An undated photo of Jeff Fluhr, a StubHub cofounder who is angling to buy the business back.
JEFF CHIU/AP
The tangled saga of the ticketing marketplace StubHub grows messier still.
In February, at the very start of the pandemic, StubHub was acquired for $4.05 billion by Viagogo, a European rival founded by one of StubHub’s scorned cofounders, Eric Baker. Then British regulators moved to halt the merger on anti-competitive grounds, helping turn the transaction into one of the worst deals ever. Now StubHub’s other cofounder is swooping in and trying to capitalize on the tumult.
“I know StubHub’s roots better than almost anyone on the planet,” writes the cofounder, Jeff Fluhr, in a letter to the U.K.’s Competition and Markets Authority calling for a total divestiture. “The buyer in this transaction requires a team with deep expertise in the ticket resale industry, a willingness to navigate an uncertain climate, and a hyper focus on customer satisfaction.” Fluhr’s candidate: himself, or at least a group of investors led by himself or his venture capital firm, Craft Ventures.
Fluhr is also attacking Baker’s proposal to only partially divest StubHub—Viagogo would keep its North American operations—arguing that the plan is infeasible and would be “to the detriment of UK citizens and consumers.”
A representative for Fluhr declined to comment. A spokesperson for Viagogo says, “We look forward to working with the CMA to deliver a comprehensive solution which addresses their concerns, and we believe this proposal [partial divestiture] would achieve that.”
The stakes are high. If the deal had gone through, Viagogo and StubHub would have controlled more than 90% of the secondary ticketing market in the U.K., according to the Competition and Markets Authority. Viagogo, which processed billions of dollars in sales in 2019, faces a battered landscape; its revenues have plummeted at least 90% due to the pandemic, analysts estimate. It is not clear how big of a discount, if any, Viagogo would have to offer in selling StubHub.
The bad blood between Baker and Fluhr stretches back two decades. The pair met at Stanford business school, where they entered the annual business plan competition with an idea for an online ticket marketplace. Soon after, Fluhr dropped out to work on the business, which became StubHub, while Baker stayed at Stanford to complete his degree before joining full time. The cofounders quickly clashed, and Baker was fired in around 2004, though he never signed a non-compete agreement.
“I think the thought process was, well, ‘Gosh, Eric is the second-largest shareholder; he’s not going to compete,’” Baker told Forbes last year. Instead, to his old company’s surprise, Baker traveled to Europe and covertly founded Viagogo, a competitor, which launched in 2006.
StubHub was acquired by eBay the following year for $310 million, while Viagogo kept growing, getting big enough to eventually buy the business last winter for $4.05 billion in cash and debt. The intent, Baker told Forbes, was to unite his “two babies,” as he called them. Instead it has produced months of bureaucracy and headaches, with no immediate end in sight.
Meanwhile, Baker continues to face criticism from activists who denounce Viagogo’s business practices, including inflated prices, low transparency and a platform dominated by professional resellers. “You’ve got to educate people when you’re disrupting things,” Baker said in response to the blowback. “We need to do a better job of that.”