eBay, Inc. announced that it has entered into an agreement with viagogo. It will sell StubHub to the Swiss ticket seller for $4.05 billion. The all-cash deal is expected to close in Q1 2020. Activist investors (see: Elliott Management, Starboard Value) have been pushing the e-commerce giant to unload non-core businesses (think: StubHub, Classifieds) since January. The sale will reunite viagogo CEO Eric Baker with the company he helped co-found (he left before it was sold to eBay for $310 million in ’07).
Howie Long-Short: At $4.05 billion, the purchase price comes in at least a billion dollars higher than much of the media assumed StubHub to be worth, but industry insiders “expected that it was going to take a huge number” for eBay to part ways with the profitable asset. Ticketing Solutions’ executive managing director Corey Gibbs told JWS founder Corey Leff (for a September 30th SBJ story entitled ‘Finding Value in Potential StubHub Sale’) that it would take a bid at least 15x-20x EBITDA to make a sale worth their while. If industry rumblings are correct, viagogo’s bid was worth 25x EBITDA. That kind of multiple on earnings means that significant growth is projected and most expect that growth to be driven internationally.
Viagogo was widely been considered to be the most dominant resale brand on a global basis before government regulations started to take a stronger hold in some key countries (see: the raids of 2017) and its growth was thwarted, so Eric Baker and Co. should have an idea how to leverage the StubHub business internationally. One way for StubHub to gain trust abroad will be to follow SeatGeek’s lead and become a primary market. While it would require an additional capital investment, the company would benefit if and when key teams and arenas are given the green light to offer resale. Tickets.com, which is owned by Major League Baseball Advanced Media, would be a logical target.
There is a path for StubHub to make inroads abroad without having to bring a primary marketplace under its umbrella, but it’s more about educating regulators than gaining access to inventory. Patrick Ryan of Eventellect says that “one of the really massive soccer teams will need to go to their local government and argue that a marketplace needs to exist. Authenticated and endorsed resale will decrease fraud and increase available options, which will in turn lower prices for fans and enable season ticket members to unload extra tickets.” While that may sound like a long-shot, Ryan states that the U.S. is a blueprint for resale ticket growth via regulatory changes. “Until professional sports teams embraced resale, it was considered a business that only existed in the shadows here in the states. Once teams understood the value real marketplaces had in terms of improving the fan experience, they actively worked with local and state governments to repeal antiquated scalping laws.”
While international growth over the next decade offers upside, the deal will still make sense for viagogo if they can just manage to build on StubHub’s existing U.S. marketshare. Ryan said that “there is a huge opportunity in ticketing [here in the U.S.] due to how many seats go unsold for many games and concerts. Fans need help finding relevant events and then a simple shopping experience to ensure conversion. Helping teams and entertainment companies sell more tickets by providing fans with options based on customer data really is the ‘golden ticket’.”
There is a palpable sense of relief within the resale community that viagogo was named the buyer. It was feared that if Vivid Seats took control over the eBay subsidiary, that the ticket reseller would have over 50% market share and would look to leverage that power via increased buyer and seller fees.
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