I write typically about Viagogo, the UK primarily based ticket reseller which lately bought StubHub as a result of its founder, Eric Baker, is the Travis Kalanick of tickets. He makes his personal guidelines and sometimes they stick.
Yesterday, to the shock of many within the business, it turned public Viagogo can nonetheless borrow cash. That was sudden as a result of the Coronavirus triggered shutdown of virtually all ticketed reside leisure occasions globally has crushed Viagogo’s capability to resell tickets and actually crimped their cashflow. Simply this week I printed an article discussing the refunds due customers by Viagogo and their wholly owned sister firm StubHub.
These refunds, which I estimate to be between $1 billion and $three billion are build up whereas the businesses are solely providing vouchers to customers. Given the extent of those refund liabilities, I assumed there was virtually no probability of Viagogo getting any industrial loan.
Nonetheless, Moody’s Traders Service reported yesterda that Baker’s firm PUG LLC which does enterprise as Viagogo obtained a $330 million loan so as to add liquidity to their steadiness sheet. The loan is due in February 2027. Taking this loan didn’t have an effect on the corporate’s credit score rating. Why?
Buried within the particulars is the important thing sentence of Moody’s report: we count on extra cash will stay on Viagogo’s steadiness sheet to make sure liquidity is on the market to handle operations by way of the pandemic and won’t be used to fund distributions or acquisitions. Moody’s goes on to report Viagogo has cash in extra of $700 million and the flexibility to function with “nominal amounts of revenue for two years”.
The outlook for ticket gross sales as acknowledged within the Moody’s report is for income to extend regularly by mid 2021, however that 2021 revenues for Viagogo will stay effectively under 2019 ranges. In different phrases, the earliest they see a return to regular ticketing exercise is 2022. This tells me that anybody holding a voucher from Viagogo or StubHub rather than a refund ought to count on to carry on for between 18 and 24 months earlier than really attending an occasion. I’ve a request out to Viagogo for remark and can replace this story ought to they reply.
Firms led by dynamic entrepreneurs all the time appear to discover a means by way of disaster. Viagogo continues to shock. I’m planning to maintain watching them intently. Eric Baker has extra classes to show these of us who’re listening.