Stubhub sold, is eBay Classifieds next?

By Chris Dawson November 26, 2019 - 10:00 am

Elliott Associates have got their wish – the break up of eBay has begun with Stubhub sold for $4.05 billion in cash. With CEO Devin Wenig gone (we’re pretty sure he wasn’t in favour of a fire sale), the break up of eBay was almost inevitable and the next question is will eBay Classifieds also find a buyer?

“It is clear eBay needs urgent change including a holistic operational review which will produce lasting efficiencies and improved execution. Without question, this focus must include a strategic review that evaluates a separation of Stubhub and Classifieds, which is even more necessary given an increasingly disappointing Marketplace outlook.”
– Elliott Associates

eBay announced the cash influx will come with Stubhub sold to viagogo and expected to complete in the first quarter of 2020.

“We believe this transaction is a great outcome and maximizes long-term value for eBay shareholders. Over the past several months, eBay’s leadership team and Board of Directors have been engaged in a thorough review of our current strategies and portfolio, and we concluded that this was the best path forward for both eBay and StubHub. We firmly believe in the StubHub business and we are excited about its future growth potential with viagogo as its owner.”
– Scott Schenkel, interim chief executive officer, eBay Inc

On has to have a certain amount of sympathy for eBay CEO Scott Schenkel. It’s a tough job announce the family jewels are being sold off and spinning it as a positive.

eBay said that ‘viagogo is a leading worldwide ticket marketplace for live sport, music and entertainment events, and StubHub is a trusted ticket marketplace in the United States. Both viagogo and StubHub provide fans with transparency, choice and competitive prices for tickets and do so in a trusted and secure environment with fan-protect guarantees. Combined, these complementary marketplaces will sell hundreds of thousands of tickets daily across more than 70 countries, giving fans seamless access to a wider selection of inventory around the world, while sellers, teams and artists will have the ability to more effectively reach a broader global audience’.

Eric Baker, viagogo’s founder and CEO, also co-founded StubHub while in business school, but left before the business was sold to eBay for $310 million in 2007.

“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. Buyers will have a wider choice of tickets, and sellers will have a wider network of buyers. Bringing these two companies together creates a win-win for fans – more choice and better pricing.”
– Eric Baker, CEO, viagogo

“Bringing StubHub and viagogo together will allow us to drive further expansion and innovation, and create a more competitive offering for live event fans globally. This provides a great opportunity to expand our business, pursue new partnerships and execute our strategy. We expect a seamless transition for all our employees, partners and customers, and we are excited for what the future holds.”
– Sukhinder Singh Cassidy, president, StubHub

eBay’s press blurb concluded saying “eBay regularly reviews its portfolio to ensure that its investments and assets support the company’s strategic direction while adhering to a disciplined approach to value creation”. That may be true, but the only times in recent years that eBay have divested businesses have been PayPal and StubHub, both of which have been instigated by activist investors more interested in breaking up the business for a quick buck rather than growing it for future profit. That last phrase of eBay’s might be more indicative of a potential sale of eBay Classifieds in the near future than it is of closing the sale of StubHub.

Selling off StubHub will inevitably involve some picking apart of the two businesses, but selling eBay Classifieds would be much more troublesome. For instance with the new eBay Motors Group, a combined platform of eBay, Gumtree and

  • 2 years ago

    Two business that who’s job is to rip off consumers……

    The most interesting aspect is that most tickets sold on these these platform come from the promoters of the bands, who as the bands “don’t wish to be seen to be ripping off there fans, however they are quite happy for there promoters to!!!”

  • jim
    2 years ago

    a company that has its ethics criticised, bought for 3.10 million, then over a decade of profit , sold for over 4 billion
    seems a good deal to me

    • 2 years ago

      Bought for 3.1 million, but current StubHub run rate is $306 million revenue on $1.2 billion GMV per quarter.

      $306 million a quarter means if eBay kept StubHub they’d get their $4 billion in a little over four years. Strange to sell a profit cash cow…. but that’s what you get with activist investors who would rather turn a quick buck than be in it for the long haul.

      If you get time, don’t look at the Mecardo Libre value now compared to when eBay sold it because it’ll make you cry – they lost billions by selling and not sticking with it.

      If eBay also sell Classifieds, the treasure chest will be practically empty and all eBay will have left is to sell the marketplace category by category. Who’s betting that Motors will be the first category to sell?

    • Dav
      2 years ago

      Agree with Chris. This is a cash grab by eBay, Elliott, Starboard, and all other big players involved. Everything eBay does is for the short term. How much of this cash will go into fixing the marketplace? Likely little to none. They’ll waste it all on buybacks attempting to keep the stock price afloat. But will it help? Maybe not. Executives will continue selling their shares behind the buybacks as always. eBay itself will continue it’s decline. Business as usual at eBay.

    • Ifellow
      2 years ago

      Maybe it’s actually to do with Ebay’s poor performance and to focus more on its core business, as it’s not.doing well.

  • Richard
    2 years ago

    We don’t know what StubHub’s margin is. It’s been sold for ~3.3x revenue run-rate, but the operating margin on that is what eBay is really forgoing.

  • richard kramer
    2 years ago

    Actually that is not correct. EBAY reports the operating margins of STUB – they were 13.8% in 2018, 14% LTM, well below EBAY, and it had exactly 0% growth in LTM sales sales ($1,063m). This is a whopping 27x EBIT – a much higher price that I had expected.

    But the correct point is that this money will go towards more buybacks and dividends and not to re-investment in the core Marketplace.

  • James
    2 years ago

    Pretty sure most of the $4.05 billion will be distributed to eBay sellers as goodwill “compensation” for the Item Specifics disaster….

  • Mark
    2 years ago

    All that profit will allow ebay to lower the final value fees.
    Stop taking a percentage of your shipping costs. and lower shop fees.
    Which in turn will encourage many more sellers to the platform followed by more buyers.
    Which in turn will make 2020 a prosperous new year for everyone.

    Sorry that was just a joke i found in this years xmas cracker.

  • james
    2 years ago

    I was wondering who would actually want to buy stubhub, most people wouldn’t touch it with a bargepole, but yeah, viagogo. either them or satan himself was the only two real possibilities.

    I almost vomited reading this sentence. i don’t know how people manage to regurgitate such blatant lies without choking on them; probably practiced early on stealing candy from babies and worked their way up to whoppers like this:
    “Both viagogo and StubHub provide fans with transparency, choice and competitive prices for tickets and do so in a trusted and secure environment with fan-protect guarantees.”
    even boris johnson would have trouble keeping a straight face while repeating that straight up lie.

  • 2 years ago

    A while ago, I bought some tickets to see a band, the sort of band that fills the venue easily enough. Depsite being online on the venue’s site and ready the second they became available for sale, the best I could get was 3rd tier, row X, practically at the very back of the place. Afterwards, I looked on a few ticketing sites, and there they were, standing, seated tiers 1 through 3, all the options, at many many times the face value.

    A few months after that there was another band playing the same venue. Again, they could fill it no problems. But this time, they were enforcing a 4 ticket max, buyer must be present at concert and bring photo ID. They didn’t sell out in 5 seconds flat. In fact, days later, you could still get pretty decent tickets. And weeks later, you could still get the back of the venue tickets. I didn’t see much activity on the ticket sites, if any. Fans 1, Touts 0.

    I predict the latter example will be followed by more and more bands, particularly in the age of social media shaming. With a bit of luck, these ticketing sites will cease to exist, at least in their current form, within 5 to 10 years. Ebay has dodged a bullet by getting shut well before then.

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