A hot ticket? Why Viagogo’s acquisition of StubHub is no sure thing

The secondary ticketing market is facing calls for regulation, artists are unhappy and the competition is only increasing, writes James Moore

Viagogo is buying rival StubHub for $4bn (Alamy)

A sport or music fan’s nightmare? A lot of people will see the acquisition of StubHub, the secondary ticketing website, by rival Viagogo in those terms.

Consumer group Which? certainly thinks so, saying that “any move to increase [Viagogo’s] grip on the secondary ticketing sector is likely to be a worry for consumers”, citing “its long history of ripping off music and sports fans”.

With a $4bn (£3.1bn) price tag, it’s a fancy ticket. A hot one? That’s an interesting question. But for regulators the deal could certainly be described as a hot potato.

First the background. The deal will put StubHub back in the hands of co-founder Eric Baker, who left to set up Viagogo after a rift developed.

StubHub was bought by eBay in 2007 but the latter has been facing pressure from its investors, who’ve been calling for disposals, including a move like this.

When you consider that eBay bought the thing for $310m the sale represents a good bit of business that might look even better depending on how the market develops.

From a geographical perspective, the deal makes sense. StubHub is stronger in the US. The smaller, privately owned Viagogo has more clout in the rest of the world, including the UK.

But that’s the easy part. The storm of controversy the deal has whipped up reflects the way the Swiss-based Viagogo has conducted its business, with criticism coming from all quarters as a result of the information – or lack of – provided to users (before recent changes) and the effect it has had on prices.

It was blocked by Google from appearing in paid-for search results worldwide earlier this year in the wake of a series of regulatory investigations and it fended off legal action threatened by the Competition & Markets Authority (CMA) in July only by making “1,000 changes” to its site.

The CMA concurred, saying that “the Viagogo website UK customers now visit is worlds apart from the one they faced before the CMA took action” in September. The CMA’s chief executive Andrea Coscelli said that information such as where you might sit, and the risks of being turned away at the door through using a secondary site, had become “much clearer”. But she said the time taken to get to that point was “not acceptable”. And she called for “stronger powers” to deal with the issues posed by the sector, which has been accused of ramping up prices on numerous occasions.

Viagogo has repeatedly shown it’s had a tin ear when it comes to the criticism it and the industry have faced.

It angered MPs by failing to appear before an inquiry into the industry being conducted by the Digital, Culture, Media & Sport Committee. Damian Collins, the chair, said this was part of a “pattern of evasion, disrespectful to the house and disrespectful to consumers”. Digital minister Margot James urged consumers to steer clear. Viagogo later apologised to MPs, admitting it had been a mistake not to appear at the inquiry.

There have been some suggestions that a rebrand could follow this transaction. StubHub is notable for its attempts to work in partnership with US sports teams and leagues, although it’s by no means loved by all.

Perhaps what Viagogo really needs, however, is a reset. That might yet be forced upon it.

You could argue that sites like it wouldn’t exist if musicians in particular didn’t “leave money on the table”.

But many of them have a close relationship with fans and don’t like to be seen to be gouging the people on whose loyalty their success has been built. Some have sought to find ways to neuter sites like Viagogo. Then there is the increasing interest of primary sellers, notably Ticketmaster, in the resale market.

Regulators and law makers, the latter with an eye to public unhappiness with the way ticketing is handled, aren’t finished with this market as the CMA’s statement, and moves in the US, the EU and Canada have made clear. The deal isn’t quite the hot ticket it might seem.