StubHub, Revolutionizing the Modern-Day Ticket Scalper

Feb. 6, 2013 — -- Wall Street has its trading floor. Ticket sales have StubHub.

StubHub.com, the San Francisco-based online marketplace, has become the ticket scalper of the digital age, the ultimate middleman to shake up the way people interact to buy and sell tickets to almost any concert, theater performance or sporting event.

Missed a ticket to that sold-out Lady Gaga show in Toronto or that upcoming Taylor Swift concert in Atlanta? It is almost certainly available on StubHub from people re-selling their tickets for whatever price they can get.

Before the Super Bowl, Jason Deppen managed the chaos of fans buying last-minute tickets at prices that began in the mid-$2,000 range -- and that was for the cheap seats.

"We get to be the face of the company and we get to see the happy faces of every fan that comes through," Deppen said. "This is a bucket-list-type event. It is my favorite time of year."

Company CEO Chris Tsakalakis has been around long enough to remember how the same transactions were done in the not-so-olden days, when ticket buyers faced getting ripped off or foiled by shady ticket scalpers on the street outside the stadium or arena.

His unyielding belief is that the world of ticket sales is horribly broken, backwards, even rigged. Tsakalakis said before a ticket goes on sale, promoters have already sold a huge chunk of the seats to everyone from fan club members, American Express card holders and ticket brokers. In a nut shell, Tsakalakis believes the ticket market, now a thriving $5 billion industry, is not a level playing field for the average person.

"There is this whole mentality within concerts that if it doesn't sell out right away it's not a hit. It just doesn't make sense," he said. "Nothing works that way. There isn't a supplier out there that says, 'The first day I put my product out there I want all of it to sell out and I don't want to have any more supply.' What business works that way?"

StubHub, now owned by eBay, isn't just a random place for second-hand ticket sales. It now has official partnership with 27 of Major League Baseball's 30 teams. One holdout is the New York Yankees, which does not like the fact that seats to the team's games are often on sale on StubHub for below face value.

It's a headache StubHub CMO Ray Elias is familiar with. He said he has seen tickets to some incredible events go for $5 or less -- way less.

"Almost giving it away, a penny, sure," Elias said. "It's a problem for us because we see it philosophically. We see the world differently. We believe that the market should set itself."

On the other end of the spectrum, supply and demand is tested in a very big way. Elias said he has seen boxing match tickets go for as high as $100,000.

"There is a lot of irrational stuff that happens on StubHub," he said. "I think some of the boxing tickets have been pretty high when you think about ring-side seats."

The company makes its money by taking a cut of the action -- a big cut -- 15 percent of the price from sellers and 10 percent from buyers. What the site offers in return is security from that shady guy selling tickets on the sidewalk and security from fraud because it ensures that the tickets people are buying from that online stranger are real and will actually show up on time.

Several Super Bowl ticket buyers said those reassurances were exactly what convinced them to go with StubHub.

"We almost got into a Craiglisting that we almost got scammed on, so knowing that it was reputable and that it was going to be here when we got here felt good," said Brian Defazio.