eTickets (Extract)

By ZIV HELLMAN
Extract from an article in Issue 13, October 13, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here. High-tech moves into the sports ticket arena It is a scenario familiar to many an avid sports fan. You support your team for years through ups and downs. Finally, the day you have been waiting and praying for arrives: They've made it to the championship game. You excitedly look forward to joining the crowd in the stadium to cheer them on - the reward for your years of allegiance. And then you discover that all the available tickets were snapped up within minutes of going on sale. You, the loyal fan who hasn't got great wealth or a corporate connection, have two options: Pay an astronomically high price to a scalper - or watch the match on television. Tel Aviv computer programmer Yaniv Ozana felt the sting of being unable to get a ticket when he was living in London four years ago and working for Mercury Interactive, a Hewlett-Packard subsidiary. "Chelsea were playing Manchester United in a championship match I felt I absolutely had to attend," he recalls. "But there were no tickets to be had, anywhere. I was even willing to subscribe to a season ticket to get in - but was told there was a five-year waiting list for that." As often happens in the high-tech world, Ozana's extreme frustration begat a business plan. When he returned to Tel Aviv in 2005, he began outlining the elements of a website based on an idea he says he "first dreamed of as a child." The objective: to enable the true fans of any sports team to buy the right to see their team participating in a championship game if the team qualifies - in much the same way that financial options grant people rights to purchase stocks under certain circumstances. Together with fellow programmer Oren Tal, he submitted the idea to an Israeli start-up competition - and became determined to turn it into a business when it was crowned one of the ten most promising start-up ideas of 2006. With the support of start-up incubator Yam Business Opportunities, Ozana's dream, now called Ticket2Final.com, began taking form. It is now at the beta testing stage in preparation for a full launch. Although it has not yet seen any revenue, it has plans to begin selling options for tickets to several European basketball and soccer league cup finals in time for the 2008-2009 season, and users can already reserve the right to purchase options once they go on sale. The company is planning to expand to the United States within the next six months, initially concentrating on college football championships - assuming that its business model is not determined to be a form of illegal gambling. The devotion that sports induce is legendary - the word "fan" is aptly derived from the word "fanatic" - and sociologists compare the emotions supporters feel to the adrenalin rush of soldiers going out to the field of battle. Fans will go to almost any length to obtain tickets for the big game and the scramble has only intensified in recent years. If once they could assure themselves tickets if they camped out early enough outside the box office, nowadays, with on-line sales, seats can be sold out within seconds of going on sale. The Ticket2Final system grants every fan a chance to vie for a ticket. Suppose you, like Ozana, are intent on seeing Chelsea play in the cup final, assuming the team gets there. If Ticket2Final has signed an advanced deal with the Football Association, the organizers of the cup tournament, you can purchase an "option" on Ticket2Final's website at any point during the preliminary rounds, at a price that will reflect Ticket2Final's statistical assessment of Chelsea's chances of making it, and that will obviously fluctuate as the team progresses in the tournament. If Chelsea are eliminated at any stage, the option becomes worthless - and you have lost your investment. But if the team knocks out all their opponents, your option will become redeemable for the purchase of a ticket - to be paid at face value, above what was paid for the option - to the final at Wembley Stadium. Option prices can vary widely from one team to another, based on the perceived strengths and weaknesses. Take for example the price differentials for options to purchase a ticket to the Euroleague Basketball 2008-2009 finals, one of the first pilots that Ticket2Final is hoping to implement. An option purchased prior to the season, which begins in late October, on one of the low-seeded teams, such as the Italian Air Avellino, could cost as little as one or two euros. But an option on powerful CSKA Moscow, which has been in the Euroleague Final Four six consecutive years and is the current champion, having defeated Maccabi Tel Aviv in the last championship in May, may cost as much as several hundred euros. This may sound expensive, but it pales in comparison with the face value of a prime-seating ticket to the final, which is 3,100 euros, to say nothing of what one would pay for such a ticket on the black market. The element of uncertainty is crucial to the business plan. The purchase of an option is always linked to a specific team, so no single option guarantees the right to a championship game ticket unless the team proves to be a championship contender. Options cannot be bought once the identities of the finalists are known. After polishing their business strategy and working on the technological infrastructure of Ticket2Final for over a year and a half, Ozana and Tal decided several months ago that the time had come to seek a CEO who would be able to steer the company financially and negotiate high-stakes deals. The ideal candidate, they agreed, would be an individual who could combine a solid operations and finance CV with deep connections in the sports industry. Through mutual acquaintances, they found Todd Warnick, a man with 25 years of experience in senior finance and management positions and 30 years of experience in basketball. On the management side of the ledger, Warnick, 53, who immigrated to Israel 29 years ago from Tacoma, Washington, has previously been the manager of the Aliyah Department of the Jewish Agency, a senior executive at the Joint Distribution Committee, CFO of the World Union of Progressive Judaism, in addition to holding senior positions at high-tech companies SuperStudio and Answers.com. On the sports side, he was a well-known and respected referee in the Israeli professional basketball league for 25 years, and officiated at professional basketball games in Europe for 20 years. Alongside all this activity he also managed to earn degrees in economics and public administration at the University of Washington in Seattle and the Hebrew University of Jerusalem, and to serve as a lieutenant in the office of the financial adviser to the Israeli army chief of staff. "Warnick opened doors that we couldn't get through without him," says Ozana. From his sturdy build to his shaved head, Warnick looks every inch a basketball referee. "I'm excited and having a lot of fun working on this," he says. "The company's business model is unique, we've got patent-pending new technology, and I get to work in a sports-related field, which is close to my heart." Ozana and Tal decided from the start that Ticket2Final would handle only the sale and registration of options, and would not hold any tickets itself. To ensure that option winners have seats waiting for them, the company negotiates with the primary ticket sellers - the sports leagues and clubs - to reserve tickets which are then sold to winning option holders at face value. What do the primary ticket sellers, such as the Euroleague basketball tournament organizers, receive in return? Extract from an article in Issue 13, October 13, 2008 of The Jerusalem Report. To subscribe to The Jerusalem Report click here.