Ebay, the online auction group, has agreed to buy Stubhub, an online ticket exchange that allows fans to buy and sell tickets for sports games and concerts without resorting to illegal touts, for $310m cash.
Stubhub, which collects 25 per cent of the value of any ticket sold over its service, recorded net revenues of $110m last year from selling more than $450m worth of tickets – more than twice the value of tickets it helped sell the previous year.
Acquiring Stubhub will bring Ebay a fast-growing US business that claims a larger share of the secondary market for tickets than Ebay or other rivals such as Craigslist or Ticketmaster.
“StubHub has been extremely successful in the online tickets segment, and it’s a perfect complement to Ebay’s tickets business,” Bill Cobb, Ebay North America president, said.
Founded in 2000 by two graduate students, Stubhub offers fans a means of offloading and obtaining tickets and provides sports clubs and concert organisers with a legal means of filling seats that would otherwise be empty, hitting sales of food, drink and other merchandise. Founders Jeff Fluhr and Eric Baker own about 17 per cent and 10 per cent of the business respectively, with Pequot Ventures holding another stake.
Mr Baker last year set up a similar service for Europe, viagogo.com. “This is a great day for the secondary ticketing industry,” he said. “Ebay’s purchase validates a rapidly growing sector that benefits teams, entertainers and fans alike.”
Deloitte named Stubhub the fastest growing technology company in Silicon Valley last year.
“The strategic merits are fairly obvious: Ebay, while being one of the largest ticket resellers, is not the best known in the market. The company is picking up the best known brand and solidifying its position as the dominant online market place,” said Jordan Rohan, RBC Capital analyst.
Stubhub’s earnings before interest, tax, depreciation and amortisation have risen rapidly to nearly $10m, according to one person familiar with the company.