The ticket industry generates over $20 billion in gross ticket sales each year. For fans looking to see their favorite teams or performers, the act of buying a ticket has never been a simple one. There are many different ways that fans can buy tickets, the most active and visible of which are on the primary and secondary market. The most visible brands in the space are behemoths like Ticketmaster and Stubhub. At the intersection of the primary and secondary market brokers are an important part of the equation, often purchasing tickets directly from teams and then reselling them to the on the secondary market.
While consumers find it easy to blame brokers for high prices, they’re a critical part of the marketplace ecosystem by providing guaranteed sales for venues and promoters and taking on market risk. If prices go up on the secondary market, brokers stand to make money, but just as often the market goes down. When that happens, brokers are left paying the bill for cheap tickets. Of course, more often than not, brokers do make money. If they didn’t they wouldn’t exist. While there is still money to be made in the ticket business, the table stakes get higher and higher every year. In order to exert more control in their respective markets, teams are often requiring much bigger investments from brokers looking to get a seat at the table. In the past, brokers could make a bet on a team with a handful of season tickets, however, in the new ticketing world, teams are often requiring six-figure investments. That’s a huge sum of money for a lot of brokers, who are often running small businesses. One company, however, is helping to bridge that gap.
RCN Capital is helping ticket brokers with cash flow management by providing short term loans using the actual tickets in a given transaction as the collateral for the loan. Typically a traditional financial institution would never consider this given the type of collateral. RCN, however, is able to fill this gap by coordinating with ticket issuing entities and brokers seeking funding. This method of financing can create substantial cash flow flexibility and has the potential to meaningfully increase position sizes given that the approved loan amount is directly linked to the transaction size agreed upon between a broker and a seller. The organization selling the tickets benefits by receiving full payment immediately while also significantly reducing processing fees. Brokers benefit by improving cash flow flexibility, improving purchasing power, and possibly using added funding to obtain better terms in a transaction.
RCN has been around since 2010, and while the ticketing industry is a relatively new piece of their portfolio, the company will exceed over $100 million in originations this year. While the majority of their business remains in commercial real-estate world, with the way the ticket business is evolving, ticketing is likely to become a bigger piece of the company in the months and years to come.