The Return Of StubHub

StubHub will long be a business school case study. Its path is fascinating. From the initial development of a reputable online secondary market to what is happening today is unfathomable. Let’s review:

Initially, 22 years ago, Eric Baker and Jeff Fluhr the founders of StubHub developed an online market where event tickets could be safely purchased or sold. This transformed ticket resale which had long been a shadowy business into one accepted by the public at large. Fast forward to the present and there are now multiple ticket resale companies with global executive teams and worldwide sales in the billions of dollars resulting from that innovation.

But, it is StubHub which continues to add to its legacy of unexpected steps and unusual circumstances. Many of the key decisions stem from actions taken by Eric Baker. Baker left StubHub in 2004 and moved to Europe where he built Viagogo, the foreign equivalent of StubHub’s U.S. operation. Viagogo grew quickly, partially because Baker had learned lessons from StubHub which he could export to Europe, partially because Baker is aggressive in his business practices. I have long been a fan of what he’s accomplished, but recognize the high wire act that taking on regulatory agencies in multiple jurisdictions entails.

Meanwhile, StubHub grew steadily in the U.S., at one point commanding the largest share of the ticket resale market. Some of the growth of StubHub comes from their $310 million acquisition by eBay, thereby giving the company access to the infrastructure of a public company and the resources which were accessible there.

In 2019 eBay decided to sell StubHub and put it out for bid. Baker wanted to reunite his current company with the company he cofounded and bid what seemed then to be an astonishing number: $4.1 billion cash to purchase StubHub. Less than a month after Baker closed the deal to purchase StubHub, the Covid-19 pandemic shut down the world of live events.

While StubHub, along with every other ticketing company was facing the duel challenges of refunding shows canceled as a result of Covid, and trying to find a way to generate revenue while tickets were on pause, the UK’s Competition and Markets Authority required Viagogo and StubHub to operate with separate executive teams while they decided whether or how to block the combination. After more than a year of wrangling, the CMA allowed the merger provided the company sell off the StubHub international brand, thereby allowing Viagogo and StubHub US to merge.

Change is still afoot. Just this week, StubHub sent out an update to its team letting them know the offices in San Francisco (their former headquarters) and Shanghai will be closing while headquarters will move to Los Angeles and New York. With this realignment comes many pink slips as those who were not invited to move have been summarily let go.

For those in the ticket resale industry, there has been a pause while the formerly dominant StubHub has been digesting a merger undertaken just prior to a calamitous pause in live events, followed by a painful regulatory fight in the UK. This created a growth opportunity for competitors in the resale space such as the newly public Vivid Seats along with SeatGeek, TickPick, GameTime and others who filled the void along with industry stalwart Ticketmaster.

StubHub’s story is nearly that of a Greek tragedy. A successful company was formed by entrepreneurs who split because of a difference of opinion, then divided the world. StubHub had dominance in the US. Viagogo was dominant in the UK and certain foreign countries. Baker returned in triumph to purchase StubHub only to face the twin forces of Covid and government. Now, more than two years later, StubHub is newly unified and Eric Baker is ready to take StubHub back to being a dominant player in the space. Will this work? That depends on the consumers. StubHub is still very well known by the public at large who really don’t follow the insider stories of the ticketing industry. People just want to get their tickets and they don’t really differentiate much between markets. StubHub has been around so long that their name recognition is still good, which gives them a tremendous market advantage.

This year’s challenge is that regulatory oversight is likely coming for everyone. New York just passed a new ticketing law which mandated all-in pricing and disclosure of the original sale price of the ticket being resold. The Federal Trade Commission and the Department of Justice are looking into ticketing practices. This is not the time for buccaneering. This is the time when the industry is maturing into a competitive oligopoly in which there are a few large competitors and no one else much matters.

The fight in 2022/2023 is likely to be over exclusivity and that game is won by those with the best access to capital. StubHub’s backers have been patient. Their brand name still resonates. Capital is flooding the space. Eric Baker is still one of the most innovative founders in the space. Disruption is on its way.