Viagogo Takes on More Debt
Ticket marketplaces like the rest of the live event industry are struggling mightily due to the COVID-19 shutdowns. With events not only not happening but also being cancelled, marketplaces are at the same time not generating new revenue while also doling out refunds.
Viagogo is likely in a more precarious situation than other marketplaces. Just months before the onset of the virus crisis, Viagogo agreed to a deal to purchase StubHub from eBay for over $4 billion. It would soon be dubbed the “Worst. Deal. Ever.” due to the poor timing as COVID-19 shut down the industry. While you can’t completely judge a deal in the first few months or year and there is a long way to go, there is little doubt that Viagogo would enjoy not having a $4 billion liability on their balance sheet in the midst of a pandemic.
With the rush for cash hoarding and balance sheet protection that many businesses are going through, Viagogo recently announced a new $330 million incremental term loan to improve the company’s liquidity. Moody’s says this doesn’t currently impact its B3 Corporate Family Rating of Viagogo. However, this is highly dependent on a lot of unknowns and/or things that need to go perfectly right for Viagogo.
It is very dependent on a return of live events by the middle of 2021. Moody’s says it also depends on sentiment of fans to attend events. This is true, but fan sentiment shouldn’t be the main concern. The reality is that fan’s will likely return in large numbers once it is safe to do so. Just as people are flocking to restaurants and Disney World as they reopen.
The bigger problem with concerts and for Viagogo is when and if fans will be allowed back. As well as in what capacity. As attempts to return to some form of normalcy lead to rises in cases not just in the U.S. but in other countries that did much better than us, it gets harder and harder to envision how we’ll get there. Without trusted treatments and/or vaccines.
While the medical community has been pushing hard to fast track these solutions, Viagogo depends on it. While the extra liquidity from this debt buys them more time, it next summer comes without real signs of dependable income, it will be bad news for Viagogo and StubHub. And this debt might just be throwing a good $330 million after a bad $4 billion.