U.S. patent application number 14/202054 was filed with the patent office on 2014-09-04 for method, apparatus and article-of-manufacture for the creation, issuance, trading, and exercise of refund options for attendance rights.
This patent application is currently assigned to The Ticket RESERVE, Inc.. The applicant listed for this patent is The Ticket RESERVE, Inc.. Invention is credited to Sanjay P. Muralidhar.
Application Number | 20140249868 14/202054 |
Document ID | / |
Family ID | 37914208 |
Filed Date | 2014-09-04 |
United States Patent
Application |
20140249868 |
Kind Code |
A1 |
Muralidhar; Sanjay P. |
September 4, 2014 |
METHOD, APPARATUS AND ARTICLE-OF-MANUFACTURE FOR THE CREATION,
ISSUANCE, TRADING, AND EXERCISE OF REFUND OPTIONS FOR ATTENDANCE
RIGHTS
Abstract
Computer-related methods, apparatus, and/or articles of
manufacture to permit/facilitate the creation, marketing, and/or
distribution of options to purchase tickets or obtain refunds to a
particular future event, particularly an elimination format
competition, when the chosen competitor's qualification for such a
game is currently uncertain, but where the uncertainty will be
resolved prior to the commencement of the particular future
event.
Inventors: |
Muralidhar; Sanjay P.;
(Plano, TX) |
|
Applicant: |
Name |
City |
State |
Country |
Type |
The Ticket RESERVE, Inc. |
Lake Forest |
IL |
US |
|
|
Assignee: |
The Ticket RESERVE, Inc.
Lake Forest
IL
|
Family ID: |
37914208 |
Appl. No.: |
14/202054 |
Filed: |
March 10, 2014 |
Related U.S. Patent Documents
|
|
|
|
|
|
Application
Number |
Filing Date |
Patent Number |
|
|
13401260 |
Feb 21, 2012 |
8671028 |
|
|
14202054 |
|
|
|
|
12762357 |
Apr 18, 2010 |
|
|
|
13401260 |
|
|
|
|
11716072 |
Mar 8, 2007 |
|
|
|
12762357 |
|
|
|
|
09435168 |
Nov 5, 1999 |
7206755 |
|
|
11716072 |
|
|
|
|
Current U.S.
Class: |
705/5 |
Current CPC
Class: |
G06Q 40/04 20130101;
G06Q 50/188 20130101; G06Q 30/0617 20130101; G06Q 30/02 20130101;
G06Q 10/02 20130101; G06Q 30/0619 20130101; G06Q 30/0601
20130101 |
Class at
Publication: |
705/5 |
International
Class: |
G06Q 10/02 20060101
G06Q010/02 |
Claims
1. A method for providing a marketplace for an option right to
attend a future event, the method implemented on a computer system
and comprising the steps of: facilitating a creation of a
contingent right to purchase a ticket to a future event coupled
with an obligation to purchase the ticket, the future event being
an event at which spectators pay to view activities having a
restricted attendance, wherein the contingent right and the
obligation to purchase the ticket vest upon an occurrence of a
future outcome that is uncertain at the time of the creation of the
contingent right; providing an online marketplace for a seller to
offer for sale the contingent right; providing a valuation of the
contingent right to the seller based on bidding activity by market
participants; providing a platform for a bidder to view the offer
for sale and submit a bid to purchase the contingent right, the
platform including a communication link wherein, when the bidder
submits the bid, the seller receives the bid through the
communication link and the seller has an option to accept or reject
the bid; allowing for a transfer of the contingent right from the
seller to the bidder when the seller accepts the bid; and allowing
the bidder to resell the contingent right in the online
marketplace.
2. The method of claim 1 wherein the future outcome includes
participation in the activities of the future event by certain
participants that are uncertain at the time of the creation of the
contingent right.
3. The method of claim 2 wherein the certain participants include
at least one of a team, an athlete, a band, and a performer.
4. The method of claim 1 wherein the future outcome is an
occurrence of the future event itself, which is uncertain at the
time of the creation of the contingent right.
5. The method of claim 1 wherein the online marketplace includes an
auction.
6. The method of claim 1 further comprising storing information on
a plurality of future events, the information including one or more
details regarding the future events.
7. The method of claim 6 wherein the one or more details include at
least one of a number of seats, a location of seats, a class of
seats and their face values, and tentative times and dates for the
future event.
8. The method of claim 1 wherein the future event is a competitive
sporting event with a playoff style elimination.
9. A method for providing a marketplace for rights to attend a
future event, the method implemented on a computer system and
comprising the steps of: receiving information from a ticket
issuing authority regarding a ticket being allocated for a creation
of an option right to attend a future event, the future event being
a competitive sporting event at which spectators pay to view a
competition having a restricted attendance, wherein the option
right vests upon occurrence of a future outcome that is uncertain
at the time of the creation of the option rights, and wherein the
option right includes an obligation to purchase the ticket upon
occurrence of the future outcome; providing access for market
participants to view the option right and an ability to search a
plurality of option rights offered in the market based on specified
search criteria; providing market participants with an ability to
post bids on option rights they are interested in acquiring, the
option rights including specifications pertaining to a plurality of
option factors; verifying posted bids to determine whether the bids
are accepted, rejected, or pending; and performing at least one of
(i) processing a payment if a bid is accepted, (ii) notifying a
market participant that posted a bid that the bid is rejected, or
(iii) forwarding pending bids to a market clearing mechanism
configured to determine an optimal pricing to match supply and
demand of the option rights.
10. The method of claim 9 wherein the option factors include at
least one of a participant competing, a round of play, a series of
play, a number of seats, and a bid price.
11. The method of claim 9 wherein the information includes at least
one of a number of seats, a location of seats, a class of seats, a
face value of a seat, a tentative time, and a tentative date.
12. The method of claim 9 wherein the future outcome is
participation in the activities of the future event by certain
participants that are uncertain at the time of the creation of the
option rights.
13. The method of claim 12 wherein the participants include at
least one of a team and an individual athlete.
14. The method of claim 9 wherein the future outcome is occurrence
of the future event itself, which is uncertain at the time of the
creation of the option rights.
15. The method of claim 9 wherein the access for market
participants comprises access to an auction.
16. The method of claim 9 further comprising storing information on
a plurality of future events, the information including details
regarding the future events.
17. The method of claim 9 further comprising facilitating a revenue
maximization objective by adjusting criteria associated with the
option rights, the criteria including at least one of a minimum
price reserve level and a volume offered.
18. The method of claim 9 wherein the market clearing mechanism is
configured to match open sell offers and purchase bids.
19. The method of claim 9 wherein the market clearing mechanism is
configured to keep a posted sell offer open for a defined period of
time dependent upon the posted bids.
20. The method of claim 9 wherein the market clearing mechanism is
configured to close a posted sell offer if there are no matched
purchase bids for the sell offer at the end of a defined period of
time.
Description
CROSS-REFERENCE TO RELATED APPLICATIONS
[0001] This application is a continuation of U.S. patent
application Ser. No. 13/401,260 filed Feb. 21, 2012, which is a
continuation U.S. patent application Ser. No. 12/762,357 filed Apr.
18, 2010 (now abandoned), which is a continuation of U.S. patent
application Ser. No. 11/716,072 filed on Mar. 8, 2007 (now
abandoned), which is a divisional of U.S. patent application Ser.
No. 09/435,168 filed Nov. 5, 1999 (now U.S. Pat. No. 7,206,755
issued Apr. 17, 2007). The entire content of each of the above
applications is hereby incorporated by reference in its
entirety.
FIELD OF THE INVENTION
[0002] This invention generally relates to the field of
computer-implemented business methods and financial instruments;
more particularly, the invention relates to a method, apparatus and
article-of-manufacture to permit/facilitate the creation of the
options to purchase attendance rights (tickets), and derivative
instruments on these options, to a particular event and/or
subsequent events in an elimination format (or selection based on
performance) competition.
BACKGROUND OF THE INVENTION
[0003] In almost all events that have an elimination style
narrowing of the field or a process of selection of a limited
number of participants from a larger pool of participants based on
prior performance (sports competitions), there are a number of
problems faced by supporters:
[0004] Inability to purchase desired attendance rights in advance:
For playoff type events, fans would like to purchase tickets at the
start of the season, but since the outcome is uncertain, the
authorized ticketing authorities (e.g., team owners) do not offer
these tickets until continuation in the tournament is guaranteed
(e.g., end of the regular season). Therefore, there is long lead
time between when individuals would like to purchase tickets to
these subsequent competitions and when such tickets are usually
offered.
[0005] Requirements to purchase unwanted tickets, merely to
guarantee attendance at a particular event of interest: For
tournament type events, fans typically have to commit to buying
tickets without being sure who the actual competitors would be,
with the possibility of the two participants being competitors that
the fan has no desire to watch.
[0006] Reliance on "scalpers" and other unreliable sources: As the
information on who will participate in future rounds evolves, an
individual may find that it is more difficult to obtain tickets to
these future rounds. Some preference may be given to season ticket
holders, but there is normally a long wait list and a greater
financial cost to become a recipient of a season ticket. Therefore,
individuals are often forced to purchase such tickets through
"scalpers," "ticket brokers," or other unsavory characters or risk
not obtaining such tickets at all.
[0007] Inability to actively manage "ticket availability" risk: For
fans willing to absorb the risk of their options never vesting,
there is also potentially an advantage to purchasing an "option" to
the ticket early on when such uncertainty is great vis-a-vis
waiting until there is absolute certainty about the competitor's
participation in the chosen event/game. Such "option" could
potentially be offered to them at lower cost (i.e., "discounted" in
accordance with the probability that the competitor will not
qualify for the event). Currently, fans have to wait for the
outcome to be finally decided and they risk either not getting a
ticket allocation or having to pay a significant premium to
scalpers.
[0008] Lack of a secondary market: Currently, there is no official
secondary market for post-season tickets, so that if individuals
cannot attend such events, they are left with the problem of
disposing of such tickets themselves.
[0009] Moreover, in addition to creating various problems for fans,
the current method for selling and distributing elimination- or
competition-based attendance rights is not particularly well-suited
to the interests of owners/organizers either. Among the problems
faced by the event organizers/team owners are:
[0010] Absence of an efficient market clearing mechanism: Fan
interest in attending these higher round competitions varies
depending upon the competitors--i.e., they would want to attend if
their favorite competitors advance, but would not necessarily care
if their preferred competitors are eliminated. Typically, however,
when sporting events reach the point where such fan interest is at
a peak (when a team has qualified for the playoffs or the final
match-up of a tennis tournament is set), there is a substantial
imbalance between the supply of tickets for the games (which is
fixed) and the demand for these tickets. Since prices tend to be
fixed (by the teams or tournament organizers), there is no
efficient market clearing mechanism and tickets are sold on a first
come/first-served basis. There is a considerable unmet demand at
this point that is never satisfied by the event organizer and hence
goes to waste.
[0011] Revenue lost to unexploited demand: As explained above, team
owners/event organizers are not maximizing their revenues.
Currently, only teams that qualify for post-season play make
revenues from such ticket sales. To illustrate this point, in a
tournament with 64 players, the organizers can allocate 5,000 seats
(or 2,500 seats per optioned contestant) for the final match to
options holders. If there were sufficient demand for each of the
contestants, the organizers could sell up to 160,000 options on all
the contestants, and only 5,000 of these options will vest.
Similarly, in team sports with a playoff style elimination, all
teams can issue such options and get some revenue, where currently,
no such opportunity exists. In this way, the organizers have
captured all the demand available (thereby maximizing revenues),
fans have been able to match their needs to the financial cost of
satisfying the need, and the event is attended by fans most
interested in the event, because the options allow such
matching.
[0012] Risk that "popular" teams/competitors will be eliminated in
early rounds: Under the current system, team owners/event
organizers may face financial difficulties if, for example, the
qualifying competitors are not popular, of if all the "favorites"
are eliminated in the early rounds of competition. In these
instances, there may be very little fan interest in the later
round(s) of competition and expected revenues from these rounds may
never, in fact, materialize.
[0013] Unpredictable revenues, based on performance: Under the
current system, team owners (and event organizers) have little, if
any, ability to hedge against the risk of poor performance or
"upsets"--which may substantially diminish fan interest in the
event.
[0014] Generally speaking, options represent the right to acquire
or dispose a specified asset at a predetermined price within a
defined time period. The predetermined price is referred to as the
"strike price" and the date on which the option ceases to be
effective is called its maturity/expiration date. These parameters,
along with the current market value of the underlying asset,
largely determine the value of the option. Other factors in the
valuation are the volatility of the value of the underlying asset
(a measure of the probability that the current value will be
favorable vis-a-vis the strike price) and the interest rate (to
quantify the carrying cost or the cost of financing the purchase).
For a detailed discussion on options, see John Hull "Options,
Futures and Other Derivative Securities," Prentice-Hall, Chapter
7.
[0015] Alternative forms of options have included those that
provide a pre-specified payoff when an event occurs during a
defined time period. These latter types of options are more in the
nature of an insurance policy type of application than a true
option. See, e.g., U.S. Pat. No. 4,766,539. Examples of these are
options on bonds that can be purchased by the owner of the option
from the seller of the option, at a pre-specified price, should an
earthquake occur in a specified area during a specified period of
time.
[0016] Options have been used for hedging the risk of changes in
the value of the underlying asset or occurrence of event, or for
investment and speculation. The option seller, who is willing to
make this commitment to the option purchaser, receives the proceeds
from the sale of the option and is better off for having been able
to sell such rights. Computerized methods for trading traditional
futures/options have existed for many years. See, e.g., U.S. Pat.
No. 4,903,201, incorporated herein by reference. There have been
other applications of options-type instruments beyond financial
instruments and commodities, such as options to purchase airline
tickets. See, e.g., U.S. Pat. No. 5,797,127, incorporated herein by
reference. And there are currently computer systems that manage the
sale and issue of tickets to a variety of events and under various
sale conditions, like refundable and non-refundable, fixed terms
and changeable terms, and so on, e.g., U.S. Pat. Nos. 5,598,477 and
5,953,705, incorporated herein by reference.
[0017] At present, significant problems and inefficiencies exist in
the selling/distribution of post-season and tournament attendance
rights, and there remains a significant need for improved methods,
apparatus and articles-of-manufacture to facilitate efficient
sale/distribution of such attendance rights.
SUMMARY OF THE INVENTION
[0018] Accordingly, one object of the present invention relates to
computer-related method(s), apparatus and/or
article(s)-of-manufacture that solve(s), at least in part, one or
more of the above-identified problems with the current system for
marketing and distributing attendance rights.
[0019] Another object of the invention concerns computer-related
method(s), apparatus and/or article(s)-of-manufacture to
permit/facilitate the creation, marketing and/or distribution of
options to purchase tickets to a particular future event,
particularly an elimination format competition, when the chosen
competitor's qualification for such a game is currently uncertain,
but where the uncertainty will be resolved prior to the
commencement of the particular future event.
[0020] Still another object of the present invention relates to
creation of an online, real-time computer-based system and method
to facilitate the initial marketing and valuation of these options,
as well as the subsequent trading of these options until their
expiration.
[0021] A yet further object of the invention relates to attendance
right option marketing/trading systems and methods which display
the status of a host of options in multiple events, for different
stages of competition, and for a multitude of competitors, and
which manage a plurality of individual investment/trading accounts,
allowing for the purchase and subsequent sale of the displayed
options through a payment processing agency (credit card charge or
bank facility), payment of revenue share amounts to a ticket
issuing authority, a clearing mechanism to manage trades between
individuals, charge a transaction fee to the individuals
participating, and final payment, if necessary, back to the
individuals who may have credit balances if so requested.
[0022] Still further objects of the invention relate to
computer-based method(s), apparatus and/or
article(s)-of-manufacture to store data on all transactions, track
current and historical quotes of the various options traded,
compute indices that track the investment values represented by
various options, compute the relative probabilities that the option
prices imply of various outcomes, and provide tools to facilitate
option valuation for the participating individuals.
[0023] And an additional object of the invention relates to the
creation, marketing, trading and valuation of derivative financial
instruments based on various attendance right options.
[0024] These, and other objects/advantages, are realized, at least
in part, by the present invention, the general aspects of which are
outlined below.
[0025] Generally speaking, and without intending to be limiting,
one aspect of the present invention relates to a computer-based
method for marketing attendance right options, comprising, for
example: storing, in a computer, information related to attendance
right options; linking said computer to at least one user terminal
through a data communication link; and displaying, at said user
terminal, information concerning selected attendance right
option(s). "Storing" may include writing said information into a
random access memory, writing said information into a magnetic
storage device, and/or writing said information into an optical
storage device, and may also include storing information
identifying a particular attendance right and a current offer or
bid for the option to purchase said particular attendance right,
storing information identifying a particular attendance right and a
current highest bid for the option to purchase said particular
attendance right, storing a complete bid history concerning the
option to purchase said particular attendance right, storing option
expiration information, storing information related to vesting of a
particular attendance right option (such as an identification of a
particular team or competitor who must qualify for the particular
event, an identification of a particular round of play, and/or an
identification of home or away status of the particular event).
Preferably, each option includes an associated certificate or
certification number.
[0026] The data communication link preferably includes at least one
internet segment, and the linking process preferably includes
authenticating the user terminal as an authorized user.
[0027] "Displaying" preferably involves use of an internet browser,
and includes displaying information identifying a particular
attendance right and bid(s) and/or offer(s) on the option to
purchase said particular attendance right, information identifying
a particular attendance right and a current highest bid for the
option to purchase said particular attendance right, a complete bid
history for said particular attendance right, a date on which a
sale of the option to purchase said particular attendance right
will take place, account balance information for the user of said
user terminal, option position information for the user of said
user terminal, up-to-date option valuation information (wherein the
option valuation information is preferably computed from current
sports wagering data and/or user-input probabilities concerning
option-vesting contingencies), and/or the net profit/loss for
positions currently held by the user of said user terminal (wherein
net profit/loss is preferably computed from the current
bid(s)/offer(s) on positions similar to those held by the user).
"Displaying" may further include sending notification to customers
regarding the availability of certain specified options through
available communication mechanisms (e.g., phone, email, broadcast,
letter, etc.).
[0028] Other aspect(s) of the invention relate to receiving a
command, over said communication link, from a user of said user
terminal, which may include a command to purchase the option to
purchase a particular attendance right at a previously-displayed
offer price, a command to place a specified bid on the option to
purchase a particular attendance right, a command to cancel a
specified bid on the option to purchase a particular attendance
right, and/or a command to place and maintain a bid, higher than
the current highest bid, but subject to a limit, on the option to
purchase a particular attendance right.
[0029] Yet another aspect of the invention relates to receiving
bid(s) and/or offer(s) on selected attendance right options, and,
optionally, clearing said bid(s) and/or offer(s) through an auction
or market clearing process that serves a revenue maximization
function for the seller. This may involve a Dutch auction, or an
open outcry auction process, or other types of sealed bid/disclosed
bid auctions. Further, in matching bid(s) and offer(s), the
mechanism may be as simple as pure matching at the highest price
and volume levels, or may incorporate more sophisticated ways of
clearing the market, like a specialist market maker function or
automated closing of the bid offer spread.
BRIEF DESCRIPTION OF THE DRAWINGS
[0030] Certain aspects of the present invention are depicted in the
accompanying drawings, which are intended to be considered in
conjunction with the detailed description below, and which are
intended to be illustrative rather than limiting, and, in
which:
[0031] FIG. 1 is a chart that illustrates various participants and
their roles in relation to the invention;
[0032] FIG. 2 is a process flowchart exemplifying the opening of an
account to facilitate the transactions envisioned in the
invention;
[0033] FIG. 3 illustratively depicts the flow of information
associated with the initial marketing/valuation of options in
accordance with the present invention;
[0034] FIG. 4 illustratively depicts the flow of information
associated with the sale of options held by an account holder in
accordance with the present invention;
[0035] FIG. 5 illustratively depicts the flow of information
associated with the purchase of options by an account holder in
accordance with the present invention;
[0036] FIG. 6 illustratively depicts the flow of information
associated with the exercise of options held by an account holder
upon maturity in accordance with the present invention;
[0037] FIG. 7 illustratively depicts the flow of information
associated with the settlement of the account balance by payment to
the account holder in accordance with the present invention;
and,
[0038] FIG. 8 depicts, in block diagram format, several functional
blocks associated with the data storage and analytics performed by
computer system.
DETAILED DESCRIPTION OF THE INVENTION
[0039] Referring to FIG. 1, illustrating the various participants
and their interaction envisioned in the present invention, computer
system 10 preferably comprises a hub, which manages all the
transactions and information flows among the various players.
Initially, the ticket issuing authorities 20 feed into computer
system 10 various details related to tickets being allocated to the
creation of options (e.g., number of seats, location of such seats,
different classes of seats and their face values, tentative times
and dates for the specific events/games, etc.). Customers 30
interested in these options may access computer system 10 via a
communication link (of any sort, including, but not limited to,
internet, telephone, cable, wireless, optical, etc.) and open
accounts to transact their trades, and will thereafter be able to
bid on initial issues of the options as well as sell or buy options
going forward. Payments made by customers will preferably be
managed through an interface with a payment agency 40 (such as a
credit card payment processing company, electronic payment agency
or bank). Dues collected will be transferred to a bank account 50,
with information feeds back to the payment agency and the computer
system, so as to maintain account trading histories up to date. The
revenue share of the ticket issuing authorities 20 will also be
transferred upon collection from customers. Further, ancillary
business may be transacted by third parties 60 using the data
within the computer system block 10, thereby yielding additional
revenue streams to bank account 50.
[0040] In accordance with the invention, an option is preferably an
event-strike option with the following characteristics: the
individual purchaser of the option acquires the right to purchase
tickets at a predetermined price (or the payoff) from the seller of
the option, should the competitor on whom they chose the option
advance to a pre-specified higher round of competition (or the
strike event). The maturity of the option is the date on which it
is finally/irrevocably decided whether the competitor progresses or
not. If the competitor on whom the option was purchased does not
qualify for the specified round of competition, the option expires
worthless and the owner of the option receives no compensation. The
settlement of the option will take place within an appropriate time
frame subsequent to maturity and prior to the specified event
commencing. The settlement could take place in a number of ways
including physical or electronic acknowledgment of ownership of
such tickets.
[0041] For example, the customer would pick a team/player
underlying the option purchased to reach a specified higher level
round of competition (e.g., wild-card, quarterfinals, semifinals,
up to and including the final round of competition) in the
tournament. If that team/player qualifies for the round of
competition specified in the option contract, the customer has the
right to purchase an attendance ticket from the authorized
ticketing body at a given fixed price. The higher round of play
could be either a single event elimination or a multiple event
series. The customer can purchase the option to any or all games of
the chosen round of competition. The invention is applicable to
tournaments where there is a regular season that determines
qualification for an ensuing play-off contest (e.g., basketball,
football, athletics, golf, soccer, cricket tournaments) or to pure
elimination style competitions (e.g., match play golf, tennis,
figure skating, etc.).
[0042] Reference is now made to FIG. 2, which illustrates the
opening of an account to facilitate the transactions envisioned in
accordance with the invention. Here, customer 110 accesses an
online web page 120 to fill out the information required to open an
account. This information preferably includes name, addresses,
credit card information, dollar limit in the trading account,
demographic/personal information, and contact information, like
email and phone number(s). There are alternative ways to collect
this application information, which can be done in writing, over
the telephone and through other technologies that are being
developed currently (e.g., WebTV, etc.). Once the information is
received, the credit authorization process 130 secures a payment
authorization from a payment processing agency 140 and blocks out
the limit of funds required and requested by the customer. This
information is relayed to the database and computer system 150 that
manages the account information, which assigns an account number,
password and other requisite information and communicates this
information back to the customer 110 to facilitate use.
Collectively, functional units 120, 130 and 150 are preferably
implemented on a single computer system 160, but may alternatively
distributed over a number of servers/nodes connected in a
network.
[0043] Reference is now made to FIG. 3, which illustrates the
information flow associated with the initial marketing/valuation of
options in accordance with the present invention. Here, ticket
issuing authority 210 provides details to computer system 280
regarding the tickets being allocated to the creation of options
(e.g., number of seats, location of such seats, different classes
of seats and their face values, tentative times and dates for the
specific events/games, etc.). These are then posted on the online
service 220 (or other information-disseminating facilities that may
be developed) so that account-holding customers 230 can access the
information they require to decide on the various options they
would be interested in through search functionality associated with
their accounts. Customers may then, through their accounts 230,
post bids on options they are interested in acquiring, with
specifications on options pertaining to the underlying competitor
chosen, the round of play and potentially the specific games if the
playoff is a series playoff, number of seats, and bid price.
Verification module 240 confirms that all information is valid and
correctly input, and provides confirmation back to the customer on
the bids submitted or rejected. Qualified bids are then forwarded
to the market clearing mechanism 250, which determines the optimal
pricing to match supply and demand. It is envisioned that this will
occur through a Dutch Auction, but other auction or bid and offer
type matching can easily be adopted. See, e.g., U.S. Pat. Nos.
5,890,138, 5,905,975, 4,674,044, and 5,950,176, each incorporated
herein by reference. Also, conditions like minimum price reserve
levels and adjustments of volume offered may be allowed to
facilitate a revenue maximization objective. See, e.g., previously
incorporated '201 patent. For bids that are accepted, there would
be a credit card payment process with the payment agency 260, which
would then transfer the funds to the bank account 270, from which
the revenue share to the ticket issuing authority 210 is remitted.
Market clearing mechanism 250 also sends notification to the
customer accounts 230 on order status, e.g., orders filled and
unfilled, positions, payments received and account balance, if any.
This initial offer of options can be made in one offering prior to
the beginning of any competitive process or can be made in a series
of offerings as the competitive process progresses and the
uncertainty of the outcome is lower (thereby increasing the price
of the option), but preferably not once the outcome is finally
decided.
[0044] Reference is now made to FIG. 4, which depicts an
illustrative information flow associated with the sale of options
held by an account holder in accordance with the present invention.
Here, the customer accesses his/her customer account 310 to access
the option positions held in the account. The customer may then
have access to functionality 320, to review information that helps
him/her decide on the details of an intended sale offer. This
functionality 320 includes historical transactions (volume and
price), valuation tools, other open offers to sell and open bids to
purchase. Once this process is completed, the customer will
typically post 330 a sell offer. This information is then forwarded
to the market clearing mechanism 340. Clearing mechanism 340, as
previously described, preferably either matches an open bid to
purchase or keeps the posted sell offer open for a defined period
of time during which the system attempts to match open sell offers
and purchase bids, closing transactions as long as the purchase
bids are at least greater than the sell offer, and closing on the
lower volume if there is a mismatch. During this period that the
sell offer is open, the customer can change its details by looping
back to 320 and modifying the offer as necessary. If, at the end of
the defined period of time, there are no matched purchase bids for
the sell offer, the order is closed 370 and the account
position/trade status is updated 360 accordingly. Once the match is
performed, the transaction moves to the settlement 350 to complete
the transaction, including generating the information necessary to
update the account positions, credit the selling customer's account
and update 360 his/her account balance.
[0045] Reference is now made to FIG. 5, which depicts an
information flow associated with the purchase of options by an
account holder in accordance with the present invention. This
represents the other party to the transaction described above.
Here, if the customer does not already have an account, he/she
would open an account 410, as described in FIG. 2, and then could
proceed to 420, which is similar to 320, as described in connection
with FIG. 4. Once this process 320 is completed, the customer will
post a purchase bid 430. This information is then forwarded to the
market clearing mechanism 440, which processes the bid as in 340
(described in connection with FIG. 4). During the period that the
purchase bid is open, the customer can change its details by
looping back to 420 and making changes as necessary. If, at the end
of the defined period of time, there is no match, the offer is
closed 490, and the account position/trade status is updated
accordingly. If a match is found, the transaction moves to 450 for
the settlement, which involves updating account positions and
collection of dues through the payment processing agency 460/470
from the buyer, in a similar manner as laid out in FIG. 3, and
updating the concerned account balances 480.
[0046] In FIGS. 4, 5 and 6, the market clearing mechanism may take
other forms if required to provide liquidity to the marketplace.
These would include "marketmaker" functions, open outcry auctions
with or without reserve levels, sealed bid auctions, etc. Also,
bids and offers may be allowed to scale up or down based on
customer defined rules to seek matches.
[0047] Reference is now made to FIG. 6, which depicts an
information flow associated with the exercise of options held by an
account holder in accordance with the present invention. Here, in
block 510, computer system 590 determines all open option positions
that vest (or qualify) for the purchase of attendance
rights/tickets and processes 520 the relevant options for ticket
purchases. The payment processes related to the ticket purchase
(e.g., blocks 530 and 560) is similar to that described in FIG. 3,
as is the remittance of the associated funds to the ticket issuing
authority (e.g., block 550). Information is also sent (from 520 to
570) as part of the ticket purchase process to facilitate delivery
of the tickets, with the necessary information (confirmation
numbers, names, etc.) being sent to the ticket counter.
[0048] Reference is now made to FIG. 7, which depicts an
information flow associated with the settlement of the account
balances by payment to account holders in accordance with the
present invention. If a customer requests that he/she be paid the
account balance in his/her account, the customer account, at 630,
is accessed and the balance is verified by computer system 620.
Then, either a check is processed and sent to the customer or funds
are processed 650 for a credit to the customer's credit card
account (in much the same manner as a refund would be processed by
a vendor). Also, the customer's account 630 is updated to reflect
the appropriate account balance.
[0049] Reference is now made to FIG. 8, which depicts certain
exemplary functional blocks associated with the data storage and
analytics aspects of the present invention; in other words, some of
the information that would be captured and stored by the computer
system is described. As shown, a position information module 720
contains information on trades, open positions and holdings, which
is preferably fed by clearing mechanism 770. Clearing mechanism 770
preferably performs all trades, using information from customer
accounts module 760, and feeds resulting data to position
information module 720. Up-to-date position information is supplied
(by position information module 720) to a data warehouse 730, which
can be accessed by custom designed display screens and reports.
Further, analytic algorithms and code modules can be run against
this warehouse data for the purpose of generating financial
derivative instruments on the listed options; and indices and
probabilities to quantify the odds of the various competitors
reaching the different levels of competition can be generated.
These are preferably used to evaluate competitors across the
specified competition or across competitions (i.e., either in
different locations or across time periods) and even develop
comparative rankings Some of this data can also be sent/sold to
vendors 750 interested in these analytics, published for public
dissemination, used in contests, etc.
[0050] The above described arrangement is largely illustrative of
the principles of the current invention. For example, while the
illustrative embodiment(s) is/are described in terms of "options"
to purchase particular attendance rights, the invention can be
alternatively implemented by issuing/marketing "contingent
attendance rights"--i.e., an actual attendance right for an event
that may, or may not, take place, such as a "second round home
playoff game at Texas Stadium." This contingent attendance right
is, in effect, the same as an option, but does not require that the
ticket issuing authority keep track of vesting and actually issue
tickets after the vesting period. Other facilities provided by the
creation of these options include the ability to split the rights
to post-season tickets associated with season ticket ownership.
Further, another alternative implementation could be the sale of
tickets to such events with a refund option and a refund fee that
would de facto be the option price at initial issue. Finally, it is
not critical to this invention that a secondary market to trade
these options exists. This is a feature that adds functionality
useful to customers but the rest of the advantages of this
invention are still available to all parties if only the initial
issue of options was available.
[0051] Other advantages, modifications, and adaptations of the
invention will be readily apparent to those skilled in the art. For
example, the present invention allows fans to buy attendance
options well in advance--as early as before the entire competition
starts and all the way until the settlement time--before the
commencement of the actual event(s) covered by the option(s).
Therefore, fans are able to lock-in the ability to purchase
attendance rights to certain events under certain desired
circumstances (e.g., round of play, competitors, etc.). Option
holders can thereafter trade their options (until maturity of the
individual options), and continue to do so based on the ongoing
performance of the competitors.
[0052] Based on the prices of the multitude of options on all
competitors and competitions, the present invention also
facilitates the development of derivative instruments on these
options and indices, and probabilities and statistical measures to
quantify the odds of the various competitors reaching the different
levels of competition. These can be used extensively to evaluate,
among other things, competitors across the specified competition or
across competitions (i.e., either in different locations or across
time periods).
[0053] The present invention preferably--though not
necessarily--works in conjunction with fixed price attendance
rights/tickets, and allows the options to capture the market
premium (or consumer surplus) that supply and demand imbalances
would create.
[0054] The invention allows all team owners to generate revenues by
selling options for potential post-season play, so that there is
some potential revenue (no matter how small), even if the team does
not qualify. For tournament event organizers in single elimination
style competition (e.g., tennis tournaments), the present invention
allows for the sale of multiple options on a fixed number of seats,
thereby expanding the market size (and hence revenues)
significantly. The invention also allows team owners/event
organizers to hedge against the uncertainty of future revenues.
[0055] Unlike traditional financial options, the options marketed
and traded in accordance with the present invention relate to
attendance rights to events under very specific circumstances, like
defined competitors and round of play. Hence, the outcome (i.e.,
whether the option will be valuable or "in the money") is uncertain
at initial issue and for a large part of the trading period.
[0056] Vesting of the options takes place when the chosen
competitors underlying the option qualify for the competitive event
specified. Such vesting preferably--though not
necessarily--produces an obligation to purchase attendance
rights/tickets to the specified event at a face value price of
those attendance rights/tickets. In traditional options, the
vesting takes place over time leading up to maturity, and options
are exercised only if they are "in the money" or the strike price
is favorable to the price of the underlying asset.
[0057] Unlike traditional ticketing systems, which only allow for
returns and/or refunds (if at all), the present invention envisions
the options either expiring worthless or being converted into the
purchase of tickets. Further, a secondary market will be created to
allow for the ongoing trade in these options, and to allow
subsequent participants to enter and also create liquidity for
initial participants.
[0058] Thus, the present invention fills a void of unmet market
ticket purchaser demand; it provides a product/service that allows
the various market participants to interact freely to satisfy such
demand; and it simultaneously provides a mechanism that
incorporates individuals' subjective evaluation of competitive
outcomes to value such products (a price discovery mechanism), and
further facilitates the trading of such a product based on an
individual's valuation of the option vis-a-vis the rest of the
purchasers and sellers (i.e., the marketplace). The present
invention also facilitates the hedging of risks. For example, in
some competitive events, the individual must purchase tickets today
for future rounds, without the knowledge of who the participants
may be. As the competition evolves, a ticket holder maybe less
interested to see a certain round of competition and would like to
hedge against this risk. If he/she has purchased tickets for a
particular round of competition, he/she could potentially sell an
option on his/her ticket should a competitor he/she dislikes be a
competitor in that round. However, another individual may have
exactly the opposite desire, and may want to be cautious about
spending the entire cost of the ticket on the day tickets go on
sale, as he/she may like the competitor that the current holder of
the ticket dislikes, but think that that competitor has a low
probability of advancing. The invention facilitates the matching of
these two desires to create an efficient, market-driven
outcome.
* * * * *