I often write about Viagogo, the UK-based ticket reseller who recently bought StubHub because its founder, Eric Baker, is the Travis Kalanick of tickets. He makes his own rules and they often stick to them.
Yesterday, to the surprise of many players in the sector, Viagogo can still borrow money. This was unexpected because the Coronavirus caused nearly all ticketed live entertainment events to close globally and crushed Viagogo’s ability to resell tickets and really reduced their cash flow. Just this week I published an article discussing consumer refunds from Viagogo and their sister company StubHub.
Those refunds, which in my opinion are between $ 1 billion and $ 3 billion, are piling up as companies only offer coupons to consumers. Given the size of these repayment commitments, I thought there was almost no chance of Viagogo getting a commercial loan.
However, Moody’s Investors Service reported yesterday that Baker PUG LLC’s firm, which does business like Viagogo, has received a $ 330 million loan to add liquidity to its balance sheet. The loan expires in February 2027. Accepting this loan did not affect the company’s credit score. Because?
Buried in the details is the key phrase of Moody’s report: we expect excess liquidity to remain on Viagogo’s balance sheet to ensure liquidity is available to manage operations through the pandemic and will not be used to fund distributions or acquisitions. Moody’s goes on to report that Viagogo has more than $ 700 million in liquidity and the ability to operate on “nominal revenue for two years”.
Forecasts for ticket sales, as indicated in the Moody’s report, predict a gradual increase in revenue by mid-2021, but Viagogo’s revenues in 2021 will remain well below 2019 levels. In other words, the former time they see a return to normal ticketing activity is 2022. This tells me that anyone in possession of a Viagogo or StubHub voucher in lieu of a refund should expect to hold out for 18 to 24 months before attending actually at an event. I have a request for comment from Viagogo and will update this story if they respond.
Companies led by dynamic entrepreneurs always seem to find a way out of the crisis. Viagogo continues to surprise. I intend to keep watching them closely. Eric Baker has more lessons to teach those of us who are listening.