TM And Cavs Go 1-On-1

The NBA’s Cleveland Cavaliers and Ticketmaster have filed suits against each other and at the heart of the matter is whether an exclusive agreement with TM means a client has to use its ticket resale software, too.

The Cavs are a TM client but recently contracted with a paperless secondary-ticketing software system called Flash Seats – a system the team believes is superior to TM’s TeamExchange (a sports-minded version of TicketExchange). TM has filed a federal court suit against the Cavs, claiming the system is a breach of the agreement. Both sides are taking shots at uncovering exactly what the licensed user agreement (LUA) between the companies entails.

Ticketmaster filed suit against Cavaliers Operating Company LLC and Flash Seats LLC in U.S. District Court in Los Angeles July 17th, bringing forth a laundry list of complaints including breach of contract, declaratory relief, intentional interference with contractual relations and unjust enrichment, among others.

Ticketmaster claims the companies have had a contract since 1993 that gives TM the exclusive right to sell tickets for any attractions scheduled or presented at the team’s home venue – the Quicken Loans Arena – via all means and methods. Ticketmaster contends the LUA includes primary ticket sales and Internet sales, as well as auctions and ticket resales.

"The Cavaliers and Ticketmaster fairly negotiated a contract for Ticketmaster to serve as the team’s exclusive primary and secondary ticketing company," TM president Sean Moriarty said in a statement. "However, after accepting a large up-front payment from Ticketmaster for these rights, the Cavaliers breached their contract by establishing a ticketing arrangement with another ticketing company, Flash Seats."

The Cavs and Flash Seats countersued July 30th in U.S. District Court in Ohio and made some big claims of their own, namely that Ticketmaster is "coercively seeking to enforce its primary ticketing contracts" by tying those primary ticketing contracts with the Cavs and other customers to TM’s secondary-ticketing programs.

"Ticketmaster claims that its primary ticketing contracts with the Cavaliers and other customers prohibit them from doing business with competing secondary ticketing providers," the suit says.

The Cavs said TeamExchange is inferior to Flash Seats because – unlike the team’s paperless system – TeamExchange allows both the original ticket and multiple paper tickets to remain in existence, creating the "untenable situation" where more than one person could arrive at a game with tickets to the same seat.

The Cavs suit alleges TM is engaging in "anticompetitive practices, such as its use of illegal tying arrangements, long-term exclusive contracts and its threats and use of ungrounded litigation," and in essence is operating as a monopolistic entity.

"Fans deserve to enjoy and benefit from a free and open marketplace," Flash Seats CEO Sam Gerace said in a statement. "We believe fans suffer from less competition and less innovation due to the Ticketmaster business practices we address in our lawsuit. …We feel it is time to put a stop to these practices."

Both sides are seeking damages, declaratory relief and injunctive relief.