Upon Further Review . . . New Jersey Supreme Court OKs NFL Policy of Selling Only 1% of Super Bowl Tickets to Public

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

I never knew this, but the NFL only sells 1% of Super Bowl tickets to the general public. The remaining 99% are given to: the host team, the teams playing in the game, networks, corporate sponsors, and other related entities. While this might sound a little fishy, the New Jersey Supreme Court ruled that it was not, or, more accurately, that it did not violate the New Jersey Ticket Law.

In Finkelman v. National Football League, plaintiff purchased two tickets to the 2014 Super Bowl (the one held at MetLife Stadium) on the secondary market for $2,000 each. This was more than double the face value of the tickets. He sued the NFL, on behalf of himself and a proposed class of individuals who either bought tickets to the game at premium prices on the secondary market, or who could not afford to do so. He sought various remedies, including treble damages under New Jersey’s Consumer Fraud Act.

At the heart of plaintiff’s claims is the New Jersey Ticket Law, N.J.S.A. 56:8-35.1. It was originally enacted in 1983, and allowed the Division of Consumer Affairs and the Department of Law and Public Safety to license ticket brokers and regulate their sale of tickets for admission to “places of entertainment.” (Insert your joke here about whether MetLife has been a “place of entertainment” for either of its resident football teams in recent years.)

In 1997, Governor Whitman created the Ticket Brokering Study Commission to review the efficacy of the law and recommend amendments, if needed. Among other suggestions, the Commission proposed adding the following provision, which the Legislature did:

It shall be an unlawful practice for a person, who has access to tickets to an event prior to the ticket’s release for sale to the general public, to withhold those tickets from sale to the general public in an amount exceeding 5% of all available seating for the event.

According to the Commission, the purpose of this provision was to allow “the greatest number of tickets” to be “available to the greatest number of ordinary fans on the initial sale to the public.”

In Finkelman, plaintiff claimed that the NFL’s policy of withholding 99% of the tickets to the Super Bowl violated this provision. He filed a putative class action in federal court. The case was dismissed by the district court, reversed (in part) and remanded by the U.S. Court of Appeals for the Third Circuit, and then dismissed again by the district court. On its second trip up, the Third Circuit certified to the New Jersey Supreme Court the question of whether the NFL policy violated the Ticket Law. (The Supreme Court split the Third Circuit’s question into two parts, but this post focuses only on the second part. The first related to whether the term “person” in the Ticket Law applied only to ticket brokers.)

Apparently, it is NFL policy to only sell 1% of Super Bowl tickets to the public. It does so through a lottery. The winners get to purchase two tickets to the game at face value. To prevent scalping, the winners must pick up their tickets on game day at the stadium. For 2014, the remaining 99% of the tickets were distributed as follows: 5% to the Giants and Jets (the host teams); 35% to the Broncos and Seahawks (the teams playing in the game); 35% to other NFL teams; and 25% to “NFL-connected individuals and entities including corporations, broadcast networks, media outlets, sponsors and the Super Bowl host committee.”

To determine whether this violated the Ticket Law, the Supreme Court broke the statute down into its component parts.

First, it examined whether tickets sold to winners of the Super Bowl lottery were “release[d] for sale to the general public” in the first place. (The NFL had argued that they were not.) The Supreme Court held that they were: “[N]othing in [the Ticket Law] or its legislative history suggests that in order for a release of tickets to constitute a ‘release for sale to the general public,’ tickets must be made available to any member of the public who wants to purchase them.” Thus, when the NFL made 1% of Super Bowl tickets available for sale to lottery winners, it “released” those tickets for sale to the general public for purposes of the Ticket Law.

Second, the Supreme Court examined whether the NFL withheld more than 5% of “those tickets from sale to the general public in an amount exceeding 5% of all available seating for the event.” On this point, Plaintiff argued that the Ticket Law was designed to ensure that 95% of tickets to an event would be available to the general public. The Supreme Court rejected this interpretation, holding:

A statute that imposed that requirement would certainly ensure public access to the vast majority of seats to a given event. It would restrict or eliminate the sale of coveted sports playoff tickets to season ticket holders and the reservation of prime theater seats to subscribers. It would curtail a college’s ability to assign specific sections of a stadium for students or alumni and limit a sponsor’s authority to allocate tickets for entertainers’ fan clubs or commercial partners. Had the Legislature intended to impose such a restriction, it could have done so in unmistakable terms.

Instead, it held that the statute only prohibits “the withholding of ‘those tickets’ — a plain references to the preceding description of tickets accessed ‘prior to the tickets’ release for sale to the general public’ — in an amount exceeding five percent of all available seating for the event.” In other words, the Ticket Law “does not impose a limit on withholding any tickets, but restricts only the withholding of the subset of tickets that would otherwise be made available in a public sale” (emphasis added).

In Finkelman, the NFL did not divert any of the 1% of tickets it offered for sale to the general public. The tickets plaintiff challenged — the other 99% of tickets — “were never destined to be part of a public sale.” Therefore, they were beyond the reach of the Ticket Law. As the Supreme Court held: “[n]o ‘person’ had ‘access’ to those tickets ‘prior to the tickets’ release for sale to the general public,’ and no ‘person’ could withhold those tickets from sale to the general public’ in advance of such a sale.” Stated differently, only “tickets that would — if not diverted — be destined to be available for sale to the general public” are protected. The NFL did not withhold any of these tickets, so it did not violate the Ticket Law.

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