Broker Scalps TM & Front Line

Ticketmaster Entertainment’s stance on the secondary market has wavered over the years, but a new breach-of-contract lawsuit claims the company cozied up to a broker to sell tickets to high-demand shows at markups beginning in 2007.

The suit, filed in Los Angeles Superior Court by New Jersey ticket broker Chuck Lombardo’s Elite Entertainment, brings forth a wealth of other charges including fraud, rescission due to fraud, promissory fraud, defamation, trade libel and promissory estoppel against TM, Irving Azoff’s Front Line Management and TicketsNow.

Elite was one of several brokers that TM and Front Line tried to enroll in “Project Showtime” – the attempt to incorporate secondary ticketing companies into the TM system, according to the Wall Street Journal. The purported “Showtime” deal revealed that TM dabbled in the business of reselling tickets, and this lawsuit contends the effort was significant.

According to the filing, TM, and later Front Line, entered agreements with Elite Entertainment to manage, price and sell TM’s tickets on secondary ticketing sites including TicketsNow, TicketExchange and TicketNetwork.

Shows included Eagles, Van Halen, Def Leppard, Kanye West, Steely Dan, George Michael, Journey, New Kids On The Block and Neil Diamond.

Additionally, Lombardo consulted for TM through his Event Analysis group on a “project-by-project” basis and helped the company develop its secondary ticketing software and build business, according to the suit.

Of course, Lombardo didn’t sign on to help Ticketmaster and Co. simply out of the kindness in his heart.

The suit claims that during initial discussions in 2007, TM “promised and assured [Lombardo] that if Ticketmaster was satisfied with their services, it would acquire Elite and employ Lombardo and Elite’s key employees for the management and operation of its secondary ticket services.”

But when the time came to begin acquisition and employment talks in 2008, Ticketmaster presented Elite with a couple of conditions.

Lombardo alleges he was asked to sign a settlement agreement to release any claims against TM or Front Line and told that the companies would come to a “compromise” on amounts owed for the services Elite had already provided.

When he balked at the conditions in December, he was allegedly told by TM CEO Azoff that Elite could sign the agreement or sue Ticketmaster and be “blackballed” within the industry, the suit says.

Lombardo signed the settlement, but didn’t see much movement on the TM deal until August 2009 when Elite was presented with a proposal from the company.

The proposal reportedly lacked any references to acquisition or employment, but did include a “posting agreement” that would permit Elite to access and sell tickets through TM’s platforms – for a fee.

“Ticketmaster used plaintiff’s knowledge and expertise contacts to build its secondary ticket platforms, inducing plaintiffs to provide their services, knowledge, expertise and contacts with false promises that Ticketmaster would acquire Elite and of full time employment for Lombardo and Elite’s key employees with Ticketmaster,” the suit says, adding that TM “ruthlessly cast [Elite] aside, without regard to irreparable harm done to their business and to Lombardo’s ability to earn a living.”

A representative for Ticketmaster called the suit “meritless” in a statement and said the company plans to defend itself with vigor.

Lombardo and Elite Entertainment are seeking a rescission of the settlement agreement, damages and punitive damages, costs and attorneys’ fees.