TJ Chambers
Once is chance, twice is coincidence, third time is a trend.
SeatGeek
Recently there was an article in Ticketing Business News (SeatGeek to slash headcount by 15%, outgoing employees claim, Richard Mulligan, 20th February 2025 – https://www.theticketingbusiness.com/2025/02/20/seatgeek-to-slash-headcount-by-15-outgoing-employees-claim/) which reported that SeatGeek which operates as both a primary platform for sports teams and live entertainment venues and as a secondary ticket marketplace, was reducing its global workforce, in particular within New York and Berlin, by 15% in a cost-cutting exercise.
The company didn’t respond to the news report or clarify any of the claims made on LinkedIn from the various software engineers and user experience specialists ‘abruptly’ let go, but a downsizing exercise of that scale is usually undertaken because of an economic downturn, competitive pressures, or the need to improve margins.
It should also be acknowledged that SeatGeek have continued to announce new and/or extended ticketing partnerships (SeatGeek and Sporting JAX Kick Off Multi-Year Partnership, 27th February 2025 – https://seatgeek.com/press/SeatGeek-and-Sporting-JAX-Kick-Off-Multi-Year-Partnership + AFC Bournemouth Selects SeatGeek to Power Ticketing and Enhance Matchday Experience, 25th March 2025 – https://seatgeek.com/press/AFC%20Bournemouth%20Selects%20SeatGeek) so the actual performance of the company shouldn’t necessarily be defined by a single news story.
So the SeatGeek news item was temporarily filed away until Vivid Seats announced their full year 2024 results (Vivid Seats Reports Fourth Quarter and Full Year 2024 Results, 12th March 2025 – https://investors.vividseats.com/news-releases/news-release-details/vivid-seats-reports-fourth-quarter-and-full-year-2024-results-0) and then StubHub declared its intention to go public (StubHub Files Registration Statement for Proposed Initial Public Offering, 21st March 2025 –https://www.prnewswire.com/news-releases/stubhub-files-registration-statement-for-proposed-initial-public-offering-302408295.html) and collectively these three announcements reveal something about the health of the secondary ticketing sector.
Vivid Seats
VividSeats has two main divisions: Marketplace, and Resale. The Marketplace operations includes Vivid Seats; Vegas.com (a marketplace for shows, attractions, tours, flights, and hotels in Las Vegas); Wavedash (a ticket marketplace in Tokyo, Japan), and Vivid Picks, a fantasy sports mobile application with social and gamification features. The Resale division also directly acquires tickets to resell on secondary ticket marketplaces.
The Vivid Seats results reveal a company experiencing a number of issues. Whilst the secondary ticket marketplace reported a 1% Y-O-Y increase in Q4 revenues to $199.8M, the full year figures revealed a 1% decrease in Marketplace GOV (Gross Order Value) from $3.92Bn in 2023 to $3.89Bn in 2024, including a 11% decline for the fourth quarter. The company also reported an 87% drop in net income to $14.3M for 2024, down from $113.1M in 2023.
Despite CEO Stan Chia in the earnings conference call (https://investors.vividseats.com/events/event-details/vivid-seats-fourth-quarter-2024-earnings-webcast-conference-call) expressing optimism about the company’s future with a continued global growth in live events, its investment in marketing and loyalty programs and their international expansion plans, shares of Vivid Seats plunged following the earnings release, and as of 27th March has not recovered.
Source: (C) Refinitiv
Further, since the Vivid Seats IPO in April 2021 the share price has fallen by approximately 70%, with recent market speculation that the company is now seeking a buyer, with Bloomberg stating that StubHub ‘the most logical buyer’ (Online Ticket Marketplace Vivid Seats Is Exploring A Sale, Ryan Gould + Gillian Tan, 30th December 2024 – https://www.bloomberg.com/news/articles/2024-12-30/online-ticket-marketplace-vivid-seats-is-exploring-a-sale).
More recently, the Chelsea Supporters Trust has called on the Premier League to investigate Todd Boehly’s (co-controlling owner and chairman of Chelsea FC) links with Vivid Seats (Chelsea fans call for investigation into Todd Boehly’s links with ticket resale website, 26th March 2025 – https://www.theguardian.com/football/2025/mar/26/chelsea-fans-call-for-investigation-into-todd-boehlys-links-with-ticket-resale-website) and the illegal resale of football tickets.
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StubHub Holdings
The potential acquirer of Vivid Seats is StubHub Holdings the operator of two ticketing marketplace brands: StubHub in North America, and viagogo internationally. And it is Pugnacious Endeavors Inc. trading as StubHub Holdings that has filed for an IPO, apparently to enable it to pay down its debt (incurred chiefly from the acquisition of StubHub from eBay for $4.05Bn cash in 2019 (https://www.ebayinc.com/stories/news/viagogo-acquires-stubhub-from-ebay-for-4-05-billion/) previously described as Worst.Deal.Ever (‘Worst.Deal.Ever’, Noah Kirsch, 28th May 2020 – https://www.forbes.com/sites/noahkirsch/2020/05/27/worst-deal-ever/), to cover the company’s operating margin which has dropped significantly as it faces substantial competition (from both the primary ticketing market as it increasingly adopts yield management tools as well as secondary competitors), macroeconomic sensitivity, and to fund its future growth strategy (which includes international expansion, direct issuance market partnerships, and exploring adjacent opportunities like sports betting and advertising).
StubHub with its mass of PE ‘joint book-running managers’ and ‘co-managers’ (including J.P. Morgan, Goldman Sachs & Co. LLC, BofA Securities, Evercore ISI, BMO Capital Markets, Mizuho, TD Cowen, Truist Securities and Wolfe | Nomura Alliance, Citizens Capital Markets, Oppenheimer & Co., Wedbush Securities and PNC Capital Markets LLC) presents a bullish and optimistic view of their own corporate future in the (280-page) Form S-1 filed with the U.S. Securities and Exchange Commission – https://www.sec.gov/Archives/edgar/data/1337634/000119312525060140/d225849ds1.htm.
(c) StubHub
Within the Form S-1 StubHub claims that in 2024 it sold 40M tickets generating $8.7Bn in GMS (Gross Merchandise Sales) ‘which represents the total dollar value paid by buyers for ticket transactions and fulfilment’ but which also includes fees charged to sellers and buyers ‘as well as the net proceeds we remit to sellers’ but excludes ‘sales, value-added and other indirect taxes, shipping costs and the impact of discounts and coupons as well as event cancellations or expected cancellations after the initial transaction on our platform’.
StubHub believes it is ‘the largest global secondary ticketing marketplace for live events’ because of four core capabilities:
Technology: End-to-end functionality capable of handling all types of events.
Distribution: Global distribution built to operate anywhere there is demand for live events.
Data: Data intelligence to optimize outcomes for both buyers and sellers.
Brand: Trusted brands that attract millions of participants without controlling the box office or venue access.
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StubHub Revenues & Costs
The importance of the brand positioning and marketing of StubHub is highlighted by figures within the IPO filing which detail that it has spent approximately $2Bn on sales and marketing since 2022, or 48% of its revenues.
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StubHub Risks
With regards to the market positioning of StubHub it also concedes ‘Negative perception of our marketplace may harm our business, including as a result of complaints or negative publicity about us, our inability to timely comply with local laws, regulations and/or consumer protection related guidance, the failure by sellers to fulfill orders placed on our marketplace, our responsiveness to issues or complaints and timing of refunds and/or reversal of payments on our marketplace, actual or perceived disruptions or defects in our marketplace, cybersecurity incidents, such as data breaches and compromised buyer or seller data or lack of awareness of our policies or changes to our policies that sellers, buyers or others perceive as overly restrictive, unclear or inconsistent with our values.’
Another risk StubHub highlights relates to search advertising ‘Changes in internet search engine algorithms and dynamics, or any limitation or discontinuation of support by such search engines for our paid search results, could have an adverse impact on traffic for our sites and ultimately, our business, financial condition and results of operations’.
Further StubHub states that governmental intervention, especially in the international markets may present a business risk ‘We operate in international markets and are subject to risks associated with the legislative, judicial, accounting, regulatory, political and economic conditions specific to such markets, which could adversely affect our business, financial condition and results of operations’.
Additionally, lobby groups acting on behalf of artists, teams and promoters could also detrimentally impact the StubHub business ‘Our failure to comply with existing laws, rules and regulations as well as changing laws, rules and regulations and other legal uncertainties, including as a result of lobbying by artists, teams and promoters, could adversely affect our business, financial condition and results of operations’.
In short ‘Compliance with ever-evolving federal, state and foreign laws and other requirements relating to the handling of information about individuals necessitates significant expenditure and resources, and any actual or perceived failure by us or our vendors to comply may result in significant liability, negative publicity, regulatory investigations or actions and/or an erosion of trust, which could materially adversely affect our business, results of operations and financial condition.’
And ‘From time to time, international, federal, state and local authorities and/or consumers have commenced investigations, inquiries or litigation with respect to our compliance with applicable consumer protection, advertising, unfair business practice, antitrust (and similar or related laws) and other laws. Our businesses have historically cooperated with authorities in connection with these investigations and have satisfactorily resolved, or are in the process of resolving, material investigation, inquiry or litigation. Such regulatory proceedings may result in fines or changes to our business practices’.
Aside from those regulatory and lobbying obstacles, litigation and fines, or enforced changes in business practises, StubHub also identifies other risks relating to the continued development of its technology, IP protection, payments, anti-money laundering and cybersecurity, as well as its own financial condition and indebtedness, cashflow management, the evolving taxation environment and macroeconomy inflation.
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On a separate but related matter it is also interesting to note that Eric Baker CEO of StubHub holds 5.2% of the Class A Shares and together with his Class B Shares has more than 90% of the voting power in the company (StubHub Co-Founder Takes Tortuous Path to Initial Share Offering, Katie Roof + Christopher Palmeri, 22nd March 2025 – https://www.bloomberg.com/news/articles/2025-03-21/stubhub-co-founder-takes-tortuous-path-to-initial-share-offering).
‘We are controlled by our Founder and Chief Executive Officer, Eric H. Baker, whose interests in our business may be different from yours’ – StubHub Form S-1
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Secondary Ticket Marketplaces
Secondary ticket marketplaces enable resellers i.e. those who have previously purchased tickets for events (of which an extremely small percentage is peer-to-peer resale), those who may have access to a level of ticket inventory (which includes the industrial-scale brokers, scalpers, and touts who may have suppliers from within promoters, or venue box offices etc.), or those who are fraudulently and/or speculatively listing tickets that they may not yet own (which includes ticket bot operators and criminals), to connect with would-be purchasers who may have missed the original pre-sale, or were not qualified for any closed user group scheme e.g. artist fan club, membership scheme, promoter database, preferred credit card user / mobile phone customer etc., or were unsuccessful in any general on-sale, or lastly those who may have only decided to attend in the last few weeks/days/hours before an otherwise apparently sold-out event.
What was once a small offline community of street-level, cash-based, quasi-concierge operators, has been transformed by the adoption of internet technologies to become a semi-regulated, but largely unauthorised and combative freemarket evangelists who have an aggressive nakedly self-interested stance with regards to respecting (or not) any Ticketing Terms and Conditions as devised by the event Rights Owners, or adhering to local territorial consumer protection, police or legislative authorities that they perceive as restricting their ability to exploit an arbitrage opportunity within a growing multibillion-dollar sector.
What StubHub identifies in its Form S-1 as a $23Bn market opportunity.
Secondary marketplaces are typically dominated by sports inventory, arguably reflecting the structural issues relating to season ticket ownership with consumers’ post-purchase inability to then attend all events or fully utilise the ticket inventory with various restrictions limiting exchange and/or resale, followed by music inventory, and then high-demand events from the performing arts, or attractions sector.
Reseller sales strategies inflate the apparent scale and volumes of the secondary market and that has led to consumer frustration, market jealousy, legal and moral indignation from event Rights Owners and regulatory authorities, especially when comparing the value of the resale transaction to the original (Primary Market) ticket ‘face value’.
The difference in price is a result of the different operational mechanics of the secondary market:
Cost Inflation: tickets bought from a primary market source usually attract associated per ticket service and/or per transaction processing fees, as well as venue restoration / facility fees: Ticket Face Value + Per Ticket Service Fee + Per Transaction Processing Fee = X, so the original ticket face value may not reflect the total purchase cost.
Whilst the listing of tickets for sale on secondary marketplaces is free, there are seller fees payable following a successful transaction. So, in order to recoup the original purchase price and any additional resale fees, the seller charges X + Reseller Fee = Y.
Then any purchaser of this resold ticket now pays an additional buyer fee i.e. Y + Buyer Fee = Z. This layering of fees upon fees, upon fees, even without any speculative profit margin may lift the transaction cost of a single ticket by 30%-50%, or geometrically more, from the original ticket face value.
Volume Inflation / Multiple Listings: Ticket resellers (whether ticket buyers now unable to attend, bedroom touts or industrial scalpers) list their inventory across multiple resale marketplaces e.g. Coast to Coast, Gametime, SeatGeek, StubHub, TicketCity, TicketNetwork, TickPick, Vivid Seats, etc. as well as non-ticketing marketplaces such as Facebook or Gumtree etc. in order to reach the maximum number of potentially interested parties. This multiplication of ticket listing appears to inflate the number of tickets available i.e. two tickets listed across five different sites = ten tickets, and this apparent abundance of supply can drive FOMO and thus demand.
Similarly, certain ticket types, especially those in the front rows, may be bought and then sold several times in the event sale timeline – the weeks or months between initial pre-sale / onsale through to event maturity. So, the same tickets may reappear within the secondary marketplace several times for a single event
Speculative Listings: ‘Seek & I Shall Find’ (maybe). This is the listing of tickets to gauge consumer demand irrespective of whether the ‘seller’ has any actual inventory. Given sufficient demand the ‘seller’ may then source the desired tickets and deliver, or not. All too often speculative listings are linked to fraudulent non-delivery of tickets.
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Within the S-1 Eric Baker states ‘Consumers do not care whether a ticket is a primary or secondary ticket; they just want a single, trusted and reliable destination to buy any ticket for any event, anywhere in the world, in any language, with any currency, through any device. Content rights holders simply wants to maximize revenue and attendance by reaching the largest possible audience and accessing the best data to price intelligently. We believe we have built a platform that is well-positioned to tackle these wants, and in doing so, we believe StubHub can become the destination fans will turn to for access to every ticket, every event and every option on demand’.
StubHub further identifies its growth strategies.
Grow the number of Buyers, and Sellers, in part through continued international expansion
Expand relationships with content rights holders (‘direct issuance offerings’), such as the 27th March announcement with Manchester City: https://www.mancity.com/news/club/city-announce-global-partnership-viagogo-63878663)
Improve the monetization of the ticket marketplace through advertising
Expand into adjacent market opportunities such as sports betting, and merchandising
Expand beyond sports, music, theatre, and comedy to also include other live experiences such as tours, attractions, museums, cinemas, and esports etc.
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In conclusion, StubHub believes that despite relying upon 3rd Parties to create large-scale sports, concerts, and theatre events, with restrictive resale Terms & Conditions and ever more sophisticated digital technologies limiting unauthorised transfer, and whilst it is subject to extensive and evolving governmental regulations, and also dependent upon internet search engine algorithms to not limit or discontinue their market reach, with an expected increase in sector competition, they believe that the international secondary ticketing market represents a $23Bn opportunity.
StubHub also states that it is assisting in the growth of the $132Bn global ‘original issuance’ (primary) market, and that it can enable the distribution and recovery of approximately $22Bn in unsold ticketing.
We’ll all just have to wait and see.
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Investment Disclaimer: this post is intended to be used for entertainment and/or informational purposes only. You should always take independent financial advice from a qualified professional and/or independently research and verify any information before undertaking an investment decision. Buyer beware!
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Until the next time.
TJ_Chambers 