Sources close to deal say eBay was looking for a big sale and estimate the price tag reflects 15 to 20 times earnings before interest, taxes, and amortization. (eBay doesn't break out earnings for StubHub, but the company's third quarter 2019 report shows StubHub had $306 million in sales revenue for the quarter.)
The move shifts control of the biggest player in the $10 billion secondary market from the well-known eBay brand to a relatively unknown company in the U.S. and Canada. Much like tech startups Uber and Airbnb, StubHub quickly grew in the 2000s by taking a liberal view of the countries' hodgepodge of ticketing laws and lack of federal legislation to sell tickets to almost any event without restrictions. Its dominance in North America was not without controversy, but eBay’s well-funded team of political lobbyists and its consumer oriented pro-resell campaigns helped support the company’s growth.
It’s a different story for Viagogo, which has been in a number of regulatory bodies' the crosshairs in recent years. That includes the U.K.’s Competition and Market Authority (CMA), which raided both StubHub and Viagogo's offices in 2017 as it probed alleged breaches into consumer laws.
Last year the CMA secured a court order against Viagogo that forced it to disclose the risks of buying tickets on the secondary market when artists like Ed Sheeran began turning away fans who bought tickets through Viagogo. After twice accusing Viagogo of not adhering to the order, in September the CMA announced it was suspending a court action to find Viagogo in contempt of court after it said the ticketing company “addressed outstanding concerns about how it presents information to its customers.” In July, Google suspended Viagogo from advertising on the site over similar concerns with the company’s policies.
“We worked with Google for a long time and we're happy that we've worked through our issues and everything is back to good,” Baker says, noting that the company is “back to our normal relationship with Google,” although he didn’t provide details on how the issue had been resolved.
The next hurdle for Viagogo will be regulatory approval of the Stubub acquisition, which could be a challenge since the CMA oversees mergers in the U.K. and a number of anti-resale groups will likely oppose the merger. In the U.S., the acquisition comes as lawmakers in the House Energy and Commerce committee open an investigation into ticketing, sending letters to the heads of a handful of ticketing companies -- including Live Nation and StubHub -- inquiring about their business practices.
Baker could not address any regulatory issues but said the acquisition was personal for him -- he started StubHub in 2000 with Jeff Fleuhr and says he was pushed out of the company by Fluer, even as he retained his position as the company’s second-largest shareholder. Baker tells Billboard he opposed the 2007 sale to eBay at the time but has since changed his mind, saying, "eBay has done a great job with the asset and the StubHub team’s success speaks for itself."
While Baker didn’t reveal his plans for the company or whether he would retain StubHub chief executive Sukhinder Singh Cassidy, he said he thought StubHub was "one of the best consumer brands on the internet period.” He added, "They've done a great job servicing fans. So that's the No. 1.”
In buying StubHub, Viagogo also buys its complex web of relationships with sports leagues like the NFL, where StubHub is an authorized retailer that's integrated into a new digital ticket initiative powered by Ticketmaster. StubHub is also the official secondary market of Major League Baseball, renewing its deal in 2017 to operate all 30 MLB teams' fan-to-fan retail sites. For Viagogo, managing those relationship and continuing to look at new ways to embed StubHub into the ticket-buying experience -- like the primary ticketing deal the company has with Philadelphia 76ers professional basketball team -- could be an important step for Baker as he begins to meet with rights holders in the U.S. and Canada.
But he will also need to woo politicians, who will be soon weighing the passage of the BOSS Act, a bill from New Jersey congressman Bill Pascrell that would include a number of ticket industry reforms like a potential ban on hidden fees and great transparency about how tickets are bought and sold. And unless the can keep manage to keep lawmakers satiated, Baker could be in for a long legislative battle as Congress seeks to overhaul an industry he just paid $4 billion to control.