Dorfman calls on Congress to ban Live Nation–Ticketmaster rebate program

Business Wire

Music promoter and CEO of Juice Entertainment Tommy Dorfman today called on Congress to eliminate what he described as a “rebate-driven pay-to-play system” at the center of the Live Nation Entertainment and Ticketmaster business model.

Dorfman, who has waged a 16-year legal battle against the companies, said the rebate “scheme” systematically increases price of ticketing, while allowing Live Nation to “hide” true profitability from whoever it chooses, often fiduciaries such as co-promoters and artists. This further distorts competition via forced exclusive partnerships and/or arbitrary increased costs of production across the nation, essentially at will. The scheme, Dorfman said, also allows Live Nation to demand loyalty and silence from artists by misleading, or limiting the sharable profit pool in each event.

“Congress has stepped in before when industries crossed the line with hidden financial kickbacks,” Dorfman said. “It’s time to do it again, as Live Nation has crossed the line a long time ago.”

He pointed to several industries where lawmakers and regulators moved to ban or restrict similar practices:

Healthcare: The federal Anti-Kickback Statute makes it illegal to offer or receive financial incentives for referrals involving Medicare or Medicaid patients, recognizing that such payments corrupt decision-making and harm consumers.
Finance: In the wake of the 2008 financial crisis, Congress and regulators cracked down on incentive structures and conflicts of interest that steered business unfairly and misled consumers.
Energy and utilities: Federal and state regulators have acted to limit rebate and incentive programs that distort markets or lock in providers at the expense of competition.

“Call it a rebate, call it a bonus, call it whatever you want. In any other industry, we’d call it what it is: a kickback,” Dorfman said. “And we’ve already decided as a country that this kind of behavior shouldn’t be allowed. Everyone is paying the price in money and/or in dignity for the insatiable greed of one company.”

The call comes on the heels of a major legal setback for Live Nation Entertainment and Ticketmaster, as a recent federal court ruling found the companies engaged in anticompetitive behavior consistent with monopoly power in the live entertainment marketplace.

The decision pulled back the curtain on long-standing Live Nation practices and added momentum to growing calls in Washington and among dozen of states attorneys general for structural reforms, including limits on opaque financial practices that gives one company unlimited power to determine prices, shows and who gets paid or survives across the supply chain in an entire industry.

Dorfman said he possesses internal documents he intends to introduce at his trial that, in his view, strip away the industry language and expose the rebate system for what it is, “a racket.”

“We’re going to put documents into evidence that really undress this rebate program,” he said. “When people see how it actually works behind closed doors, it’s going to be very hard to call it anything other than an offensive kickback scheme.”

Dorfman said eliminating these “kickbacks” will immediately open the live entertainment market to greater competition and reduce ticket prices from day one. “It’s really simple, when the mob demands kickbacks from the fish monger, your fish gets more expensive, and the more they squeeze, the more expensive the fish becomes.”

“This is the choke point,” he said. “You remove the handcuffs and “protection money” imposed by Live Nation, that distorts the entire industry, and you give artists, promoters, and fans a real choice again.”

He also paid tribute to the late U.S. Rep. Bill Pascrell, who was among the most outspoken critics of Live Nation and Ticketmaster on Capitol Hill, and said Congress should move to formalize his efforts through new legislation bearing his name.

“Congressman Pascrell understood exactly what was happening here,” Dorfman said. “He called out the cabal when others wouldn’t and fought for fairness in an industry that desperately needs it. Congress should honor that work and finish what he started by passing what I’d call the ‘Pascrell Act’ — a clear ban on these so-called rebates that are nothing more than kickbacks.”

Dorfman said he plans to continue pushing for both legislative action and his day in court.

“I don’t care if it takes another 16 years,” he said. “I have the evidence, I have the experts, and I have no doubt that when this is fully exposed, what we’ve seen so far will look like small potatoes and the wrong doers WILL finally go to jail.”

About Tommy Dorfman

Tommy Dorfman is a former independent music promoter who has spent well over a decade challenging anticompetitive and illegal practices in the live entertainment industry.