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Insights: Looking deeper into ticketing’s deal of the century

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.

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*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

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