Critics: NCAA’s reselling of suites out of sync with scalping ban

Lucas Oil Stadium suite holders are upset that the NCAA is taking their suites for the men’s basketball Final Four
in April and reselling them on the secondary—or scalpers—market.

Suite holders see the practice as
inconsistent with the hard line the NCAA has taken against ticket scalping.

“I am disgusted by the hypocritical
behavior of the NCAA in saying one thing … then scalping suites out the back door,” said a Lucas Oil Stadium
suite holder who spoke on the condition he remain anonymous.

The college sports association has asked for local
ordinances at the sites of Final Fours prohibiting ticket scalping and has implored fans and ticket brokers not to seek profit
by charging inflated prices for NCAA event tickets on the secondary market.

Shaheen

Several upset suite holders
contacted by IBJ declined to speak out publicly because of the Indianapolis-based NCAA’s
vast community connections.

Greg Shaheen, the NCAA’s senior vice president of basketball and business strategies,
said suite holders at the time they bought their suites were made aware of language in their contract
stating the suites are not guaranteed for Final Fours. The same is true for the 2012 Super Bowl.

Shaheen said the last time the Final Four was played here, in 2006, some suite holders in the
old RCA Dome had to forfeit their suites. Though the practice of taking suites isn’t entirely new,
he said it’s happening on a wider scale this year.

Shaheen said there is an incorrect perception
that money from suite sales is lining the NCAA’s pockets.

“One hundred percent of suite revenue is
going to host-committee expenses,” he said. “The NCAA is not getting this money.”

Susan Williams,
president of the Indiana Sports Corp., which is heading up the host committee for next year’s Final Four, confirmed
that the NCAA is pledging up to $4 million toward local operating expenses.

“This is money that before
we had to go out and raise on our own,” Williams said. “It was time- and resource-intensive, so we’re happy
to have this financial assistance.”

But whatever the NCAA gives to the local host committee doesn’t
represent all the revenue from suite sales. The NCAA’s corporate hospitality partner, California-based RazorGator, keeps
some of the proceeds.

The NCAA hired RazorGator in 2007 to market and sell hospitality packages for men’s
Final Fours. Financial terms of its deal with the NCAA were not released.

The company, which sold Final Four
hospitality packages before partnering with the NCAA, told IBJ in 2006 that it was selling packages for 30 percent
above cost.

Suites are an important component of the packages, which RazorGator sells to corporations and individuals
for tens of thousands of dollars. A package typically includes suite access, hotel rooms, celebrity meet-and-greets and other
red carpet treatment.

In 2006, RazorGator told IBJ it was offering ticket and hospitality packages for
$2,000 to $10,000 per person. Those sales, sports business experts said, generate $8 million to $12 million for RazorGator
at each Final Four, and the NCAA would presumably get a cut of that as part of its deal with the California firm.

The policy of confiscating suites for the Final Four could be felt by suite holders for years to come. The NCAA signed
a deal with city officials in 2004 to put Lucas Oil Stadium—with its massive size and myriad suites—on a five-year
Final Four rotation through 2039.

Colts caught in the middle

The Indianapolis Colts,
the original seller of the suites, sent out letters in October telling many of the 137 stadium suite holders they would not
have the option of using their suite for the Final Four.

The NCAA is offering those suite holders the choice
of getting on a waiting list to purchase a suite for the event or buying tickets as close to their suite as possible.

“I have to get on a waiting list for the possibility of paying an inflated price for a suite—maybe my
own suite?” mused the suite holder. “Something’s not right with that.”

NCAA officials
refused to give suite holders any guarantee on the location, size or cost of the suite that might become available to those
on the waiting list.

Colts officials declined to comment.

“This really isn’t an issue
that has anything to do with the Colts,” said Milt Thompson, president of Grand Slam Cos., a locally based sports marketing
consultancy. “They’re caught in the middle, because it’s their clients that are getting upset, and they’re
hearing about it.”

It’s not uncommon for suite holders at various venues to have to buy tickets to
special events to use their suite during those events. But the Lucas Oil Stadium contract stipulates Final Fours and the Super
Bowl aren’t guaranteed to Colts suite holders even at an additional charge.

“I do have some issues
with the NCAA, not the least of which is they don’t practice what they preach,” Thompson said. “But legally,
the NCAA has every right to do what they’re doing.”

It’s not clear how much RazorGator is asking
for Lucas Oil Stadium suites. An operator in the company’s sales department told a caller inquiring about 2010 Final
Four suites that pricing wouldn’t be available until December. RazorGator executives did not return calls seeking comment
about the company’s relationship with the NCAA.

During the last two Final Fours, RazorGator charged hundreds—or
even thousands—of dollars over face value for tickets. Some tickets listed online were going for 15 times the face value.
For 2010, the face value of tickets for sale to the public—all upper level—are $160 and $180.

As
part of its packages, RazorGator is offering tickets starting at $455 for upper-level seats and up to $3,864 for lower-level
seats. Some hospitality offerings are rolled into that price, but additional hospitality offerings are available for a hefty
surcharge.

To the producer goes the spoils

While Lucas Oil Stadium suite holders
are crying foul, sports business expert Mark Rosentraub has no problem with the practice.

“People get annoyed
when the NCAA raises admission prices, but why shouldn’t they?” said Rosentraub, a dean at the University of Michigan
and author of “Major League Losers,” a book about sports business operations. “They’re the ones producing
the product. You could argue that previous sales on the unauthorized secondary market was theft of the NCAA’s intellectual
property.”

David Moroknek, whose local company, MainGate, has an eight-person Lucas Oil Stadium suite,
said he was offered the use of his upper-level suite for the semifinals and final games at a price of $14,000 plus additional
costs for catering. Lower-level and larger suites will go for much more.

“The asking price is a little
high,” Moroknek said. “I guess it all comes down to demand. We’re still deciding if we’re going to
do it.”

MainGate’s suite is at the low end of the price range the Colts charge, which runs from $40,000
to $275,000 per season. For that, Colts suite holders get access to eight regular-season and two pre-season games.

Another suite holder who declined to be identified due to business and community ties to the NCAA and the Colts said he
was especially upset at the way “local suite holders had been treated after all this community has done for the non-profit
NCAA,” adding that loyal local companies were being shut out of their suites in favor of “preferred partners”
of the NCAA.

Suite holders whose suites aren’t available to them for the Final Four are further angered
because they have not been given a reason why some companies are getting the option to use their suites and others are not.

The NCAA’s Shaheen wouldn’t disclose the number of suites involved or how it was determined which suite
holders were affected.

He said many of the suites taken by the NCAA are used for its corporate and broadcast
sponsors and member schools.

He also noted that Lucas Oil Co., which is the facility’s title sponsor,
Colts owner Jim Irsay and the city’s Capital Improvement Board will have access to their suites.

“We’re
doing everything we can to reach out to every current stadium suite holder,” Shaheen said. “We’re doing
that as a courtesy.”•