EBay To Purchase StubHub

EBay will acquire StubHub for an estimated $310 million, following requisite stockholder and regulatory approvals, the companies announced January 10th.

The sale, expected to close before the end of the first quarter, will allow eBay to expand its presence in the secondary-ticketing market, while StubHub will have the resources of eBay at its disposal.

"StubHub’s business model is an excellent fit with eBay, a company we’ve admired for a long time," StubHub CEO Jeff Fluhr said in a statement. "StubHub exists to serve passionate fans and we feel great knowing our customers will benefit from the power of eBay and its community of users."

StubHub, a privately owned company, is the largest ticket reseller on the Web. Buyers spent a reported $400 million for tickets sold on the site in 2006, nearly double the ticket sales of the previous year. The company reported an average of 3 million monthly visits to its site in 2006.

President of eBay North America Marketplaces Bill Cobb said the acquisition of the ticket reseller allows eBay to bolster its already prominent role in the secondary market.

"StubHub has been extremely successful in the online tickets segment, and it’s a perfect complement to eBay’s tickets business," Cobb said. "Together we can strengthen both businesses and provide fans with more choice and better service."

So what does eBay get for its purchase? There’s not a lot of bricks and mortar in the sale but without question eBay’s getting its primary competitor for ticket resales, a well-oiled protocol for ticket resales, and software.

StubHub could have gone public in "one of the more intriguing IPOs of 2007," according to investment gurus The Motley Fool. The Fool speculated that the sale might be in part motivated by the creeping hands of Ticketmaster and Live Nation, which will likely be encroaching into StubHub’s market.

"Should StubHub be worried? Let’s see," the Fool said. "The Miami Heat is hosting the Dallas Mavericks next weekend in a rematch of last year’s NBA Finals. StubHub has 281 listings for the game, but Ticketmaster’s exchange is no slouch, with 209 sets of tickets available."

Also with the acquisition, eBay may become subject to even more attacks by some primary ticketers, sports teams and venues alike. Both StubHub and eBay have been involved in recent litigation.

StubHub positions itself as a safe resale venue through which fans are guaranteed the authenticity of their tickets and has inked deals with nearly 30 professional and college sports teams, but was sued by the New England Patriots in November. The team alleges StubHub allows patrons to resell tickets for prices that often exceed what Massachusetts state law permits – a markup of $2 per ticket.

StubHub has countersued, claiming the team and its "co-conspirator" Ticketmaster are attempting to use their current primary market domination in the region to eliminate competition in the relevant secondary ticket market. StubHub also accused the team and Ticketmaster of the same scalping violations.

EBay, on the other hand, recently won an Australian court case against Creative Festival Entertainment, promoter of the Big Day Out Festival.

Federal court judge Stephen Rares blocked Creative from enforcing a provisionary phrase printed on the backs of tickets that voided those sold on the secondary market for 2007 Big Day Out concerts, the Australian Associated Press said, and also ordered the promoter to pay eBay’s legal fees.