Viagogo Snaps Up StubHub For $4.05 Billion To Create An Events Industry Megamart

FIFA 2006 World Cup Playoff: Uruguay v Australia
If you miss out on tickets the first time around, you can usually count on good seats turning up on StubHub or similar after-market sites – just at a bit of a markup. Eric Baker probably knows a thing or two about that. He cofounded StubHub while in business school, then exited the company before it was sold to eBay in 2007 for $310M. Today his new company, viagogo, the world’s largest secondary marketplace for tickets to live events, just acquired it back from the online auctioneer for $4.05 billion, pending regulatory approval. That’s quite a markup, no matter how hot the ticket.
“It has long been my wish to unite the two companies,” said Baker. “I am so proud of how StubHub has grown over the years and excited about the possibilities for our shared future.”
The sentiment was shared on the other side of the deal as well. “This provides a great opportunity to expand our business, pursue new partnerships and execute our strategy. We expect a seamless transition for all our employees, partners and customers, and we are excited for what the future holds,” said Sukhinder Singh Cassidy, president of StubHub.
For eBay, which has been looking to streamline and focus its operations under interim CEO Scott Schenkel following pressure from investors Elliott Management and Starboard Value, it’s tough to turn down a great cash offer, even though StubHub brought $306M of revenue to the bottom line in Q3 2019 (up 5%).
“We believe this transaction is a great outcome and maximizes long-term value for eBay shareholders,” said Schenkel. “Over the past several months, eBay’s leadership team and Board of Directors have been engaged in a thorough review of our current strategies and portfolio, and we concluded that this was the best path forward for both eBay and StubHub. We firmly believe in the StubHub business and we are excited about its future growth potential with viagogo as its owner.”
So what’s at stake? Building an impregnable wall of market leadership in an industry driven to new heights by demographic shifts in buying habits and increasing scale and consolidation in the events segment.
A 2018 study by Harris group found that 72% of Millennials prefer to spend on experiences rather than products, driving a 4x shift in spending in the “experience economy” over the past several years. In response, we’ve seen a boom in ticketed events and festivals across multiple segments, from food and wine shows to music concerts to comic and fan conventions. As Millennials eventually move clear of their debt burden and benefit from intergenerational transfers of wealth, some expect that the consumer habits they developed early will continue to manifest in a constant demand for high-end events and exclusive, tiered ticketing. A combined giant dominating the ticket resale industry is thus well-positioned to cash in on that trend.
Within the ticketing industry, reaction was mixed. “Our first thought was, ‘how does viagogo have four billion dollars to pay for anything?’ That’s just a huge amount of money,” said one executive.
The other concern is that the technology to build and scale a secondary market ticketing platform is not rocket science, and many large event companies and sports leagues are reportedly working on their own solutions. Insiders estimate the cost of development and marketing to be in the hundreds of millions at most, a far cry from the $4 billion that viagogo just handed over to eBay. And, of course, the secondary ticketing market depends on first-party sellers, including near-monopoly Ticketmaster - not a company known for leaving money on the table if it can find a way to extract it from partners, venues or consumers.
Viagogo is obviously betting on the value of consolidation, scale and brand. “Combined, these complementary marketplaces will sell hundreds of thousands of tickets daily across more than 70 countries, giving fans seamless access to a wider selection of inventory around the world, while sellers, teams and artists will have the ability to more effectively reach a broader global audience,” eBay said.
“Bringing StubHub and viagogo together will allow us to drive further expansion and innovation, and create a more competitive offering for live event fans globally,” said Cassidy.
Will this deal pay off for anyone besides eBay shareholders? Buy your ticket, place your bets folks!