Cambridge’s Not So Secure Ticket

The ticket company that collapsed and left Cambridge Folk Festival £618,000 ($906,000) out of pocket may have gone under because of an extraordinary administrative blunder, according to its liquidator.

Secure Ticket (UK), which sold about 60 percent of the festival’s 10,000 tickets, went into voluntary liquidation a couple of days before Cambridge City Council was to wind it up.

Nick Simmons of Tendon Recovery, the insolvency experts sorting out the demise of Secure Ticket (UK), told Pollstar the company may have failed because it mistook Cambridge’s money for a similar amount it believed it had raised from investors.

“The financial services company that collected the Cambridge money was due to pay it direct to the festival,” Simmons explained. “But things don’t always happen according to contract and it was mistakenly paid to Secure Ticket (UK), which mistook it for money it had raised from investors. The investment money has since failed to materialise.”

Simmons has declined to name the financial services company that collected the Cambridge money on Secure Ticket (UK)’s behalf. But he has confirmed that documentary evidence suggests the ticket company’s problems may well have been caused by a genuine mistake.

“The directors have lost hundreds of thousands of pounds,” he explained. He said he’s still investigating the number of creditors and calculating the total debt. It’s likely to be several million.

The Cambridge festival, which the city council has run and funded since it started in 1965, has been quick to dismiss reports claiming this year’s event is in jeopardy.

“Cambridge City Council will once again put on the Cambridge Folk Festival in 2009,” said arts and entertainment head Nigel Cutting.

City council leader Ian Nimmo-Smith told Pollstar the authority is “fully committed to the Folk Festival in 2009 and beyond.”
“Provision for this loss will affect the council’s overall budget, which will be considered later this month. But there are no proposals to reduce the festival’s budget as a result of the loss of ticket income in 2008,” Nimmo-Smith explained.

“For budget purposes, we are assuming that we will not be paid through the administration. We will of course, however, take all reasonable steps that might result in payment of some or all of the money we are owed.”

A report by the council’s internal auditors published Nov. 20 criticised some aspects of the procurement process used for suppliers of the festival toilets, showers and marquees.

Nimmo-Smith confirmed the council has brought in a team of independent accountants to carry out a thorough investigation of that process. He said the council is keen to complete the investigation as quickly as possible.

SecureTicket (UK) rolled out its payment processing and ticket sales service in 2007. It has no connection with the similarly named, Humberside-based Secure Ticket.

The Cambridge local authority – along with Retrofest and Musical Associates (UK) Ltd. – were among its first clients.
Apart from chasing last year’s ticket money, the council still needs to find a company to sell tickets for the 2009 festival.

The council’s new in-house online ticket selling facilities at the Corn Exchange has been suggested, although November’s Arts and Entertainments Service report said the installation of the equipment was still at the tendering stage. The report said workload pressures have caused a delay on the project, which should have been completed in September.

The council is now separately seeking tenders to find a company to sell 2009’s festival tickets.

The apparent loss of $618,000 of public money may also spark a political row within the famous university city’s Liberal Democrat-dominated council.

Kevin Blencowe – one of 11 Labour councilors on the 42-member authority – asked questions about the festival’s finances in November and is unhappy he wasn’t told of any problems about getting money from the ticketing company.

The council had already engaged specialist debt and insolvency solicitors with the goal of instigating formal legal proceedings against the ticket company.

Blencowe said failing to keep opposition councilors informed, even on a confidential basis if necessary, made it impossible for them to carry out their role of scrutinizing decisions taken by executive councilors.

He said he was sure council officers knew about the problem at the time he asked his question in November.

Simon Pugh, the head of the council’s legal services, said the ticket money was supposed to be placed in a client account but that “turned out not to be the case.”

He said it hadn’t been possible to discuss the matter when Blencowe asked his question in November because the council had been told that SecureTicket (UK) was in the process of being refinanced, and that any public statement by the council might have undermined those efforts.

Councilor Blencowe stuck to his guns and said, “Someone ought to have said, at least in confidential session,” that the festival was having a problem collecting its money.

Nimmo-Smith denied that the council had tried to keep the matter quiet and said Pollstar questions in that regard were “hypothetical.” He said the council didn’t make public statements because it didn’t want to do anything that might jeopardize its prospects of payment.

Following the November publication of the auditors’ report, the Cambridge Evening News began running stories detailing the festival’s losses.