Our Insights Team reflects on Viagogo’s astonishing purchase of StubHub and what it could mean for the future of the industry…
It was a deal that even Bobby Axelrod, the tycoon star of the Showtime and Sky Atlantic show Billions, would consider noteworthy.
On Monday we discovered that Viagogo, that apparent pariah of European ticketing, had emerged from the pack to win the race to buy StubHub from eBay. The purchase price would be $4.05bn. That’s a lot of tickets, even by the high rates some accuse Viagogo and its sellers of peddling.
Reflecting on this huge M&A deal, by far the biggest the sector has seen, I see the transaction as primarily an unintended consequence of the activist shareholder disruption at eBay. The ecommerce giant has been forced into looking at spinning off its ticketing and classifieds division over the last year and now it has found a way to divest this growing part of its business.
There are a few matters about the deal that stick out for me. First up, of course, it is a ‘return to the fold’ for StubHub as it is back in the clutches of co-founder Eric Baker, Viagogo’s CEO, some 12 years after he sold to eBay for what now seems like a minuscule $310m.
We are still to discover how Viagogo is financing the all-cash deal. By my estimation five previous Viagogo funding rounds have raised $65m – which covers the $0.05bn, but not the other $4bn. We also have an interesting company scale comparison of 1:6 between the acquirer, Viagogo, and acquiree, $4.05bn-valued StubHub.
Looking forward we might consider the future of the two brands, which will continue separately at least in the immediate future.
Viagogo is arguably the more toxic brand with a combative relationship with various international legislators and consumer groups. However, in its favour, Viagogo is tremendously successful in brand awareness and as a web traffic destination for ticketing despite the well documented perils of using its service.
It is unlikely that Viagogo will fundamentally change its character and business practise – not least because its ‘success’ has brought it the position where it has the ability to acquire StubHub. We might consider whether Google Adwords will re-index StubHub due to the new Viagogo ownership.
The “subject to regulatory approval and customary closing conditions” caveat is, of course, incredibly important in this deal. Two of the biggest operators in many markets will undoubtedly attract the attention of competition watchdogs. What level of market consolidation will be required before regulatory approval is required? And where?
So, what of the future? Viagogo’s press release talks about establishing a global network, which is an admittance that StubHub is the larger, more developed North American entity. This will be the key to its future with North America being where the overwhelming majority of the business for the combined company will exist.
StubHub has already started to pivot from a pure-play marketplace to a semi-active broker. Will this continue?
The announcement suggests the two operators’ current combined volume is hundreds of thousands of tickets across 70 territories. It will be intriguing to see how will the new company expand upon this level of business.
Lastly, expect a counter-reaction from the ‘Primary’ sector with some contractual drift towards Ticketmaster.
Other articles in our insights series:
- (12 November 2019): Eventbrite – One year on from the IPO
- (6 November 2019): LNE Q3 a bump in the road to growth?
- (28 October 2019): eBay flat, StubHub selloff inevitable
- (7 June 2019): Riding the rollercoaster with Accesso
- (31 May 2019): Millennial Ticket Discovery – TodayTix vs GetYourGuide
- (15 May 2019): LiveNation Entertainment Q1/19 Analysis
- (26 April 2019): StubHub’s performance in the wider eBay picture
- (19 April 2019): DEAG – Growing & diversifying the portfolio
- (4 April 2019): Eventbrite’s stock performance since IPO
- (22 March 2019): CTS Eventim’s dividends and performance
*ABOUT THIS ANALYSIS: This series of financial insights is provided by the The FP&A Team at TheTicketingBusiness. The FP&A Team comprises a group of industry finance experts who volunteer their expertise to provide ad hoc analysis of key industry financial, M&A, funding and investment news. All in an effort to better-inform the market and support the industry’s long term development. Any questions or feedback welcome to analysis@theticketingbusiness.com
Disclaimer: This article is for information purposes only and may not be reproduced or distributed to other persons without written permission. This article is not a substitute for the necessary advice on the purchase or sale of securities, investments or other financial products. In respect of the sale or purchase of securities, investments or financial products, a banking advisor may provide individualised advice which might be suitable for investments and financial products. This article is based on generally available information and not on any confidential information. We (the author(s) and publisher) believe the information included herein to be reliable, but we do not make any warranties regarding its accuracy and completeness. This article constitutes the current judgment of the author(s) as of the date of publication and is subject to change without notice. It may be outdated by future developments, without this article being changed or amended. The authors receive no compensation or hold any financial interest in the company or companies featured. In short, all/any ‘FP&A at TBF’ Insights are personal opinion only and do not constitute investment advice. All commentary, and content is for informational purposes only. Do not construe any such information as official legal, tax, investment, or financial advice. For any investment decision you should always seek a professional financial advisor.
Share this