The Tale Behind StubHub's Sale: How Eric Baker Bought Back the Ticket Seller

Date : 11/29/2019 @ 2:43PM
Source : Dow Jones News
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The Tale Behind StubHub's Sale: How Eric Baker Bought Back the Ticket Seller

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By Anne Steele 

Eric Baker long envisioned bringing together the two ticketing companies he started.

This week eBay Inc. agreed to sell its StubHub unit, a business Mr. Baker launched nearly two decades ago, to Geneva-based Viagogo Entertainment Inc., the ticketing firm with a large European presence he has been running since 2006.

The $4.05 billion all-cash deal would create a global ticketing juggernaut in the booming business of live events. It would also put StubHub back in the hands of the person who early on saw the opportunity in the legitimate resale of tickets.

Born and raised in Los Angeles, Mr. Baker, 46 years old, was on the East Coast when he got the idea. After graduating from Harvard University and doing a consulting stint at McKinsey & Co., he was working at Bain Capital in Boston in the spring of 1999, just as the internet was taking off, when his then-girlfriend wanted to visit New York to see "The Lion King" on Broadway.

"You had to pay through the nose or find people on the street corner to purchase from," says Mr. Baker. He felt there had to be a better, more efficient way to find tickets and imagined that could happen online.

He headed to Stanford Graduate School of Business that fall and, together with classmate Jeff Fluhr, started StubHub -- then called Liquid Seats -- in 2000.

The idea of taking what has been known as scalping -- a resale process often associated with selling tickets in an unauthorized manner -- and legitimizing it online didn't sit well with ticketing-industry executives.

"People thought it was crazy," says Mr. Baker.

While trying to secure the most important thing for any ticketing company -- inventory -- Mr. Baker recalls that sports leagues, which were wary of being associated with scalping, were a tough sell. But by 2001 two Major League Baseball teams had signed on as partners. Season-ticket holders could resell their tickets at will in a relatively secure manner. Basketball, football and hockey teams followed suit over the next two years.

The first college to sign on was Mr. Baker's own alma mater, Stanford.

Concertgoers, meanwhile, were introduced to a new option for securing tickets to their favorite artists' shows. It can be difficult to track when tickets go on sale, and for popular acts tickets are generally snapped up within minutes.

Mr. Baker and Mr. Fluhr -- who was chief executive and had majority ownership of the company -- had their differences, and in 2004 Mr. Baker left at the board's direction, said people familiar with the decision.

Mr. Baker intended to take a year to travel before starting another business. But a month after leaving StubHub, he was in the middle of planning a trip to London and looking for tickets to events, such as a soccer match or a concert. He then realized there was no StubHub equivalent in Europe.

Mr. Baker set out to replicate StubHub abroad. He wasn't bound by a noncompete agreement. And he knew StubHub wasn't ready to expand in Europe, so his plans wouldn't encroach on a company in which he was at the time among the largest shareholders. Viagogo launched in 2006 and has taken off largely through partnerships with soccer, cricket and rugby teams. Viagogo, which is closely held, says it is profitable.

When eBay bought StubHub in 2007, Mr. Baker says he opposed the deal. "It's rare you have the opportunity to have a business like that," he says. "To me, you try to hold on to something that's working."

Viagogo has had run-ins with regulators. Last year, the U.K.'s Competition and Markets Authority ordered the company to overhaul the way it presents important information to customers. In July, the consumer watchdog said it would hold Viagogo in contempt of court following concerns it had failed to comply with that court order. Later that month, Alphabet Inc.'s Google said it suspended the site from placing paid ads in search results, based on the advice of advertising regulators. In September, the Competition and Markets Authority said Viagogo addressed the outstanding concerns and suspended preparations for court action.

Mr. Baker, Viagogo's CEO, says the company has taken steps to be more proactive with regulators and to make the business more transparent. "When you're in a disruptive business you have to do that education process," he said.

His reputation in the industry -- among folks he has both worked and competed with -- is one of a hard-nosed, relentless deal maker and ruthless strategist with sharp elbows. These people say, and Mr. Baker doesn't disagree, that he can be difficult to work with. But they say his intricate knowledge of important nuances in ticketing make him among the most intelligent and thoughtful minds in the business. At Viagogo, Mr. Baker took on an operational role as the brains behind the business and has let others deal directly with clients.

With StubHub, he's facing an increasingly crowded and competitive market for inventory in the U.S. The live-events business has been growing for several years as consumers continue to shell out for premium experiences. StubHub, while a dominant consumer brand, faces competition from nimble upstarts like Vivid Seats LLC and SeatGeek Inc., and Live Nation Entertainment Inc.'s Ticketmaster has been expanding its resale business.

Meanwhile, some in the industry suspect the deal will tip off a wave of consolidation.

Mr. Baker says it will be important for the combined Viagogo-StubHub to be able to distribute globally. He says that will be attractive to content owners -- teams, artists and venues -- wanting to reach more fans: "We want fans to be able to get to any event, anywhere, anytime."

Write to Anne Steele at Anne.Steele@wsj.com

 

(END) Dow Jones Newswires

November 29, 2019 09:28 ET (14:28 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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