Ted Leonsis Sees a Blockchain Future in Ticketing

The COVID-19 pandemic has accelerated digital adoption on all fronts. “[We] always knew that 10 years from now we had to be digital and social and mobile,” Monumental Sports & Entertainment CEO Ted Leonsis said. “How do [we] pivot faster?” Pro teams have spent the last 12 months working to convert “brick-and-mortar and paper into digital,” including the ticketing part of the business. When fans return to stadiums, they will find physical tickets are largely a thing of the past. But to Leonsis, digital ticketing “doesn’t mean taking a physical ticket and putting it on your phone,” something many teams were doing pre-pandemic. The owner of the Capitals, Wizards and Mystics envisions a future where the game ticket is a product in and of itself, “because it does something other than let [the purchaser] into the building.”

Our Take: Attendance at sporting events was declining prior to the pandemic. So, Patrick Ryan (co-founder, Eventellect) is fully on board with the part of Leonsis’ vision that focuses on creating additional value for fans. “It is beyond critical these teams start selling more than a ticket. [You have to create] a value-add that no bar, restaurant, Top Golf, cinema can compete with,” he said. But teams don’t need to have a digital ticketing platform to do that. MLB clubs have been letting kids run the bases following select home games for as long as I can remember.

What makes Leonsis’ vision of ticketing so interesting is that in addition to adding value for fans in attendance, it has the potential to grow the potential buyer pool. Historically, having fans outside of the local market did little to boost team ticket sales (for obvious reasons). But as Leonsis asked, “What if [the Caps were] selling a ticket along with a memory of the night Alex [Ovechkin] scores his 717th goal? Now, people in Russia are buying. They’re [keeping] the memory and then reselling the actual ticket entry into the business. [Our] TAM [total addressable market] is the world—not just people who are Caps fans who want to come to that game.”

When Leonsis talks about a “memory,” he is referring to a non-fungible token (NFT) on Blockchain (think: NBA Top Shot). But there is value in adopting a Blockchain-based ticketing system beyond the ability to offer digital collectibles. The technology can “take a one-time static paper transaction and turn it into an ongoing, recurring transaction,” the Monumental CEO explained. As it currently stands, once a team sells a ticket to the primary market buyer, they fall out of the loop. If the ticket is resold, they don’t know who bought the seat, and if the ticket is resold at a profit, they don’t share in any of the upside. “What a Blockchain can do, is say we’re all in this together,” Leonsis explained. Each time the ticket is resold, the club can take a cut of the transaction. Historically, teams have outpriced the die-hard fan because they “have been afraid of getting arbitraged [on the secondary market],” Ryan said. In theory, if clubs could capitalize on more transactions and control transfer/resale of cheap seats they could price them more affordably on the primary market to begin with.

Knowing who is in control of the ticket can also help teams offer better service to their fans. As Ryan explained, “Someone bringing a kid to the game might really value a picture with the mascot, while someone going with their buddies might value access to the premium club. Neither of those things costs the team any money to do. But you have to know who your fans are [to offer them].” Ryan believes teams are just at the beginning stages of true personalization. That lack of a tailored experience has led some fans to choose alternative entertainment. But as teams better capture and leverage data, they can win those consumers back.

Bundling tickets with promotional items is not a new concept. In essence, that is what clubs do now with Bobblehead nights. The difference with a digital giveaway is the number of people who might be willing to buy the package—a ticket and a collectible—with no intention of using the former. Ryan isn’t convinced that’s a good thing for sports teams in the long run, though. He said selling tickets to people who have no interest in attending the game “creates brand damage. You’re going to have all of these people liquidating tickets for 10 cents on the dollar because they wanted [the collectible]. And then the team has upset their season-ticket holders because they are sitting next to someone who paid a fraction of money for the same experience. [Teams] need to control their tickets. You do not want some [person in Russia] liquidating your tickets.”

Ryan did suggest one way teams could engage fans who aren’t able to attend the game, while providing those in attendance additional value. “Say, for example, a team promises to make a commemorative NFT for every player that scores a hat trick at a home game,” he said. “The only way to redeem that NFT is to have been at the game and be a registered member of the team’s fan rewards program. But when they redeem it, they could sell it to a fan who wasn’t at the game in exchange for more rewards points [on the platform]. That would be a win-win-win.”

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