Money for Nothing - by Eric Mitchell

Getting a seat at the grade I Kentucky Derby currently presented by Yum! Brands has always been tough, but getting tickets for the 2012 edition just got tougher, particularly on fans’ wallets.

Churchill Downs introduced a new policy last month requiring everyone applying for tickets online—now the only way to apply—to pay a $100 application fee. The fan then submits up to 10 different preferences for tickets ranging from $230 to $900 per seat, covering both the Kentucky Oaks and Derby days. If the fan gets tickets, then half the application fee is applied to the cost of the tickets and $50 is kept by Churchill Downs as an administrative fee. Here’s the rub: Should the fan not get tickets, Churchill Downs still keeps two Andrew Jacksons and an Alexander Hamilton.

That’s right. Fifty dollars just for the privilege of requesting and being denied Derby tickets.

Surely some other professional sports franchise has levied and justified a similarly excessive fee as a precedent for Churchill Downs’ attempt to sell this change as something besides a blatant money grab, right? Not exactly.

The New York Jets come the closest, having charged a $50 maintenance fee to the NFL franchise’s season ticket holders from 2003 through 2008, according to Jon Greenberg, executive editor of Team Marketing Report, a leading publisher of sports marketing and sponsorship information. However, the Jets have since dropped the tremendously unpopular fee. Other teams, such as the Chicago Cubs, are not charging more but are asking season ticket holders to part with their money sooner. When Cubs season ticket holders notify the team in October they are willing to commit to another year of woe, they used to have until mid-January to pay in full. Now ticket holders have to pay 10% of their ticket packages by Nov. 16.

Sports teams will continue finding new ways to wring money out of fans, but the Jets and Cubs don’t compare with Churchill Downs because their fans got something for their money. This year many Derby fans will get nothing but fleeced.

The track does have some logic behind its onerous fee. The goal is to eliminate the proliferation of tickets winding up in the hands of unscrupulous ticket brokers. In the past, brokers have hired homeless people to stand in line at the Louisville track to secure tickets. Then, when the process went solely online in 2010, many college students were in the brokers’ army, snapping up seats.

“When we went back through the purchases, you would see 15-20 people with tickets all going to the same address,” said Darren Rogers, Churchill Downs senior director of communications. “People need to understand it is a three-month process going through the requests. We have charges associated with every transaction and it is a cumbersome process.”

Besides adding the fee, Rogers said the track will strictly enforce a maximum of six tickets-per-household. So if Joe Smith is working for a broker at 123 Maple Lane, then he’ll get his six tickets and all others who applied using the 123 Maple Lane address will have their names tossed out.

“I think this will put more tickets into the hands of fans,” Rogers said. “We really feel for the customer who in the past has been sold a duplicate ticket that has already been voided when they arrive at the track or a counterfeit ticket.”

There is a group with guaranteed seats for Derby and Oaks days. It includes people who paid $3,000 to $60,000 for a personal seat license at the Louisville racetrack, season box holders, sponsors, certain VIPs, and the horsemen associated with these premier races. After that, the remaining tickets are made available through only two outlets—Churchill Downs or its partner Quint Events, based in North Carolina. As of right now, no tickets are available, Rogers said, and yet several online sites are advertising 2012 Derby tickets., for example, on Oct. 8 showed available tickets ranging in price from $54 in the grandstand to a seat on Millionaires Row for $125,500.

Churchill Downs deserves credit for improving the process, but it could have done so without the $50 fee, which will hurt more fans than it will discourage inventive brokers. Also, horse racing needs as many fans as possible. Let’s not give people another reason to abandon the sport by taking their money and giving them nothing in return. At least when it happens at the betting windows, fans are being entertained at a live event and at least have an opportunity to make money.

Rogers said the market will ultimately decide the fate of Churchill Downs’ new policy. So racing fans, exercise your right as consumers and speak up.

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