Early Entrants: Vol. XIX – Fanatics Expresses Interest in StubHub, May Be Too Late

Editor Note: ‘Early Entrants’ is a series of sports business ‘rumblings’ before the news breaks.


Fanatics Expresses Interest in StubHub, May Be Too Late

Vivid Seats, KKR and Booking.com have all been reported to be sniffing around a potential StubHub acquisition, but one industry insider tells JohnWallStreet that it appears as if Fanatics “just threw their hat into the ring”, too. Michael Rubin’s e-commerce giant presumably sees an opportunity to leverage the wealth of consumer data that the secondary ticketing marketplace controls. Fanatics’ bid is said to be backed by Silver Lake Partners, who is motivated to “keep [StubHub] away from [competitor] KKR.” Fanatics may have missed the boat, though. Our source believes Vivid Seats is “close to a deal.


NFL Ad Pricing Up in 2019 – Just Not to Level Touted During Upfront

NFL ad pricing has rebounded this season – just not to the level touted during 2019-2020 upfront. AdAge reported that “the average unit cost of a 30-second in-game spot was up between 5 percent and 10 percent compared to the year-ago bazaar”, but the director of media at one prominent buy-side agency suggests the real number is between “three percent and five percent.” He explained that the “networks are bullish during upfronts, but as negotiations go on [brands] get to where they need to be.

Reason for the increase? Brands have realized there’s simply no place else to capture an audience of 25 million people. The influx of non-traditional advertisers buying primetime in-game spots (think: Facebook, Amazon, Netflix, Hulu) and a tempered political climate (as it relates to player protests) have also helped to change the narrative just one year after the networks experienced steep declines.

NFL Network.png

Expect NFLN to Retain Exclusive Live Rights

In week 1, Thursday Night Football on NBC averaged over 22 million viewers. In week 2, NFL Network (NFLN) had the exclusive broadcast rights to TNF and viewership declined -70% to an average of 6.6 million fans. The NFL’s media strategy is predicated on reach and the league’s cable channel is in just 41 million homes (Nielsen counted 119.9 million  for the ’18-’19 season), so it’s worth wondering how NFL Network fits into the upcoming round of media rights negotiations.

EVP of media Brian Rolapp says NFLN will continue to play a prominent role come ’23 and expects that the network will retain exclusive live broadcast rights. “The NFL Network is very important to [the NFL] for a lot of reasons. We still believe the NFL fan is somewhat underserved and NFL Network helps [us to] fill [that] need. NFL Network and the RedZone channel are great properties, but also all of our digital content is produced out of that infrastructure and [the network is] really valuable to us in [terms of] how we engage our fans. The [exclusive] games are an important part of [the NFLN content strategy], so I don’t really see that changing.” Thursday night’s Tennessee – Jacksonville game (9.19) will again be exclusive to NFLN.


MLB Moves to New CMS, NHL May Not Be Far Behind

Major League Baseball has announced that Deltatre’s Content Management System, which powers 25 of the largest sports leagues in the world (including the NFL), is now hosting their +/- 300 digital destinations; MLB had an in-house tool, but the CMS went over to Disney as part of the BAMTech sale in 2017. The decision to settle on Deltatre came after a global search and is not surprising with WWE, PGA TOUR having recently made similar moves. It’s the ability to customize and develop on top of a platform that reached 750 million unique visitors in ’18, that makes ‘Forge’ particularly attractive to MLB.

The NHL is the last of the major leagues (save MLB.tv) still running on BAMTech with the Disney entity focused on building out its own well-publicized streaming services. Insiders tell JohnWallStreet that the league will likely make a move when their current rights deal expires in 2021-22 and speculation already exists that the company will look to follow MLB’s lead.

NLL Looking to Raise Profile Through Digital Storytelling    

The National Lacrosse League made headlines in late August when it named NHL executive Jessica Berman as the league’s deputy commissioner. This week the NLL will take another positive step forward when it hosts a business summit for its players. The event, which will take place in Philadelphia on Wednesday (the day after the 2019 NLL Entry Draft), is designed to educate players on best business practices and social media guidelines. The hope is that the digital-first league can continue to raise its profile with captivating storytelling and the support of a media partner (Turner) that has committed to creating more print and video (see: highlights) content around the NLL.

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Resale Sites Forced to Cancel Ticket Orders within Hours of Champions League Final


Thousands of English soccer fans embarked on the journey to Madrid for the Champions League final (between Liverpool and Tottenham) on June 1st only to find out that the tickets they had purchased on the secondary market didn’t exist – the threat of “indefinite season ticket bans” for fans caught scalping seats online had many of those intending to sell ultimately elect to attend the game. StubHub (and other resellers like Viagogo) was forced to notify buyers in the days leading up to the game that their orders would not be fulfilled – agreeing to refund those inconvenienced (including all fees & shipping costs incurred) and award them an additional +/- $1,900/ticket cancelled for their troubles. Those that accepted the offer waived their right to file suit against the company.

Howie Long-Short: Tickets were being sold for +/- $12,500 on game day, so the common misconception is that as prices rose sellers reneged on previously agreed upon deals in hopes of holding out for more money. But the increase in pricing didn’t happen overnight, it had been known for weeks that ticket prices would exceed $10,000.

In the days leading up to Tottenham’s first Champions League final, the club announced that it had “banned three season ticket holders [for offering] to sell their match seats online at a profit.” The ticket shortage – and ultimately the resale sites’ need to cancel transactions – stems from the panic that quickly spread after the news broke. Once season ticket holders began deciding to hold on to their tickets, brokers who had anticipated those seats (see: short selling) were left scrambling to fill the transactions completed on the resale sites. With no inventory available, StubHub (and Viagogo) ultimately had to cancel the listings and refund buyers.

While easy to point fingers at the resale sites – detractors will say they shouldn’t have been allowing so many speculative tickets to be sold and could have de-listed the event when the 3 Tottenham fans had their season tickets revoked – Brett Goldberg (co-CEO, TickPick) insists that much of what occurred was “out of their control. If the season ticket holder agrees to sell the ticket and then opts not to part with it, what can a resale marketplace do?” Goldberg isn’t wrong, but that explanation probably won’t sway European regulators who tend to have little tolerance for consumer protection law violators.

Fans who spent thousands on airfare and hotel rooms are unlikely to be satisfied with the $1,900 StubHub offered – particularly if they’re aware fans squeezed out of the ’15 Super Bowl (last major event with fans shut out due to short selling) between $5,000 – $10,000 – so it’s reasonable to assume the company will also be facing a class action lawsuit in the near future.

Fan Marino: Dumping extras in the parking lot (or now on resale sites) is a rite of passage for Jets fans, so it was shocking to see the Spurs revoke fans’ season tickets for trying to sell their seats. Goldberg explained that differing cultural dynamics allowed Tottenham to make an example of the violators. While scalping tickets is commonplace and socially acceptable in the U.S., it remains frowned upon in Europe. There have been cases of U.S. teams restricting broker access to tickets or revoking inventory from season ticket holders believed to be re-selling tickets, but the examples are far and few between.

The main reason you don’t see MLB, NBA and NHL teams revoking the season tickets of fans who sell seats to playoff games is the sheer volume of contests that make up their post-seasons. U.S. pro sports leagues (sans the NFL) are playing best of 7 series. Champions League matchups consist of just 2 games. While Champions League participants can host no more than 3 home games before qualifying for the final (6 if you include the group stage), U.S. teams could have as many as a dozen. It’s unreasonable to expect even the biggest of fans to attend that many games – the costs are prohibitive.

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Early Entrants: Vol. VI – NFL Leaning In To Amazon’s Pitch


Early Entrantsa bi-weekly series of sports business “rumblings” before the news breaks.

NFL Leaning In To Amazon’s Pitch

The NFL appears ready to split its out of market broadcast rights package between a satellite provider (DirecTV) and an online streaming service. Commissioner Roger Goodell recently told Bloomberg that the league plans to deliver its NFL Sunday Ticket “on several different platforms.” While it’s reasonable to assume DirectTV Now would be the front-runner to acquire the streaming rights, multiple sources tell JohnWallStreet that the NFL “is leaning in to Amazon’s pitch.” Prime Video can provide the league with the widest reach (relative to DirecTV Now, DAZN) and the NFL sees value in the e-commerce giant’s ability to facilitate merchandise and ticket sales.

Turner Sports Can’t Get Enough of the AAF

Back on March 5th, Turner Sports announced that TNT would exclusively televise 2 additional regular season Alliance of American Football games – they’d initially agreed to place just a single regular season game and one playoff game on the cable network (B/R Live carries 1 game/week). But the AT&T/WarnerMedia subsidiary was pleased with viewership for its March 9th contest – it was the 2nd most watched show on the network that day – and sources tell JohnWallStreet that the company is looking to add additional broadcasts as the league’s season winds down (3 regular season, 2 post-season games remain). It’s worth mentioning that CBS has also decided to move 2 games from the CBS Sports Network to the CBS broadcast network; a regular season contest on April 6th and one of the Conference Championship games on April 27th.

Digital-Only Service Set to Buy Linear Network

There are rumors floating that DAZN is “set to buy” Fox Sports (Brazil), an acquisition that would accelerate the company’s rise in the country given the “premium rights” that would come along with it. The purchase would certainly run contrary to the company’s digital-only strategy, but in a market where TV is the preferred viewing platform and digital consumption remains an afterthought (particularly relative to the U.S. or Japan) it makes sense.

Vivid Seats Sniffing Around StubHub Acquisition

We mentioned in Early Entrants Vol. V that eBay was exploring the sale or spinoff of StubHub. Questions surrounding inclusion of the company’s foreign offices (via Ticketbis) had insiders doubting within the last week whether the company would move forward with the split, but we’re hearing separation of the 2 companies is now considered “almost a near certainty”; the “eBay elite” have tired of the fluctuations caused by StubHub in their quarterly earnings reports. Vivid Seats is said to be sniffing around a potential acquisition.

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Ticketing Allocations the Cause of Free-Falling Championship Game Secondary Market Prices


Ticket prices on the secondary market to the college football playoff national championship game are in free fall, available for +/- 10% of what they were selling for just a month ago, as scheduling, location and the participants have contributed to a depressed secondary market; but, it’s the way championship game duckets are allocated that has caused a flood of tickets to hit the market over the last few days. As of Thursday evening, StubHub had more than 9,000 tickets remaining for sale, with $475 (face-value) seats selling for as little as $114; the lowest ever for national championship game under the current playoff format.

Howie Long-Short: The number of tickets allotted to each of the participating schools is at the core of the ticketing problem; 20,000/per is simply too many tickets to sell, in too short a window (5 days), with the game +/- 2,500+ miles from campus (the longest average distance for any CG game since ’11). The cost of airfare (and hotels) – inflated on just 9 days’ notice – prices out fans that otherwise might attend making it difficult for the schools (and their preferred brokers) to unload the seats.

Dave Wakeman is a ticketing guru that hosts an iTunes Top 100 podcast, “The Business of Fun”, focused on marketing and the selling of experiences. I asked Dave why the participating schools get so many tickets and who receives the balance?

Dave: The College Football Playoff Committee has worked hard to retain a sense of the college atmosphere, allocating a large percentage of tickets to the competing schools; in this case, 40,000 is more than half the stadium (71,000 seat capacity for game). The remaining 31,000 seats are split up among the hosts and the sponsors; those tickets, which are sold in advance, are sold out.  

When the 2017 championship game between the 2 teams was played within 600 miles of campus (Tampa), the schools had no issues unloading tickets and the get-in price hovered around $2,000, but with the game in Santa Clara and flights from Clemson and Tuscaloosa going for upwards of $1,500 tickets haven’t sold; the result has been preferred brokers flooding the market (there are now 2x the amount of seats for sale) with tickets over the last several days.

One might think that a wealthy San Francisco sports fan base would quickly buy up the available seats tickets, but 40% of 49ers SBL members already bought seats to the game and 80+ suites were sold to local businesses, so many Bay Area fans who want to attend the game already have tickets; and it’s not like Northern California is a particularly good college football market. Stanford averaged just 37,850 fans/home game during the 2018 season despite being ranked in the Top 25 going into all but one of those games.

I asked Dave what needs to occur for the game to be a sell-out (meaning few seats available)?

Dave: There will need to be a focus on driving further demand from local businesses. There are a lot of very large companies in the Bay Area that have a once in a lifetime opportunity to take their employees, clients, or prospects to see a national championship and that should be a big demand driver. On the other hand, with rain in the forecast and the perception that declining ticket prices indicates a lack of “buzz” surrounding the game, local executives without a stake in the outcome may just decide to stay home.

It’s lazy (and simply wrong) to attribute the staggering low prices on the secondary market to a lack of interest in the game. Those making the apathy argument will tell you that the casual fan is tired of watching Alabama and Clemson play for a 3rd championship in 4 years, but 28.4 million people tuned in for an SEC rematch in last year’s title game (the highest non-NFL television broadcast of year) and many are expecting “Alabama-Clemson IV [to] pull in more viewers than any other championship game to date.”

Fan Marino: Cratering secondary market ticket prices are in no way indicative of what’s to be expected on the field Monday night when two undefeated teams, coming off semi-final blowouts, vie to become National Champions; and the 1st team in college football history since Yale in 1894 to win 15 games in a season. Need another reason to watch? Each team is led by a projected #1 overall NFL draft pick; Alabama QB Tua Tagavailoa is expected to be the first player selected in the ’20 draft, while Clemson QB Trevor Lawrence is the favorite to have his name called first during the ’21 draft.

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Fewer Fans Attending College Football Games, With SEC Experiencing Biggest Decline


College football attendance declined -3% in 2017, the most significant drop in 34 years and 2018 isn’t expected to be much better; Dynamic Pricing Partners is claiming that overall ticket sales for NCAA football are down -19% YoY “across many P5 programs”. Contributing to the decline has been a recent (last 5 years) trend of fewer fans following their team on the road, a fate that not even SEC schools have been able to avoid; SEC schools reported 2,433 fewer fans/game last year, the biggest decline amongst P5 conferences. Florida A.D. Scott Stricklin acknowledged the decline before suggesting a solution, “I think you’re going to see an adjustment around the country where stadiums are going to reduce capacity to make the seating better for fans.”

Howie Long-Short: A depressed market for college football ticket sales doesn’t bode well for StubHub, a company coming off a disappointing 2nd quarter. eBay (EBAY) blamed StubHub’s Q2 ticket sales decline on the low number of games played within the NBA Finals (4) and Stanley Cup (5) and “a historically bad MLB start of the season.” While both are valid reasons, StubHub isn’t expecting sales to dramatically increase in H218; which would seemingly contradict their reasoning.

StubHub struggles are far more likely the result of competitors Live Nation and Vivid Seats taking a greater percentage of market share, teams/musicians taking greater control of their markets and a crackdown on secondary market ticketing fees in the U.K. Those aren’t issues that can be solved with a little luck.

StubHub’s short-term outlook forced EBAY to lower full year revenue forecasts; shares are down -9% (to $34.43) since the company reported on July 18th.

Fan Marino: SEC A.D.’s blame everything from the familiarity of the competition (caused by having 2 divisions), to the allotment of bad seats for the visiting team, to modern technology and the comforts of watching at home for the attendance decline, but they’re all in agreement that “people aren’t traveling the way they used to.” That’s a shame, because many college towns (and the small businesses within) rely on the economic activity generated on home football weekends.

As for Stricklin’s projection, I’m 100% in agreement. The next generation of stadiums are going to be more intimate/exclusive. They’ll need to be as the experience of watching has become a particularly compelling alternative with the addition of 4K and the increasing popularity of 2nd screen viewing.

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TickPick Doubles User Base with Razorgator Acquisition


TickPick has acquired ticket re-seller Razorgator (excluding its corporate ticketing business) to grow market share in a competitive secondary ticketing industry. The company’s “Best Price Guarantee” (on the exact same ticket) and “No Fee” policy (for buyers), has enabled it to onboard over 1 million active users. Their white-label software will power a revamped Razorgator website, one that also maintains +/- 1 million loyal users. Financial terms of the deal were not disclosed, but it is suspected TickPick paid far less than the +/-$60 million in venture capital that Razorgator had raised to date; considering the company declared financial insolvency back in February.

Howie Long-Short: TickPick has been able to capture market share by operating on slimmer margins (13-14% commission) than the 25%+ collected, per transaction, by market leaders StubHub (EBAY) and Ticketmaster (LYV). The company did $100 million in 2017 sales, with EBITDA of $2 million over the trailing 12 months. Expect them to continue rolling up competitors, as consolidation within the secondary ticketing industry continues.

As mentioned, Razorgator raised $58.5 million over 6 rounds; though, no new money since ’14, before running out of runway. Steamboat Ventures, the venture capital arm of The Walt Disney Company (DIS) and Hercules Capital (HTGC) had both invested in the company. I’m unaware of any way to play TickPick.

Fan Marino: FlipTix, a mobile marketplace that enables fans to buy and sell tickets mid-event, is another exciting entrant to the secondary ticketing space. While historically, most stadiums prevent fan exit and re-entry, the FlipTix app gives promoters the ability to invalidate a bar-code on a ticket, notify prospective buyers, re-sell the seat and issue a new ticket. The original buyer then receives remuneration for their contribution to the transaction, though not necessarily in the form of cash. Secondary buyer pricing is determined by variables like the score and time remaining in the game. With teams once again moving downtown, fans are living/working within walking distance (or a quick ride-share) to the venue. I would expect FlipTix to capitalize on the fan who gets out of work late and wants to “catch a few innings” on his/her way home from the office; a market that didn’t exist prior to their entry.

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MLB Teams Using Secondary Market as Alternative Means of Ticket Distribution


The Toronto Star and CBC are reporting that Major League Baseball teams restricting fans to exclusive secondary ticketing marketplaces (see: Stubhub, TicketsNow etc.) are both profiting from the resale of those seats and using the secondary market as an alternative means of  ticket distribution. StubHub (EBAY) head of global communications Glenn Lehrman acknowledged that teams “do very well (financially)” from tickets sold on the online resale site, a fact previously believed (why else would a team maintain an exclusive relationship with a resale site) but unconfirmed; adding that any tickets sold on the secondary market, directly by the franchise, is “absolutely added revenue” for a team’s bottom line. Lehrman acknowledged that his company would “encourage” teams to sell tickets directly on the secondary market.

Howie Long-Short: Blue Jays President, Mark Shapiro touted the team’s home opener as the “highest-revenue game in the history of Rogers Centre”, but failed to mention that just 30% (13,000) of the stadium’s seats were ever offered on the primary market (i.e. through team box office). On the contrary, at least 20,519 tickets (45%) were available for purchase on resale sites within the last 60 days; at an average markup of 205%. Double-dipping and taking a cut of resale market proceeds is one thing, bypassing the primary market to increase team profits at the expense of your biggest fans (it was Opening Day) is unethical (marketing tickets at one price and selling them at another) and downright piggish. MLB (and any other leagues running this racket) needs to put a stop to this practice for the long-term good of the game, pigs get slaughtered.

Fan Marino: Speaking of the secondary market, the NCAA men’s basketball championship game is arguably the best value in sports. Kansas and Loyola-Chicago fans are long gone from San Antonio, but many bought tickets hoping their team would be playing tonight. Those seats now sit on secondary market, with the price dropping by the hour. According to TicketIQ, a leading ticket search engine, as of 10p on Sunday evening you could get into the building for $84; roughly 1/10th of the “get-in” price ($833) for the 2018 college football national championship game. Looking to go to the game? The NCAA Ticket Exchange, powered by Primesport (owned by OLE) is actually currently the cheapest deal on the market TicketIQ data sources. Below is quick comparison vs Stub Hub (prices after fees)

  • 300’s level / Get-in price:
    • Exchange: $84
    • SH: $85
  • Cheapest 200’s level
    • Exchange: $148
    • SH: $200
  • Cheapest 100’s level
    • Exchange: $157
    • SH: $182

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National Championship Game 1st to Require Mobile Entry

College Football Playoff

Nearly all fans attending tonight’s national championship game at Mercedes-Benz Stadium will use an Apple iOS (AAPL) or Android device to enter the stadium; as Ticketmaster, the official partner of College Football Playoff, will only be issuing paper tickets to a small number of VIPs. The all SEC contest is the first significant U.S. sporting event to require mobile entry; fans will not have the option to print their own tickets. Ticketmaster (LYV) said it’s using mobile ticketing to “increase the safety (i.e. counterfeiting) and convenience of the ticketing process” and to expedite “mobile entry for fans.” Fans without mobile devices will have the option of visiting the box office and having their ticket printed for them.

Howie Long-Short: Stubhub said that Ticketmaster mandating mobile ticketing for the game, has resulted in less inventory; but, TicketIQ is reporting that they’ve seen 2x the amount of inventory (from last year) in the 3 days leading up to the game. In 2017, Stubhub increased its fees 1.5% to 21.8% per transaction; nearly 3x (7.7%) more than parent company eBay (EBAY) charged its sellers. Perhaps that has something to do with why inventory is down.

Fan Marino: Georgia HC Kirby Smart was a long-time assistant under Nick Saban (Alabama, LSU, Dolphins), but guys on Saban’s coaching tree haven’t fared well against their former boss; Saban has won the last 11 meetings over former assistants (Fisher, Dantonio, Muschamp, McElwain, Dooley).

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MLB Sets Record for Sponsorship Revenue Generated in a Season

MLB has set a league record for sponsorship revenue generated in a season, taking in $892 million in 2017; a 7.9% increase YOY and up 26% from just 5 years ago ($663 million). Newly signed deals with Coke (KO), Nathan’s Famous (NATH), Old Dominion Freight Line (ODFL) and 5-Hour Energy along with the addition of presenting sponsorships for the playoffs and World Series, are credited driving the growth. New Era, StubHub (EBAY), Budweiser (BUD), Majestic Athletic and State Farm were the league’s 5 most active sponsors. The data was compiled by ESP Properties, a sports & entertainment research and consulting firm owned by WPP (WPPGY).

Howie Long-Short: MLB finished a distant 2nd among the 4 major U.S. professional sports leagues in sponsorship revenues generated. The NFL brought in $1.2 billion during the ’16 season, the NBA did $880 million and the NHL generated a league record $505 million in ’16-’17 (5.9% increase YOY). With the addition of the Adidas (ADDYY) contract, the NHL is expected to set another record this season.

Fan Marino: While on the topic of baseball, Astros OF George Springer hit a HR in the 7th inning of Game 5 of the World Series, that appeared to explode upon landing. You can check out the video here. While logic points to perfect placement and immaculate timing by the Astros pyrotechnic staff, conspiracy theorists will claim the balls are juiced…with TNT. I suppose it’s possible. The teams have combined for a World Series record 22 home runs through 5 games.

Behind Coke, YouTube, Camping World, MLB Sponsor Spend Hits $892M In 2017

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