Digging into the numbers on the Ace Comic Con lawsuit and other CON-cellation matters

This article originally appeared on this site

 

By now we’re taking it for granted that our favorite pop culture events will be cancelled for 2020, at least unti the summer. But since the first wave of postponements with Emerald City Comic Con four years weeks ago, with shock after shock hitting us daily, we’ve barely begin to even look at the long term damage this is posing to the events industry. Truthfully, we won’t know the extent of it for quite some time. But while this is only a very very preliminary look, here are some issues I thnk we’ll be dealing with down the line.

First off, Exhibit A is Rob Salkowitz’s interview with Marc Jenkins, Chief Executive Officer of Patron Technology, the parent company of Showclix, Growtix, Mercado, Thuzi, FISH, Greencropper and other platforms that support event operations, ticketing and marketing . As we mentioned yesterday in our story about the Ace Comic Con/Growtix lawsuit, Patron is the parent company of GrowTix.  This rather astonoihsing exchange is for anyone who thought insurance would cover a lot of these cancellations.

RS: How much of the brunt of these cancellations/postponement is being borne by the organizers and companies like you that support them, as opposed to being covered by insurance or terms with venues that have to offer some financial leeway? 

MJ: It appears that insurance, to the extent it was purchased by event organizers, generally doesn’t cover the current scenario.  We have limited exposure, but are definitely feeling the pain.

RS: Wait, what? Insurance isn’t covering organizers who have to cancel or postpone events?

MJ: There are plenty of promoters who carry business interruption insurance, but the payments for this situation are in dispute. We have examples where insurers are not covering cases. In all different industries, we’re hearing the same thing.People are shocked that they’re not paying. They thought they were covered. I mean, we know insurance companies scrutinize claims so they can minimize what they need to pay out — that’s their business.  But it’s left a lot of events that thought they had been prudent with a lot of exposure.

With every other industry – except for hand sanitizer manufacturers – reeling, its no surprise that the event underwriting arm of the insurance industry would also be flailing about. They are set up to cover A LOCAL EVENT like a hurricane, not the whole world shutting down over the course of a few weeks. So insurance payouts may NOT be able to save some companies that throw comic-cons.

And that brings us to the aforementioned ACE Comic Con/GrowTix legal fight. The short version:  ACE says that GrowTix is refusing to refund $2.9 million in presold photo ops, autograph sales and VIP experiences to the people who purchased them for the now-postponed ACE Boston. GrowTix however says that they don’t have the money, they just passed it on to ACE and ACE is not transferring the money for the refunds.

To say that industry observers were stunned by this is a bit of an understatement. GrowTix is a huge partner of the entire comic-con space, as mentioned before, and for this to evolve in the space of a mere four weeks from a postponed/cancelled event to taking drastic legal action against an integral and established business partner is…well, it’s drastic.

A note: I’m not going to throw shade at the Shamuus Brothers here. I know they have a checkered past in many matters, including with lawsuits, but Ace Comic Con clearly grew to fill a niche in the event space, and has/had sterling relationships with major celebrities to give people an experience they couldn’t get anywhere else. I know ACE went out of their way to give fans the experience they were looking for, and they did it very well. As I’ve said many times, it wans’t my cup of tea, but it was definitely someone else’s.

That said, readings statement from other showrunners….makes ACE’s suit very puzzling. On the Rate That Comic Con FB board, Chris Jackson of the postponed Planet Comicon in Kansas City posted a rather long thread which I’ll cut down a bit (posted with permission):

When a show must be cancelled, Growtix can only give refunds up to the amount of money they are holding for a particular company AND if the company authorizes them to do refunds. When full refunds are required for all purchases, as in the case of Ace Comic Con’s cancellation, then the particular convention company must return funds to Growtix (which were already paid out to the company by Growtix) or Growtix can not refund money. PLUS, the company must give permission for the refunds. If Ace’s contract with GT is similar to mine (and I suspect it is, particularly in key aspects) then Growtix is holding only a modest amount of the money needed to fully refund all Ace purchasers.

I know how this works. I’ve been selling through Growtix for years. They are a good company and have treated me well throughout our relationship. Planet Comicon Kansas City is in a position somewhat similar to Ace, however we have not cancelled. We have rescheduled to August 14-16. We processed refunds for ALL photo ops (through Growtix) in the days just after we postponed (March 12). That money is appearing in purchasers accounts now (it takes up to 5-7 business days after processing for funds to appear back in the purchaser’s account.) We are offering a refund window for those who purchased March admissions, and, for whatever reason, cannot attend in August. Most people are opting to transfer their admission tickets to our August or April shows, so refunds of all admission purchase are not necessary. We are in the process of refunding admissions for those who request them.

How can Growtix do these refunds of both photo ops and admissions for Planet Comicon? They had sent me most of the money taken in from sales. They had only a modest amount of the $$ taken in from sales. Well, its easy. I wired a pretty large amount of $$ back to Growtix. Hundreds of thousands of $$$. With the money GT was already holding, there is plenty of money in my GT account now to cover all requests for admissions refunds (and remember, I had already refunded, through GT, all photo op $$. Which was a LOT of $$.)

So. I think attacks on GT are misplaced. They refund when they have money (which must be provided by the show owners, since most has been sent to the owners) AND if requested to do so by the show owners. Growtix does not “keep” this money. Or “pocket” it. And GT does not “steal” fans’ money out of a show’s bank account. Don’t jump to conclusions based on an article that contains only some of the information, and that information is basically the claims of one side.

Let me add one clarification after reading Fan Expo’s statement. There are two ways to process credit cards when using GT. 1) A show may use Growtix’s credit card merchant processor, in which case the $$ from sales go in to a GT account and then, by contract, are mostly paid out to the show on a weekly basis. (Contracts can vary in amounts held by GT. But it is not a large %) or 2) the show may have its own credit card provider and then the money from sales is never held by GT at all. I use method #1. Fan expo clearly uses method #2. In case #1, GT holds only a modest % of the total sales $$. In case #2 Growtix holds NONE of the sales $$. In case #2 Growtix does not even hold their own fees. They rely on the show owner to pay them their fees. In both cases, the $$ are with the show owners

Fan Expo’s statement was quoted elsewhere in the thread:

While Fan Expo HQ uses GrowTix technology to process ticket sales, when you purchase your tickets, the transaction is with Fan Expo HQ and the money from the sale is held directly by us. These funds are never held by GrowTix or any other third party outside of Fan Expo HQ’s control. For refunds, we also use GrowTix’s technologies to facilitate, but Fan Expo HQ is who is processing your request. We began using Growtix at the beginning of 2019 and throughout that time nothing has changed. We continue to work with their amazing team and we have nothing but the utmost level of trust in GrowTix.

Everyone I have spoken with in the con biz has nothing but praise for GrowTix and its allied companies as complete professionals.

ACE Comic Con did tweet two days ago:

Now doing a little back of the envelope math…ACE sent GrowTix $680,000 while GrowTix says they sold $2.9 million in tickets of various kinds.

So what happened to the rest of that $2.2 million?

First off, this does give you an idea of the kind of money you can make with a massive celebrity autograph show – but ACE only threw two or three events a year to keep their shows unique.

However with big names come big guarantees – the amount of money a celebrity is paid to come to a show no matter how many autograph tickets they sell. Chris Hemsworth and Chris Evans are estimated to have guarantees of about $250,000 each, and it’s hard to see how Jake Gyllenhaal and Ewan MacGregor weren’t in the same ballpark. Throw in the very large slate of other celebrity guests and you have easily spent $1.5 million – and it could be even more.

It’s quite likely that the rest of that $2.2 million was already spent on guarantees and down payments and other costs of putting on a show. (It was to be held at the Boston Convention Center, not a cheap venue.)

While the money many have been tied up, ACE might have been able to float some expected refunds. Still,  it’s very easy to understand why the refund money may not have been sitting around doing nothing.  But it does make you wonder – wouldn’t those celebrity guarantees have been refunded after the postponement, as well?

Wouldn’t they?

What’s notable about this story to me and to other observers is that it’s easy to see how the refund money from ACE Boston was tied up, and perhaps ACE did not have the funds to cover it with all hell breaking loose every where.

And that makes the decision to seek legal action against GrowTix all the more stunning. This isn’t necessarily the WWE, where you can be suing someone one day and back on the roster months later. This is reasonable, professional companies who work things out, despite the turmoil of the pandemic.

Privately, a lot of people are telling me that many companies who didn’t have strategic reserves or aren’t nimble aren’t going to come out of this. Comics publishers, retailers, comic cons. It’s going to be a different world on the other side.  And sadly, I don’t think this is the last time were going to see some seemingly desperate measures taken to cover shortfalls.

The post Digging into the numbers on the Ace Comic Con lawsuit and other CON-cellation matters appeared first on The Beat.

Leave a Reply

Your email address will not be published. Required fields are marked *