The expansion of technology and resale options was supposed to make getting tickets to sporting events easier than ever, but instead it has become hell. Scalpers dominate online platforms, ensuring that desirable events sell out immediately, causing local sports fans to miss out unless they are willing to pay exorbitant prices for fear of missing out.
Now it has been revealed that one of the biggest stakeholders in online ticket sales is helping to fund the same people who are ruining ticket sales for sports fans. A CBC investigative report uncovered information within StubHub’s IPO filing from last November, which revealed that CEO Eric Baker also runs a hedge fund that resells tickets and provides financing to resellers.
When asked for comment, StubHub repeated its public comment that the company does not own or own tickets.
“StubHub does not own, own, or sell tickets. We are a technology platform that connects independent buyers and sellers. (Think: eBay).”
This comment conveniently ignores that some of these “independent buyers” receive direct help from the company’s CEO. Of course, the devil is in the details. No one accuses StubHub of owning the tickets for its own sale, but it is now clear that the company’s leadership is investing heavily in inflating its own market. We discussed this critical topic at the end of the NBA and NHL playoffs, about how resale sites like StubHub have a vested interest in resellers, because their percentage-based resale fees are better for the company when event tickets skyrocket, while also giving them multiple bites at the apple if tickets are sold multiple times on the platform.
Baker, the CEO of StubHub, is reportedly a large shareholder in “Andro Capital,” a Los Angeles-based hedge fund, which provides loan financing for large-scale ticketing operations that have the express purpose of purchasing tickets and reselling them for profit on platforms like StubHub.
Andro Capital filing documents show the hedge fund was formed in March 2024, 18 months before StubHub announced it would go public in an initial public offering filing. In that SEC filing, StubHub revealed its deep relationship with Andro, including this key detail from 2024:
On April 15, 2024, as part of our continuing relationship with Andro, we entered into an agreement with Andro Fund under which we agreed to cover certain costs incurred by Andro in connection with ticket management services.
StubHub wasn’t required to fully disclose this deal with Andro Fund, but having the company “cover certain costs incurred” raises huge red flags. In theory, that means the hedge fund could have given up scalping on the sell side of the trade, thus incentivizing the fund to engage in scalping. In short, business flow. could look like this:
- A speculation group has capital to buy large quantities of tickets
- Rather than investing themselves, it is better to invest your money in Andro to make the purchase, because it has an agreement with StubHub to cover part of your expenses.
- Andro benefits from inflated ticket sales
- StubHub profits through massively inflated prices, from which they profit through buyer fees.
That’s not all. The filing also mentions “Colloquy LLC,” a subsidiary of Andro Capital, which serves as a loan servicing arm for ticket sellers, offering financing to purchase tickets en masse, which they will resell directly on StubHub.
Under the terms of the Program Agreement, we refer certain of our sellers to Colloquy for the opportunity to enter into separate financing agreements with Colloquy. Under such agreements, it is anticipated that Colloquy may provide short-term financing to sellers based on those sellers’ existing and/or future expected revenue generated through ticket sales on our platform.
Andro Capital is not only its own ticket buyer, but also runs an arm of the company that provides financing to sellers, based on referrals from StubHub itself. Essentially, the entire scalping business is completely intertwined with StubHub, from the CEO participating in a large-scale seller AND offering financing to sellers.
The only ones who lose out in this whole transaction are sports fans. Consumers using the platform are held hostage by ticket prices, which essentially would not have been inflated to the same level without StubHub’s intervention. This is all legal from the SEC’s perspective due to the lack of oversight when it comes to hedge funds. There are few other industries where a publicly traded company can legally be allowed to fix prices at the level that is happening on StubHub, while trying to pretend with its public face that it is just a platform for fans to sell to other fans.
There should be an immediate investigation into ticket pricing, as well as a ban on the types of predatory practices designed to inflate the wealth of StubHub and Andro Capital at the expense of consumers.