'First Five' firm TicketNetwork skirts rules, pushes ethical boundaries

TicketNetwork employees, right, retrieve items from a locked mailbox at 137 Bolton Road in Vernon. The mailbox, in front of the company's former headquarters, is one of three within 100 yards of each other. The other two are across the street from houses owned by Terrace Drive Realty and TicketNetwork Realty, companies controlled by TicketNetwork President Don Vaccaro. TIM MARTIN/THE DAY
TicketNetwork employees, right, retrieve items from a locked mailbox at 137 Bolton Road in Vernon. The mailbox, in front of the company's former headquarters, is one of three within 100 yards of each other. The other two are across the street from houses owned by Terrace Drive Realty and TicketNetwork Realty, companies controlled by TicketNetwork President Don Vaccaro. TIM MARTIN/THE DAY

Hartford - Don Vaccaro is Connecticut's biggest name in secondhand tickets.

Vaccaro, 48, is the founder and president of TicketNetwork Inc., an Internet-based business that resells sports and events tickets. From Lady Gaga concerts to Red Sox games, Vaccaro's firm moved more than $500 million worth of tickets last year.

This summer, Gov. Dannel P. Malloy named TicketNetwork a beneficiary of his "First Five" economic development program, which gives incentives and subsidies to businesses to create jobs. The state offered the firm up to $7.75 million in assistance.

Malloy has since praised Vaccaro as a "serial entrepreneur," telling an audience this month that the state's economic future may depend on attracting and retaining such talent as his. "I want to keep his next five ideas here," Malloy said.

An investigation by The Day has uncovered a component to Vaccaro's operations that pushes ethical boundaries and raises questions about the state's investment in a company in the ticket resale business.

Box offices typically limit the number of tickets that one person or household can buy to keep scalpers and brokers from purchasing large numbers of seats and reselling them at higher prices.

Jennifer Lopez fans were restricted to eight tickets for her show last weekend at Mohegan Sun Casino, for example. Such limits are meant to ensure that the general public can buy the tickets at face value.

While TicketNetwork has long asserted that it doesn't take physical possession of tickets, sources close to TicketNetwork and an events venue say that vendors have been sending volumes of tickets to a string of properties that Vaccaro owns or controls.

The tickets arrive in the mail in envelopes addressed to individuals, although those individuals don't live at those addresses, the sources said. Some are TicketNetwork employees, although many tickets are addressed to names for which The Day could find no records.

The key to this arrangement is a network of mailboxes in Vernon. These 4-foot-high, black, metal boxes are attached to properties linked to Vaccaro through various corporations, such as Ticketnetwork Realty.

The properties include a building in an industrial park, an office along Talcottville Road and two residential homes near TicketNetwork's former headquarters.

The Day recently observed TicketNetwork employees picking up mail from several of the boxes. On one occasion, two employees retrieved large envelopes from boxes outside two houses near the company's former headquarters on Bolton Road in Vernon.

Both properties are in Vaccaro's real estate portfolio. One, a two-story yellow house, appeared uninhabited.

After collecting the mail, the employees drove off and were spotted about 30 minutes later returning to TicketNetwork's new South Windsor headquarters, at 75 Gerber Road East.

Ticket brokers have always tried to get around the restrictions placed by venues. Scalpers have hired people to stand in line at box offices or to man the phones. More recently, ticketing firms have added safeguards to websites such as the squiggly-line codes to prevent computers from buying up all the seats.

By using multiple names and addresses to acquire tickets, a broker could circumvent those safeguards. Ticketmaster, the leading ticketing firm, could blacklist a company for buying tickets in that manner, according to the company's terms of service.

Affiliate in same building

When asked why TicketNetwork employees have been picking up tickets from his residential properties on Bolton Road, instead of having the tickets mailed to the company's headquarters, Vaccaro said: "There are plenty of tickets that we receive at different locations because we've moved so many times."

The tickets could have been delivered for an "affiliated company," he said. Vaccaro also operates Metro Entertainment Inc., a ticket broker based in the same building as TicketNetwork, that does handle, buy and resell tickets.

Vaccaro started Metro Entertainment in 1988 and, according to an online biography and state business filings, he remains its president and chief executive officer. The same bio describes Metro Entertainment, which also operates TicketsPlus.com, as "one of the largest ticket brokerage firms in the country."

More detailed questions about the multiple mailboxes were met with a long silence.

"You're asking me something I wasn't cognizant about," he said. "We get mail from a lot of different locations. We've moved from three different buildings in the last few years as well, and I'm not sure exactly which tickets you're talking about."

In 1996, then-Attorney General Richard Blumenthal sued Metro Entertainment for reselling tickets to University of Connecticut basketball games and Whitney Houston and Jimmy Buffett concerts at prices above the state's limit of $3 over face value.

The company settled with the state for $20,000 and a promise not to do it again.

In 2007, the state legislature repealed the anti-scalping surcharge cap, opening the door to a large-scale resale market in Connecticut.

Until recently Metro Entertainment was situated in a two-story building at 25 Terrace Drive in Vernon. The staff moved to TicketNetwork's new and roomier headquarters in South Windsor, the former Gerber Scientific Inc.

Vaccaro maintains control over the old Metro Entertainment building through a limited liability corporation, which, like the others in his real estate portfolio, shares TicketNetwork's mailing address, yet still has its own locked mailbox.

TicketNetwork spokeswoman Viveca Woods, of VMW Public Relations in Greenwich, declined to explain why TicketNetwork employees pick up tickets from properties where the addressed recipients do not live.

In an email, she said that Metro Entertainment and TicketNetwork "are two different entities with completely separate operations."

She said it is common for a building owner to provide maintenance, such as lawn care and the picking up or forwarding of mail, to buildings it owns.

"In this instance, mail delivery recipients include but are not limited to, non-ticket related companies as well as Metro Entertainment, its officers, current staffers, and tenants no longer located at one building who have moved to a new office," Woods wrote.

Metro Entertainment, she said, like ticket brokerages in general, buys tickets from venues and teams as well as "primary ticket sellers."

"Many times these tickets are purchased in employees' names who work or have worked at Metro," she wrote.

TicketNetwork did not answer questions about tickets sent to the network of mailboxes and addressed to individuals for which The Day could find no records, and did not respond to a request to interview those individuals.

The 'First Five' deal

In July, TicketNetwork became the second of three First Five beneficiaries, joining insurer Cigna and sports broadcaster ESPN. The state Department of Economic and Community Development says it is working with the company to finalize the agreement.

The package includes a $4.5 million, 10-year state loan to assist with the purchase and renovation of the new headquarters.

A full $2.5 million of the loan will be forgiven if TicketNetwork creates 200 new jobs within two years over its head count of 292 employees earlier this year. The loan would then be forgiven in $500,000 increments with each 100 new jobs.

The Connecticut Development Authority will contribute a $1.8 million loan for technology, furniture and other equipment. The state also will provide a $1 million grant for alternative energy systems, as well as a software training grant that will start at $250,000 for 200 new jobs and could reach $450,000 if 600 jobs are created.

Ronald Angelo Jr., the department's deputy commissioner, said in an interview this month that TicketNetwork made the initial call to the state about the First Five program. Development officials evaluated the firm and performed an economic analysis to ensure the investment would pay off for the state.

"We vetted them as we did many others, and we're still doing it," Angelo said. "As we've said from the start, TicketNetwork absolutely needs to work within the confines of the regulatory environment and follow all applicable laws, and as far as we're concerned, they are doing that."

Birth of a company

Vaccaro often shares the story of how he got his start in the ticket resale business. As he told The Hartford Courant, a 16-year-old Vaccaro was at a Madison Square Garden ticket window for a Ted Nugent concert when tickets for Jethro Tull suddenly went on sale. He bought 20 of them for $10 each and later scalped them for between $25 and $50 apiece.

He went professional in the 1980s, founding TicketWorld of Springfield, Mass., and later Metro Entertainment.

Vaccaro started TicketNetwork in 2002 as a software company for the secondary ticket market. The company's products power an online marketplace that aggregates the ticket holdings of numerous brokers and resellers. Buyers can search the site and purchase tickets. TicketNetwork then collects fees from the sellers and buyers.

The company reported $111 million in revenue last year.

Oftentimes it is more expensive to buy tickets on the secondary market than through the box office. A recent example was the final concert this April for the band LCD Soundsystem. Tickets with a face value of $49.50 were being scooped up by scalpers and resold for 12 times that amount, according to news reports. The band responded with a last-minute series of additional shows.

But there are instances when secondary market tickets can be cheaper, particularly tickets for underperforming sports teams.

Brokers such as Metro Entertainment that buy in bulk often turn a profit when selling below face value. "They buy a significant portion of inventory from event producers at a discounted price, and in turn sell those at a discounted price to consumers," according to Vaccaro.

'A chilling effect'

TicketNetwork is considered the industry leader in ticketing software. In the vast resale market, its competitors are StubHub, TicketsNow, RazorGator and the up-and-coming SeatGeek.

This spring, the company was a chief proponent of a state bill that would have prohibited venues from refusing to honor resold tickets or placing restrictions on the resale of season tickets.

The bill, "An Act Concerning the Fair Sale of Tickets," would also have, in effect, banned the use of ticketing systems that don't allow people to transfer their tickets to other people. These so-called "paperless" systems require buyers to bring photo IDs and the credit card used to buy the tickets to the venue.

Music acts including Miley Cyrus and Bruce Springsteen are moving toward these systems, which cut out the opportunity for reselling.

David Fay, president of The Horace Bushnell Memorial Hall Corp., in Hartford, spoke against the bill during a February public hearing, arguing that it would accelerate "rampant price-gouging of Connecticut's consumers by scalpers."

He accused TicketNetwork of selling a $20 ticket to the Bushnell's "Next to Normal" show for $167. And he claimed Vaccaro's company puts Bushnell tickets to popular events on "hold" while attempting to sell them to third parties at inflated prices.

TicketNetwork denied Fay's assertions, and in April, the company filed a defamation lawsuit against Fay and the The Bushnell.

The bill was withdrawn by state lawmakers shortly after the lawsuit was filed. Sen. Paul Doyle, D-Wethersfield, co-chairman of the general law committee, said the lawsuit had "a chilling effect" on the legislative process.

"A lawsuit was filed during session about comments made at a public hearing where legislators look for open, free-flowing comments about bills," Doyle said at the time. The suit is pending in Hartford Superior Court.

j.reindl@theday.com

Don Vaccaro in his office in Vernon in 2009. Vacarro is head of online resale company TicketNetwork.
Don Vaccaro in his office in Vernon in 2009. Vacarro is head of online resale company TicketNetwork. Librado Romero/The New York Times
A U.S. Postal worker delivers mail to a locked mailbox at 137 Bolton Road in Vernon, at 12:51 p.m. Oct. 20. The mail was retrieved by TicketNetwork employees at 2:45 p.m.
A U.S. Postal worker delivers mail to a locked mailbox at 137 Bolton Road in Vernon, at 12:51 p.m. Oct. 20. The mail was retrieved by TicketNetwork employees at 2:45 p.m. Tim Martin/The Day Buy Photo
TicketNetwork employees leave after retrieving items from a locked mailbox at 137 Bolton Road in Vernon. The mailbox, in front of the company's former headquarters, is one of three within 100 yards of each other. The other two are across the street from houses owned by
TicketNetwork employees leave after retrieving items from a locked mailbox at 137 Bolton Road in Vernon. The mailbox, in front of the company's former headquarters, is one of three within 100 yards of each other. The other two are across the street from houses owned by "Terrace Drive Realty" and "TicketNetwork Realty," companies controlled by TicketNetwork President Don Vaccaro. Tim Martin/The Day Buy Photo
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