, Gail Dent, NCAA spokeswoman failed on repeated promises to answer questions. Although she again promised and failed to call back for this story, NCAA spokesman Erik Christianson told ESPN.com the lottery is not illegal.

“Our practice of dealing with excess demand for an event is standard in the industry,” Christianson told the sports news Web site. “We have a nonrefundable fee charged to both successful and unsuccessful applicants. Those who do not receive tickets are refunded the ticket price.

“There is no credible suggestion that our public ticket sale can be considered gambling in any way, and we are comfortable with our approach. We believe this complaint is without merit.”

Not standard

But consumer advocates and the plaintiff's lawyers said it is not an industry standard.

“It's not the industry standard,” said Leonard Aragon, one of the lawyers representing the class. “It would be illegal even if it were, but it's not. They're just basically fleecing the people trying to get tickets to watch their favorite team.”

“Typically you throw your name in the hat and if it's drawn, then they charge you for the tickets,” said Russ Haven, legislative counsel for the not-for-profit consumer advocacy organization, New York Public Interest Research Group.

“You don't have to loan them money,” he said.

The suit hopes to return money to many thousands of college sports fans who have paid in both service charges and disgorgement from loaning the NCAA what amounts to many millions every year, according to court documents.

Aragon estimated only about three percent of all applicants for the Men's tournament, which is the majority of the class, get tickets.

“You can figure out a way to distribute excess demand without doing an illegal lottery,” Aragon said. “There's no reason to hold the money. It's all electronic. They could conduct the lottery right away and they could send out the notices right away. I don't know of any other system that works that way.”

Ticketmaster's role

Ticketmaster's involvement is not entirely clear at the moment.

“It's our understanding that Ticketmaster runs the actual application process,” Aragon said. “They have a very tight connection, whatever they're doing. It's one of the reasons we have a conspiracy claim in (the complaint) that they got together to conspire to engage in this scheme to defraud people.”

Ticketmaster did not return an e-mail sent Friday requesting comment.

For years consumers and consumer advocates have complained about the NCAA's practice of giving the majority of tickets – and all the good seats – to corporate sponsors rather than fans.

“I like to believe the NCAA stands for No Chance At Admission,” Haven said.

Only 4,600 tickets were distributed through the lottery system for the 2008 Men's Final Four while the NCAA and Ticketmaster received an estimated 100,000 entries, according to court documents.

Many consumers cannot apply for this because he or she may not have enough disposable income to lose $306 for just one application for six months or more, Aragon said.

“A lot of the people might be ticket brokers who can afford to have their money tied up for a long time for the reward of getting these tickets, of which there aren't a lot,” Aragon said.

Disputed charge

The anonymous consumer wrote that he was able to get his $72 in service charges back from the NCAA by fighting through his credit card company. He said he will do the same thing this next year if his application is not selected.

“It's always good to have your credit card company between you and your vendor,” Haven said.

Consumers nationwide who paid money to enter the lottery are already class members, but can request more information or become more involved in the suit by e-mailing the law firm, Hagens Berman Sobol Shapiro, at info@hbsslaw.com, Aragon said.

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