Trocadero Allowed To End TM Contract

There’s at least one way to get out of a licensed user agreement with Ticketmaster, and an ongoing bankruptcy case in Philadelphia has shed some light on the process – and on TM’s fee structure.

The Trocadero Theatre in Philadelphia recently filed for Chapter 11 bankruptcy protection and, in court papers, sought an exit from its contract with Ticketmaster.

A judge granted the venue’s request Aug. 16. Central to the case appears to be a “burdensome” contract with Ticketmaster, according to venue owner Joon Associates.

“Rejection of the licensed user agreement would be in the best interest of the estate and its creditors because the debtor would be able to increase its gross receipts royalties by entering into an agreement with a different ticketing agency,” Joon’s filing stated.

But why, exactly, was the deal so onerous for the Trocadero?

The venue noted it’s held a LUA with Ticketmaster since 2006, and in the time since, TM amended the contract and increased convenience fees for tickets sold.

Ticketmaster originally tacked on convenience charges of between $3 and $6.50, depending on ticket price, the Troc said. In return, the venue received royalties that ranged from 50 cents to $1.95 per ticket, or 20 to 30 percent of the convenience charges.

Then, in 2008, TM added two new fee levels for convenience charges – a $7.50 charge for tickets between $25 and $50, and an $8.50 charge for tickets above $50. Royalties from the higher convenience charges remained at the 30 percent level.

The venue alleged that after the charges were upped, it “experienced a decrease in the sale of tickets through the TM system due to the increase in the convenience charge. Rather than ordering tickets through the TM system, customers purchased tickets to the attractions in person at the facility box office to avoid the prohibitive convenience charge.”

Joon Associates added that after examining other ticketing options, it found “there are other ticketing agencies in the marketplace that can provide similar services as Ticketmaster, that do not require the same high convenience charges and processing fees.

“Moreover, these companies would pay twice the amount of royalties to the debtor than the royalties currently paid by Ticketmaster to debtor.”

In its filing, the Trocadero lists assets between $100,000 and $500,000, and claims liabilities between $500,000 and $1 million.

Creditors listed in the filing include AEG Live, Pro Audio, property owner Northwest Arch LLC and American Express, among others.

A spokesperson for Ticketmaster declined to comment.