Calabasas-based Spotlight Ticket Management Inc. seems to be riding a strong wave in 2024 after a rocky handful of years put the whole operation at risk.
In 2019 the company became embroiled in a breach of contract lawsuit against a one-time client, StubHub Inc. And in 2020, Spotlight was hit with a one-two punch of losing yet another major client, American Express Co., just weeks before the Covid-19 pandemic dried up all live ticketed events.
Now, the company said it is expecting serious growth this summer. And a jury decision in late May awarded Spotlight a $16.3 million payout from StubHub. Spotlight – which does business through its ticket management platform, TicketManager – prevailed on claims that StubHub interfered with another of Spotlight’s business relationships and withheld commissions to be paid to the company.
“We are so thankful to the jurors who saw what StubHub did to us and stood up for justice,” said Tony Knopp, co-founder and chief executive of Spotlight. “After nearly five long, difficult, and emotional years, including StubHub suing our staff personally in retribution for TicketManager simply seeking to be paid for the value provided, the relief and joy we felt when we finally got to tell the truth is indescribable.”
The verdict serves to bolster a Spotlight that has successfully pivoted from the initial business setback and emerged from the pandemic’s stoppage of live events. The Calabasas company has a number of new deals in the pipeline to grow its clientele later this year.
Those deals were in the works regardless of how the jury voted last month. However, now the company can ride the wave of its David and Goliath story.
“For Spotlight to have gone the distance with a giant company like StubHub and exonerated itself, proven its position, I think it shows a lot of character, integrity and that the truth was always on Spotlight’s side,” said Chris Pardo, an attorney with Hunton Andrews Kurth LLP who has worked with Spotlight for years.
Origins and success
Knopp co-founded Spotlight in 2007 with two colleagues, after all three had clocked in time as sales representatives for StubHub.
With this new company, the team developed a software platform for event promotors and other ticketing venues to use to streamline the sales process. Its services include invitation or registration, credentialing, distribution, check-in and post-event surveys and reports. Clients include Verizon, FedEx, Adidas, Anheuser-Busch, Nissan, Mastercard and a wide variety of professional and collegiate sports teams.
The company successfully weathered the 2008 financial crisis shortly after forming and in 2014 landed its biggest client at the time: American Express. The credit card company and Spotlight developed a unique model in which Spotlight managed tickets available to American Express Concierge cardholders, who had premium access to a plethora of events.
The prospect was so lucrative to Spotlight that the company sold a 20% stake to an outside investor to generate the liquidity to float these tickets for American Express. Spotlight then brought American Express and StubHub together in 2016, bringing StubHub’s secondary ticket market into American Express’ cardholder perks. American Express reportedly bought between $80 million and $100 million in tickets from StubHub, from which Spotlight received a 7% commission.
“The engagement was wildly successful,” Knopp said.
Spotlight and American Express renewed their partnership in 2017.
‘Most important business relationship’ sabotaged
Things got messy, Spotlight testified, after StubHub experienced issues with tracking all of the purchases made via Spotlight’s platform – issues that the Los Angeles jury agreed were taken advantage of by StubHub’s people. The jury also agreed that StubHub officials deliberately misled American Express officials with false information about Spotlight’s business practices to disrupt their relationship.
“StubHub had challenges with tracking the purchases that were coming through TicketManager – which they admitted and informed us of often over the course of years,” Knopp explained. “As the volume of purchases from American Express continued to grow to the tune of tens of millions of dollars, leadership at StubHub made a decision to not pay TicketManager the money it had earned and to interfere with TicketManager’s relationship with American Express.”’
Spotlight first filed a lawsuit against StubHub in 2019. In March 2020, American Express declined to renew its agreement with Spotlight. And then the pandemic hit.
“American Express was nearly 10% of our business. Their renewal was in March of 2020, which was right when Covid-19 shut down live events. The results were catastrophic,” Knopp said. “Our team pulled together by taking enormous pay cuts, renegotiating with our banks, and cutting growth spending. Losing American Express was a significant blow to our family.”
Pardo, who is based in Hunton Andrews Kurth’s Boston office but worked with the team in its downtown office to represent Spotlight, said this client loss, combined with the shortchanging by StubHub, put Spotlight in dire straits at the time.
“Their most important business relationship – so important to them that they sold 20% of their company in make it happen – was sabotaged,” he said.
Success and moving forward
StubHub was ultimately found liable for breach of contract and tortious interference with contract and prospective economic advantage.
Bolstering Spotlight’s case was evidence and testimony from StoneTurn, a Boston consulting and services firm that handles forensic business investigations among other tasks. The firm served as the damages expert for Spotlight, providing the estimates and data that resulted in the $16.3 million award.
Partner Atanu Saha and managing director Narinder Walia, both based at StoneTurn’s office in the Carthay neighborhood, testified on behalf of Spotlight.
“The damages model developed and presented by the StoneTurn team was a key factor in our success in this litigation,” said Spotlight Chief Operating Officer Ken Hanscom in a statement.
For Knopp and others, the saga became personal on account of their prior time working StubHub and the various relationships they continued to have with people there. Pardo described the litigation as being of the “bet the company” variety because of how long it took and how much work it involved. The trial itself lasted a month and involved nearly 20 attorneys from Hunton Andrews Kurth, including Los Angeles managing partner Ann Marie Mortimer.
“This was friends feeling like they’d been stabbed in the back and almost having their business completely destroyed,” Pardo added. “For Spotlight to have gone the distance with a giant company like StubHub and exonerated itself, proven its position, I think it shows a lot of character, integrity and that the truth was always on Spotlight’s side.”
For its part, Knopp said Spotlight has soldiered on since the 2020 downturn, calling business “fantastic” at this point. He added that the company expects to announce new deals involving professional sports teams this summer and is also exploring the acquisition of related companies.
“Our team pulled together through the darkest days of 2020 and we’ve come out of it battle-tested and growing at a record pace,” Knopp added. “We believe in live events work and that we, as people, will always love them. So, we’ll keep building tech to make it easier for us all.”
StubHub did not respond to a request for comment.
