What is "larger than normal." Ticketmaster is also a small piece of a very big entity. Their books are more cooked than Major League Baseball's. Despite that, in their own words: (the July 23 profit statement) "Second quarter revenues from Ticketing operations were $175.4 million, compared with $163.9 million in the year ago quarter, an increase of 7.0 percent. The revenue increase primarily reflects an increase in average revenue per ticket (from $6.29 to $6.72)"
The fact that they may have lost money is completely irrelevant. That just means that they're poorly run in addition to charging outrageous fees.
Well, it would depend on the industry, wouldn't it, what a normal profit margin is. For 2001, Ticketmaster had EBITA of around 8.6% of revenues. For 2001, Safeway, Inc had EBITA of around 8.0% of revenues. So, essentially the same (granted, this is a cursory glance. I may have made some math errors. It's been a long time since I took an accounting class. So excuse me if I made a mistake in calculations). I think the problem is that the Ticketmaster fees are just out there in the open. There's no denying it. We don't see the store fees that go into most everything else we buy. We just pay the price as marked. I suspect that if Randalls priced their bread at 99 cents and then added a 10 cent fee at the register, people would be annoyed by that.
Do you have any proof of "cooked books?" Or did you just pull that out of nowhere? And yes...they increased their revenue...of course they did...they have been non-profitable for 3 years. Straight out of their annual report on their website: http://aboutticketmaster.com/downloads/10k.pdf Page 27 of 85. Net Income: 1998: 25,550,000 loss. 1999: 115,284,000 loss. 2000: 230,023,000 loss. 2001: 164,474,000 loss. 2002: Looks like they might actually have a profitable year this year...but we wouldn't want that to happen would be. We are all pissed at paying a few extra bucks for our tickets that we would rather have a multi-national corporation go out of business...thousands of people lose their jobs...than pay for our tickets. Of course their tickets have fees on them...they are there to make money...and if they have to increase their fees to do it and the public is willing to pay it...good for them. Of course their costs are high...they have to run a huge network and infrustructure and they have to pay for it and the people to run it...they also have huge marketing costs for their events...if not, nobody would know about them. Anyways...if you want them to go out of business....bust em up...let thousand of people lose their jobs...I disagree...but this is America, you have your opinion and I have mine.
Most economists recognize a normal profit as being in the 9 to 14% range. Cooked books...ah yes...let's just go with the buzz phrase of the day to start a conspiracy theory. Their revenues only tell half the story. What are their expenses? They have offices, electricity, printing costs, electronic equipment...and most importantly employees.
For one ticket to see the Houston Texans on September 22 Face Value $45 "Convenience" Charge $ 5.50 Tax $0.46 "Order Processing" $3.55 Ticketmaster gets a whopping 20% cut as the middle man. I'm no economist but I'm betting that if they had competition, they would not get way with that sort of margin for adding VERY little value. It is a business model that takes blatant advantage of market power. In my opinion, antitrust legislation should be invoked against Ticketmaster. Virtually insurmountable barriers to entry make fair competition almost impossible. They control almost 90% of major event ticket sales, they have exclusive agreements with most entertainment providers and have discriminated against entertainers that refused, and acquired most of their competition. Automated internet ticketing has driven the price of other service providers down dramatically (ie arline tickets, hotels). Not Ticketmaster.
All of their costs and revenues are right here: Page 25 or something http://aboutticketmaster.com/downloads/10k.pdf From above post. Yeah...bust em up...put thousands out of work. People sometimes forget that these "evil" corporations are made of people just trying to get a paycheck and pay their bills.
Even if there were no barriers to entry I doubt that anybody would put forth the capital to enter this market because a monopoly has LOST MONEY. Their shareholders have lost money. Why would anybody enter this market? If you don't like the fees don't go to the show.
Supermac, I am more than happy for a multinational corporation to go out of business and thousands of people lose their jobs, if they are performing ineficiently. The world would be better served if those "thousands" of people were working somewhere productive. If Ticketmaster can't turn a profit when all they do is provide the medium for delivering tickets from Provider A to Customer B, then more fool them. If they dissappeared tomorrow, do you really think we would could not get tickets? You would still have the performers and you would still have the audience - they will find a way to meet up. I'm not sure what you are trying to say about their huge infrastructure and marketing costs. Online ticket brokering services and customer liason is much cheaper than the alternative, which is why everyone encourages there customers to use them (airlines, banks..). What marketing costs do Ticketmaster have? Promoters generally pay for advertising concerts, and the NFL, Texans, Rockets etc advertise their own product. You may be happy to pay a "few extra bucks" for your tickets to support a monopoly but I would prefer to fight it. I'll bet you lunch that one of Ticketmaster biggest expenses is their exclusive agreements with entertainment providers.
http://money.cnn.com/2002/06/03/pf/investing/q_usa/ Diller's latest deal - June 3, 2002 (Barry) Diller, the chairman of USA Interactive (USAI: Research, Estimates), announced on Monday that he wanted to buy the remainder of three Internet companies in which his company already owns majority stakes : online travel sites Expedia and Hotels.com and Ticketmaster, a ticketing service and online city guide. The cost? About $4.5 billion. == BTW, the "thousands out of work" is just as much unprovable as "cooked books." There is a need for the industry...just not one where consumers are treated as ATM machines.
It's clear that Ticketmaster does not have a good business model. If they don't have any real competition, there's no reason why they shouldn't be making money. Granted the economy's down right now, but concerts and events are always in demand. Ticketmaster is starting to get a very bad reputation due to their policies. Charging a $7 service fee on a $25 Weezer ticket isn't going to earn someone any repeat business. They deal directly to the consumer. They need to be able to scale their business accordingly, or else they will not survive.
You are siumply ignoring the LOSS per share numbers. Much of the purchase price of any business is speculative value. Also it is a package including some very profitable businesses. You can't really tie a specific value to Ticketmaster out of that. You just don't want to pay the fees and will ignore the economic numbers in an attempt to bolster your claim.
Maybe the level of fees that it would take to be profitable is more than the market will bear. As for repeat business...I don't see you or anybody else not going to shows just to stick it to Ticketmaster.
What irritates me is that you cannot buy directly from the venue for concerts. I can go to a baseball game and buy tickets at the box office. There is no way you can just go to the Amphitheater and get a couple tix at the box office with no fees attatched. I don't care if there is another ticket agency, just let me pay at the gate and I won't use any middleman.
They lost money because they have extremely high depreciation and amortization. A large amount of that is apparently Goodwill and other intangible asset amortization/depreciation from their acquisition by USA Networks. So one reason (likely the main reason) the company isn't profitable is because USA Networks paid more than book for them. I would also wonder how much of their expenses are from the non-ticket businesses. They break down some direct expenses, but lump advertising and promotions all as one. How much of that advertising and promotion are for the ticket business? I don't know. They don't say. Same for their general and administrative expenses.
Ticketmaster has a 36% margin on their ticketing operations alone (for 2001), by the way, according to their financials.
So now FASB is wrong and depreciation and ammortization shouldn't be components of net income (loss)? If that is not what you are saying, then what are you saying? You can try to sort through the financials all day (breakdown of expenses, ROI, etc), but really what matters in a true economic sense is the bottom line. That's what builds value for shareholders which is the job of business, not providing free services.
But the company overall posted a loss. I really can't stress enough that they are running a business. Strong segments make up for weaker, yet sometimes ancillary segments. Every business has profit centers (which make the most profit) and cost centers (which are necesary but add little to no revenues..for example technology development).
I made no such claim. I was merely noting that the sole reason the company posts a loss for several years is because it was so attractive as a business that USA Networks paid significantly over book value for the company. They are properly accounting for that Goodwill, but any analyst looking at that company's financials would not see them and say, "Boy, the ticket business must be a bad business to be in." It only appears to be a bad business for Ticketmaster because USA Networks paid so much for the company and that Goodwill has to be amortized. Non-cash expenses can paint an inaccurate picture of the true health of the business. But if you want to keep believing that Ticketmaster is in trouble because of Goodwill amortization, then be my guest. I don't begrudge them their profits, but I'm not going to pretend that Goodwill amortization somehow makes ticket selling a bad business or that Ticketmaster is truly an unhealthy company because of their having to expense the amount over book that USA Networks paid for the company.
You also stated that a lot of their expenses are tied to depreciation. As you probably know, the only other alternative would be for the company to expense the entire purchase price of equipment at the time of purchase. Of course this would be illegal and the execs would likely go to prison, but it's an alternative. I'm not saying that the business is a long term loser, but the facts bear out that shareholders lost value last year. USA likely paid over book based on speculation on future performance. The marketplace is largely speculative and deciding how much to pay for a company is no different. All I am saying is that people should not begrudge the company the desire to make a profit and add value for shareholders. I think the whole point of this thread was that somebody is upset because they had to pay a service charge they thought excessive without knowing the business reality of what level of service charge will give the company their profit.
