Campaign groups have urged regulators to protect music and sports fans from the threat of rip-off prices after eBay agreed to sell StubHub, its ticketing business, to the Swiss ticket reseller Viagogo in a $4bn (£3.1bn) deal.
Viagogo has been criticized for driving up ticket prices for top-selling shows and sports events. Hours after tickets for the musical Hamilton opened for sale in London in 2017, Viagogo was advertising tickets for resale at between £999 ($1,300) and £2,500 ($3,200) each.
The consumer campaign group Which? said UK fans should be alarmed at the prospect of consolidation in the secondary ticketing industry.
“Viagogo has a long history of ripping off music and sports fans,” said Adam French, a consumer rights expert at Which? “So any move to increase its grip on the secondary ticketing sector is likely to be a worry for consumers. The regulator should closely examine this deal and the impact it could have on competition in the sector to ensure consumers do not lose out.”
FanFair Alliance, a group backed by the management of bands including Arctic Monkeys and Mumford & Sons, said it would be flagging the deal to regulators and politicians in the UK.
“This feels like a desperate move from both parties. However, news of this acquisition should be a major concern for both audiences and music businesses,” said Adam Webb, campaign manager at FanFair Alliance. “FanFair will be writing to UK regulators and politicians today, and we reiterate our advice to music fans to avoid these sites.”
In 2016, an investigation by the Guardian revealed that Viagogo was among resale sites exploiting alliances with powerful and prolific ticket touts able to harvest thousands of tickets at the expense of fans.
It has since provoked outrage among fans, campaigners and British politicians over some of its business practices. These include profiting from the resale of tickets to charity events, failing to attend two evidence sessions held by MPs, advertising seats despite the risk that buyers might be turned away at the door and failing to provide sufficient detail about what consumers are buying and who they are buying from.
Google blocked Viagogo from appearing in paid-for search results worldwide earlier this year, in the light of a series of regulatory investigations into the company’s treatment of consumers in several countries. The ban has resulted in a significant fall in traffic to the website.
Ebay, the online marketplace, has owned StubHub since 2007 when it bought the business for $310m. StubHub was founded in San Francisco in 2000 by Eric Baker – the founder and CEO of Viagogo – and Jeff Fluhr.
Speaking on Monday, Baker said it had been a longstanding wish to unite both companies, adding that the deal would benefit fans.
“Buyers will have a wider choice of tickets, and sellers will have a wider network of buyers,” he said. “Bringing these two companies together creates a win-win for fans – more choice and better pricing.
“It has long been my wish to unite the two companies. I am so proud of how StubHub has grown over the years and excited about the possibilities for our shared future.”
New York’s attorney general has also criticized StubHub and its rivals. In a 2016 report he labelled ticket reselling a “rigged game” where professional brokers use “bots” to snap up thousands of tickets illegally, then mark up prices by an average of 49%, and as much as 7,000%. In one example cited by the attorney general, a scalper bought more than 1,000 tickets in less than a minute for one U2 show at Madison Square Garden. StubHub said at the time it had a “long history” of working with the New York attorney general’s office on “specific issues as they arise”.
StubHub is the largest resale ticket marketplace in the US, with about $1.1bn in net transaction revenue in 2018, according to eBay filings. Viagogo, a private company, is larger outside the US.
Katie O’Leary, campaign lead of consumer group Face-value Alliance for Ticketing, called the deal “alarming” and said it would give the combined entity “an even greater stronghold in the secondary ticketing market”.
“Viagogo claim this will create a ‘win-win for fans’, but further consolidation in the secondary ticketing market would most likely restrict competition, and further negatively impact fans,” she said. “We hope that regulators will have consumers’ best interests at heart when considering this deal, and consider not only the question of Viagogo’s increased dominance but also whether they can be considered a fit and proper owner.”
The Swiss-based company has been targeted by the Competition and Market Authority, which ordered it to display clearer information about the face value of its tickets sold on its website and threatened to bring contempt of court proceedings. However, the competition watchdog recently suspended the court proceedings, saying the company had made changes that addressed concerns the site was flouting laws designed to protect UK consumers.
The deal comes nearly a year after eBay came under pressure from activist investors to hive off some of its businesses.
In January, activist investors Elliott Management Corp and Starboard Value had urged eBay to sell its ticket sales business and eBay Classifieds Group as part of a plan that could double the company’s value.
Following the activist investors’ request, eBay made changes to its board of directors in March. It announced a review of its StubHub and eBay Classifieds businesses as part of an agreement with activist investors to avert a proxy contest.