Few people have done more to disrupt the secondary space as Curtis Cheng, the broker consolidator behind DTI Management. Earlier this month, Cheng announced that his firm had raised $75 million from CVC Growth Fund and New Amsterdam Growth Capital to develop new tools for DTI to price and distribute tickets. Amplify caught up with Cheng shortly after the announcement to talk about the future of the secondary market in a post-consolidation world.

curtis-chengIs this the first major VC round that you guys have done? 

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Yes, so this is the first round of financing things over here.  We have no debt on the company. We were specifically looking for a very strategic partner. Someone who is familiar with our space who is a global brand. CVC is not a hedge fund. They only invest in companies to help them scale. They are very familiar with our space because they’ve owned Formula One and they are headquartered overseas. We know that whatever we’ve done in the US we have to replicate this across the international platform. I think CVC is the perfect partner to help us do that.

Since you’ve raised $75 million, what’s the company’s overall valuation?

Well it’s now higher than it was before. (laughs) That’s all I can really say. That’s not something we can disclose.

How are you going to spend the money?

We want to have software that makes selling a ticket more efficient. That could be for brokers. That could be for teams or promoters. It could even be for venues and artists. Our goal is that the rights holders will eventually be able to use our platform and distribute their tickets across thousands of different retail websites. DTI will facilitate customer service, fulfilling the order, managing these transactions from a cash standpoint and distributing back to the team and the additional value we provide is that we are able to share data. Data of where the ticket was sold, where the customers bought the tickets, what customers are coming into the game and what customers paid for the tickets. That’s the whole goal, to make the industry more efficient.

What about your broker business? Isn’t working with resellers a significant part of your business?

Yes, we have two separate businesses. One is the brokerage management piece of our business where we manage a broker’s inventory. Once they sell, we collect the funds and we distribute it back. The innovative part of our business is that we cut exclusive ticketing deals directly with the team and we syndicate the entire financial obligations directly back to our brokers, while DTI takes a management fee. That’s what allows us to scale so quickly — we don’t have to put up our own capital. We have significant amounts of sophisticated investors who are constantly putting up the money to participate in these opportunities.

You’ve made significant in-roads into sports — what about music? 

The music space is the ultimate goal because there’s tons of data out there that shows that the premium seats for music are worth way more than what promoters are selling them for. The problem is one of the largest promoters in the world Live Nation owns their own ticketing system and they’re only releasing their tickets through their ticketing system. I know there’s a lot of artists out there that are very iffy about the secondary market but our platform is the perfect supplement because we can capture all the revenue and give them all the data so they can populate their fan club. It just takes a few artists to step up and be the leaders instead of waiting for other people to join.

That would be a seismic shift in ticketing. Michael Rapino and Tim Leiweke are pushing for more realistic ticket pricing — sell certain seats for $5,000 but use that revenue to take pricing pressure off the back of the house. What do you think?

You can try to charge more, but at the end of the day, if Walmart only has 5,000 people that only go into the store every single day well that’s 5,000 impressions you’re going to have. If you have 10,000 tickets you’re never going to sell 10,000 tickets with 5,000 impressions. By opening up all these platforms you’re just going to get more eyeballs and you’re going to be able to generate more money. Then you create competition for you product. This is just basic economics of any consumer brand. I come from the beverage industry. That works on every beverage. More sell space. Higher yield. Higher conversion.

Most ticketing contracts are exclusive to the venue? How can a distribution model work in an industry that relies on exclusivity?

We believe exclusive ticketing contracts should no longer exist and that multiple platforms should be utilized to sell tickets. I do believe that you should be able to take your ticket and have an authorized distributor go out there and negotiate shelf space for you. If you go on Stubhub, the first page on Stubhub probably has an 80-90% better chance of selling those tickets than the second page on Stubhub. As an official distributor for a team, we can negotiate that type of placement.

Let’s talk about the independent broker. Can retail brokers survive consolidation?

The independent guys who are really lean, have no overhead, don’t have any staff, they’ll be fine. They’re boutique businesses. It’s the big guys who are losing big deals. If DTI does a deal with the Cleveland Cavaliers, that means a Cleveland broker is going to lose a significant portion of his revenue. The thing is a lot of these big brokers didn’t have relationships with the rights holders or the teams. They should just be transparent with the teams. They should share some of the data back, share some of the revenue back, but the nature of being a broker is that you find inefficiencies in markets and you go out there and you manipulate it and try to profit off of it. With DTI, we’re a software company. We’re not out there to arbitrage ticket prices. We’re out there to help teams and content owners capture higher margins.

When DTI signs a team as a client, do you insist that the team stop selling to the other brokers?

It’s a tough situation. If we have a DTI broker and we happen to consolidate a deal or a team in which the broker holds a significant amount of inventory, we always hold enough of the shares to allow him to invest the exact same amount that he would have gotten on his own. That’s part of the benefit of being with us on a brokerage platform. The problem is we only have 4% of the brokers. The other 96% obviously aren’t so happy.

I’ve always told my friends that most people become brokers because it’s the only career that suits that skill set that doesn’t include jail time. It’s all about territory and being tough. What kind of push back do you get? 

I would say that in my community of ticket brokers I may not be the most popular guy but I’m the only guy that’s going to give brokers a shot to get back the ticket inventory that’s been taken away from them. If you put aside the fact that, yes, you lost some inventory, and yes, DTI got it and you can get over that, then join us and we will be happy to save that position for you. We are not a broker exclusive company. We are a broker inclusive company, but we’re only inclusive to the brokers that are on our platform who use our software, who’ve entrusted us to manage their business for them. They are going to get the first opportunity to invest in any of the opportunities that we get. Anybody who wants to join us, we’re going to offer them the exact same thing.

Dave Brooks
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Dave Brooks

Founder & Executive Editor at Amplify Media
Dave Brooks has over 15 years experience as a writer, including eight years as the Managing Editor of Venues Today. He started Amplify in 2014 to give the industry its own voice and turn up the volume on live entertainment.
Dave Brooks
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