Elite fan club sues Jazz for $19 million

[krebstaz]

https://https://www.deseretnews.com/article/700037881/Elite-fan-club-sues-Jazz-for-19-million.html

SALT LAKE CITY — A new populist seating policy has an exclusive group of self-described "elite" basketball fans seeing red.

The Jazz 100 Club is suing the Utah Jazz for $19 million because it says a new policy that allows all season-ticket holders to buy and sell their seats has devalued its memberships by as much as 90 percent.

The move that opened up once-exclusive perks to thousands of Jazz fans cost club members millions of dollars, says the club's elected president, Alan Melchior.

According to a lawsuit filed Friday in 3rd District Court, former Jazz owner Larry H. Miller created the club in 1987 as a "selective organization that entitled its members to exclusive rights and privileges," including equity in the club, ownership of "some of the best seats" in EnergySolutions Arena and a 20-percent discount on season tickets.

After Miller's death, however, the team's new management began to "violate its … obligations in pursuit of fleeting and relatively insignificant monetary gain," according to the lawsuit.

Melchior said that originally only club members could own seats at the basketball arena. Under new rules adopted in January, however, all season-ticket holders may now own seats, a privilege Melchior says they haven't paid for.

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Seat positions that once sold for as much as $200,000 a pop have now gone for $20,000, a drop of 90 percent, Melchior said.

"This is a major windfall for season ticket holders because they have not paid for the benefit," he said. "This makes a huge difference. It negates the value of the seat positions."

The club's 50 to 60 members own most of the 220 courtside seats, Melchior said. That pricey perk is now available to about 11,000 season ticket holders.

According to the lawsuit, club members are "some of the most successful and influential individuals and companies in Utah, who have paid millions of dollars for their memberships."

Melchior contends those millions of dollars are now gone as the value of seats has dropped and club members can only sell their seats at a significant loss.

In a prepared statement, Jazz Communications Vice President Linda Luchetti said they take the matter seriously and the team's legal department is reviewing the lawsuit, but she declined to comment further on the club's complaints.

Reading this article makes me sick! If the Jazz lose this case, what impact would it have on the Jazz signing players? It makes me sick that "some of the most successful and influential individuals and companies in Utah, who have paid millions of dollars for their memberships" are trying to make a $200,000 a pop profit off the Jazz.

 

[Kyoto]

I hate people with money... until I get money.

 

[Hopper]

The Jazz 100 Club is suing the Utah Jazz for $19 million because it says a new policy that allows all season-ticket holders to buy and sell their seats has devalued its memberships by as much as 90 percent...Under new rules adopted in January, however, all season-ticket holders may now own seats...The club's 50 to 60 members own most of the 220 courtside seats, Melchior said

It is not immediately apparent how these members have been hurt just because others can now own different seats. Don't they still control "most of the 220 courtside seats?"

 

[Marty McFly]

Now my punk-*** college friends and I can finally get those courtside season tickets we've been wanting! Yes!

 

[Ben10]

Oh cry me a river you rich fools!

 

[Mambo]

Who actually cares about their Status at a Jazz game? Jesus Christ go to a Lakers or Knicks game if you're here for that.

 

[mellow]

Hum, this is interesting. LHM needed the big money to keep the jazz, but it sounds like the LHM Group grew tired of the 100 Club (there has to be a televangilist involved with a name like that) buying tickets on the cheap and reselling them for extra $$$.

I don't care who's in the right here, but I am concerned that LHM Group may be straped for cash. If they are, the jazz could be in line to make more amazing deals like last year. How would you like the #9 pick and AK for the rights to Fran Vasquez or Tiago Splitter?

 

[Gyp Rosetti]

Hum, this is interesting. LHM needed the big money to keep the jazz, but it sounds like the LHM Group grew tired of the 100 Club (there has to be a televangilist involved with a name like that) buying tickets on the cheap and reselling them for extra $$$.

I don't care who's in the right here, but I am concerned that LHM Group may be straped for cash. If they are, the jazz could be in line to make more amazing deals like last year. How would you like the #9 pick and AK for the rights to Fran Vasquez or Tiago Splitter?

Who in the hell is Fran Vasquez? Does she even have a package?

 

[bigb]

Who in the hell is Fran Vasquez? Does she even have a package?

You don't know Fran? Dude, she's got an amazing rack!

 

[UGLI baby]

Holy ****. What douche bags.

This does not change the value of their seats. Unreal.

 

[UGLI baby]

Now my punk-*** college friends and I can finally get those courtside season tickets we've been wanting! Yes!

Might as well dude. Hard to beat 90% off!

 

[The-Joker]

Cues kicky...

come here wonder-lawyer wap us upside the head with some lawyer knowledging.

 

[Hopper]

Might as well dude. Hard to beat 90% off!

Yeah, that would be hard. Much easier to beat 100% off, I figure.

 

[sirkickyass]

Cues kicky...

come here wonder-lawyer wap us upside the head with some lawyer knowledging.

To be honest I have no idea what to think of this lawsuit. I suspect it's going to turn on the terms of the agreement. If I was licensed in Utah I could look into the e-filings for whatever court it was filed in and pull a copy of the agreement, but I'm not.

 

[green]

Knowing nothing than the article, it will probably come down to if the ticket holders can prove that the Jazz knew the value of the seats, encouraged the value of the seats to go up, and if the ticket holders have been damaged because of the new rules. If they can prove this, they will have a winning case...I would assume...

 

[sirkickyass]

Knowing nothing than the article, it will probably come down to if the ticket holders can prove that the Jazz knew the value of the seats, encouraged the value of the seats to go up, and if the ticket holders have been damaged because of the new rules. If they can prove this, they will have a winning case...I would assume...

I assume it comes down to whether or not the team promised the "elite" club exclusivity when it made the sales. If they didn't, they probably don't have a case.

 

[Hopper]

If they can prove this, they will have a winning case...I would assume...

Seems to me they would have to prove more than that.

 

[Hopper]

If I have 10 cars and sell you one, is there some implied promise, or reasonable expectation, that I will not sell any of the other 9, because the re-sale value of the one I sold you would be higher if it were the only one on the market?

 

[Hopper]

•The Jazz 100 Club is an exclusive space on Level 6 for the members of the Jazz 100 Club – the premier fan association for the Utah Jazz. On occasion, this space may be rented for holiday parties, recognition dinners, awards banquets, retirement dinners, or wedding receptions.
•Featuring breathtaking views of the downtown area, the Wasatch Range,Temple Square, and the Capitol Building, this room is perfect for your next formal function.
•The Jazz 100 Club comes with a full-service kitchen, and a full-service beverage bar.
Square Footage and Capacities

•Square Feet - 2,800
•Maximum Capacity - 206
•Theatre - 206
•Banquet - 170
•Classroom - 120

Yeah, so?

 

[Hopper]

Here's a follow-up story on this from the trib:

The 100 Club suit

You don’t see a lot of stories like the one in Saturday’s paper, with members of the 100 Club - - the biggest VIP season-ticket holders - - suing the Jazz and alleging $19 million in damages.

The suit stems from the Jazz’s decision in January to launch a transfer marketplace that allowed all season-ticket holders to sell the rights to their seats through a Jazz-operated exchange - - with the team taking a 30 percent cut of each sale.

That pretty much eliminated the exclusivity that 100 Club members had as far as selling, transferring or bequeathing their season tickets. Only 50 or 60 fans at EnergySolutions Arena used to have that ability. Now thousands and thousands do.

The members of the 100 Club involved in the suit note that a membership that came with four courtside seats sold for $800,000 as recently as October 2009. Through the ticket marketplace, rights to non-membership courtside seats have been sold for $20,000 each.

In addition, the suit notes that none of the nine 100 Club memberships on sale in January have sold since the launch of the marketplace.

Multiplying the loss of equity by the 220 seats controlled by 100 Club members leads to an estimate of $16 million in damages. The members also allege that they’ve been overbilled by Jazz subsidiaries for meals by $3 million total over the last six years.

The claim there is the Jazz bill members approximately $90 per meal served in the 100 Club when the fair market value of a comparable meal elsewhere would be $40. That $50 difference multiplies into $500,000 pretty quickly over a 43-game home schedule.

That’s the basics of the suit. There’s a strong sentiment in the document that the 100 Club members served as a way for the Jazz to raise capital in the 1980s and that they never would have received the current treatment under Larry Miller’s watch.

(Did you know, by the way, that membership is granted by an advisory board after reviewing three letters of recommendation and that members are entitled to an annual trip for two, as a group, to an exclusive resort or a road Jazz game?)

The suit also notes that after the 100 Club members voiced their issues, the Jazz attempted to unilaterally change the club’s operating rules. There were some especially interesting items in this part of the suit.

For one thing, the suit notes that the amended operating rules eliminate any equity or rights to compensation for members should the Jazz be sold or move, which prompted some speculation as to the Millers’ future intentions.

“While club members genuinely hope that it will never happen, the timing and substance of this proposal has caused members concern that [Jazz ownership] is actually planning to sell or move the team,” the suit says.

The new rules also eliminate the additional 20 percent discount on season tickets to which members formerly were entitled, which the suit claims would cost 100 Club members an additional $870,000 for tickets next season.

The current $1,000 membership transfer fee charged by the Jazz would be changed to the greater of $5,000 or 10 percent of the sale price. As noted in the suit, the sale of a membership for $500,000 now would incur a $50,000 transfer fee.

There’s obviously not a lot of sympathy for people who can afford six-figure club memberships, but imagine if you’d been a 100 Club member since the 1980s or 1990s and had been hoping to recover something from that decades-long investment in the Jazz.

--Ross Siler

It seems that one of their main complaints is that they cannot sell their membership status for more. I haven't noticed where it says what they paid to get that status to begin with.