Despite advancements in technology and a growing market for resale tickets, obtaining tickets to sporting events has become increasingly difficult. Scalpers have taken over online platforms, leading to quick sellouts of popular events and forcing local fans to either miss out or pay inflated prices, driven by a fear of losing their chance.
A recent investigation has uncovered that a significant player in the online ticketing market is financially supporting those who are, quite frankly, sabotaging access for regular sports fans. A report indicates that StubHub’s CEO, Eric Baker, operates a hedge fund that engages in ticket scalping and funds scalpers.
In response to inquiries, StubHub maintained its usual stance that it does not directly own or hold the tickets listed on its platform.
“StubHub is a technology platform connecting independent buyers and sellers (similar to eBay). We don’t own or sell tickets.”
However, this statement conveniently overlooks the fact that many of these “independent buyers” benefit from direct backing from the CEO. While StubHub isn’t technically owning the tickets, it’s evident that its executives are investing in ways that inflate ticket markets. Discussions around this became particularly prominent during the NBA and NHL playoffs; resale platforms like StubHub thrive when prices escalate, with the percentage-based fees turning into significant profit for the company. Additionally, if tickets change hands multiple times on the site, StubHub profits again and again.
Baker also holds a significant stake in Andro Capital, a hedge fund based in Los Angeles, which funds large-scale ticket-buying ventures with the intent of reselling on platforms like StubHub for profit.
Documents from Andro Capital indicate its existence and note that it was founded in March 2024, shortly before StubHub’s IPO last November. An SEC filing highlighted the close ties between StubHub and Andro in these dealings.
“On April 15, 2024, as part of our ongoing relationship with Andro, we agreed to cover certain costs incurred by Andro associated with our ticket management services.”
While precise details of the agreement weren’t required to be disclosed, the fact that StubHub would agree to “cover certain costs” raises questions. This could imply that hedge funds have an incentive to promote scalping operations, essentially participating in resale practices.
- Scalpers can buy tickets in bulk with their substantial funding.
- Andro’s agreement with StubHub offers a favorable setup for them.
- As ticket prices rise, they profit significantly.
- StubHub sees increased profits through inflated ticket prices, benefiting from buyer fees.
Moreover, the filing also brings to light Colloquy LLC, a subsidiary of Andro Capital that provides financing to ticket sellers, enabling bulk purchases for resale on StubHub.
“According to our Program Agreement, we will refer certain sellers to Colloquy for financing arrangements based on anticipated future revenue through ticket sales on our platform.”
In essence, Andro Capital not only buys tickets itself but also funds sellers referred by StubHub, making the scalping framework deeply interconnected with the platform. It’s evident that top executives are not just overseeing operations but are directly involved in the scalping business.
Ultimately, the ones left at a disadvantage are the sports fans. Consumers navigating this platform face skyrocketing prices that won’t likely stabilize without StubHub’s involvement. From an SEC standpoint, this arrangement is legal due to minimal oversight regarding hedge funds. It’s quite unusual for publicly traded companies to have the leeway to inflate prices so freely while ostensibly claiming to be a mere intermediary for fans.
There’s a pressing need for an investigation into ticket pricing practices and a push to prohibit predatory tactics that only benefit StubHub and Andro Capital at the expense of consumers.
