Once derided as ‘scalpers,’ ticket broker now backed by state

A business that once operated on the edges of legality has arrived: Not only did Gov. Dannel P. Malloy welcome the opening Thursday of a ticket broker’s new headquarters in South Windsor, he came with about $8 million in state aid to help create or retain at least 500 jobs.

TicketNetwork, an online brokerage whose commodity is the secondary market for sports and entertainment events, is the second company to receive aid under Malloy’s “First Five” program, which rewards the first five businesses that guarantee to create at least 200 new jobs in the next 24 months.

Malloy (c) with TicketNetwork CEO Don Vaccaro on his left.

The first of the five was Cigna, the Fortune 500 company and health insurer that declared Connecticut as its corporate headquarters this month. On Thursday, the state’s featured new business partner was the high-tech descendant of the old ticket scalping business that many states once struggled to tightly control.

“For far too long, for a period of time, those entrepreneurs have been attracted to other states,” Gov. Dannel P. Malloy told a packed room at TicketNetwork’s new headquarters. “This is what we need to do.”

But this emerging national trend of businesses being created to resell tickets online is not without controversy. While fans and artists want ticket prices to remain low, these companies are often able to buy up tickets and resell them at a much higher rate.

Malloy said he has heard these complaints firsthand.

“I got an earful on the Miley Cyrus concert,” he said of the high prices online for the sold-out concert at the Hartford XL Center earlier this year. But he said that is all part of the growing pains of this new emerging market, and instead of kicking the businesses out of the state the solution is to regulate the industry.

“There will be winners and losers in any emerging industry,” he said, adding the solution is to create rules for the companies to abide by, make sure the companies follow them, “and then, quite frankly, get out of the way.”

A bill that would have protected and placed regulations on the tickets sold by these online vendors at Connecticut venues failed to gain traction among state legislators this year.

Leaders of TicketNetwork said this investment from the state helped them not only move out of their small Vernon office, but also prevented them from following other companies by leaving the state.

“We need some more room, alright. We had other states come after us for our business,” said Don Vaccaro, the head of the company.

This low-interest loans tie Vaccaro’s company, which currently has 319 full-time employees, to the state for 10 years.

The assistance package includes: a 10-year, $4.5 million loan for the cost of building acquistion and purchase of equipment, furniture and fixtures; and a 5-year, $1.8 million loan for information technology and equipment; and a grant of up to $1 million for an alternative energy system.

Also, the company will receive a software-engineer training grant of $250,000 for 200 jobs, which could grow to $450,000 if Ticketworld creates 600 jobs.

“We are planning on staying in the state of Connecticut for a long time,” he said.

Catherine H. Smith, the commissioner of the Department of Economic and Community Development, said there is no shortage of interested companies seeking help.

“This gives us a lot of discretion to do what’s necessary to get the right companies in Connecticut,” she said, noting she hopes to get legislative approval in the upcoming special legislative session to expand the program to at least 5 more companies. “This is a great tool for Connecticut to create jobs.”