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The Numbers Behind A Billion-Dollar Event Ticketing Business
Huddle Up is a daily letter that breaks down the business and money behind sports.
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Hey Friends,
Jack Groetzinger is from Cleveland, Ohio, but when he and his friend Russ D’Souza started to buy & resell sports tickets on the secondary market in Boston for extra spending money in college, they noticed a few glaring issues.
The current experience was painful, and the lack of transparency in pricing often led to fraud, scams, hidden fees, and a general lack of trust amongst consumers.
So Groetzinger & D’Souza decided to launch SeatGeek in 2009 — a mobile-focused ticket platform that intelligently aggregated ticketing data from across the industry to provide consumers with a clear, transparent, and fair pricing process.
The business model has matured over the years—SeatGeek now has a strong enterprise business in addition to its consumer-led secondary market—while also receiving funding from some of the world’s best venture capital & celebrity investors.
SeatGeek’s investor list includes large private-equity & venture capital firms like TCV and Accel, professional athletes & celebrities like Eli & Peyton Manning, Carmelo Anthony, Shane Battier, and Nas, and even schools like Stanford University.
But after transforming their tech-stack from a ticket aggregator in 2009 to a vertically-integrated consumer & enterprise solution today, SeatGeek is now making its most significant move yet, announcing in October that they were going public via SPAC (RedBall Acquisition Corp.) at a combined enterprise value of $1.35 billion.
RedBall Acquisition Corp. is backed by longtime baseball exec Billy Beane and RedBird Capital’s Gerry Cardinal. The deal also included a $100 million investment from Kevin Durant’s Thirty-Five Ventures, Utah Jazz Owner Ryan Smith, and other institutional investors like Accel.
Today, we’ll run through a few things I think are interesting about the business.
The thing that stands out most about SeatGeek is that its customers love the product.
The live event ticketing business is historically a high-churn market—most consumers just care about the best deal and are indifferent about which platform they ultimately use—but SeatGeek seems to have flipped that narrative on its head.
Sure, they were focused on mobile ticketing before most legacy players transitioned, but they also have built a vertically integrated tech stack that enables them to market both primary & secondary inventory, host in-venue experiences, and seamlessly distribute tickets all within one mobile application.
Also, they were the first company to develop a “Deal Score,” which gave customers a better view into mispriced tickets via a proprietary algorithm, rather than just displaying the cheapest 3-4 tickets for each game.
The result is a Net Promoter Score (NPS) that is 4-7x their competitors.
Another thing I find interesting about SeatGeek is its growing enterprise business.
As mentioned, SeatGeek started as a simple ticket aggregator in 2009, added a consumer marketplace that enabled consumers to resell tickets in 2014, and vertically integrated their consumer & enterprise solutions in 2016.
2009: SeatGeek is using data to aggregate tickets
2014: SeatGeek enables fans with primary tickets to sell on the secondary market
2016: SeatGeek works with rightsholders to create, price & sell primary tickets
The first two (ticket aggregation & two-way marketplace) were natural steps, but the enterprise business is really what investors are excited about.
Here’s how it works — instead of just aggregating tickets and enabling professional brokers to buy tickets on the primary market and resell them on the secondary market for a profit, SeatGeek hired a sales team and started to build an enterprise business.
Just five years later, they already have nearly 300 enterprise accounts, including primary market agreements with top-tier clients across the NFL, NBA, and Premier League, including the Dallas Cowboys, New Orleans Saints, Liverpool F.C., Brooklyn Nets, and more.
But here’s how they went from 0 clients to nearly 300 in just a few short years.
That vertically-integrated tech stack that enables a seamless process from back-office sales to secondary market liquidity has created a powerful flywheel, producing impressive data that makes the sales process much easier.
SeatGeek enterprise clients are seeing a 50% higher conversion rate on sales
SeatGeek enterprise clients are seeing a 6x increase in secondary sales in year 1
Whether it’s to sound flashy & cool or based on the premise of potentially increasing their equity multiple, many companies like to claim they are a technology company — SeatGeek actually is a technology company.
Furthermore, here’s how the enterprise business drastically increased their revenue.
Lastly, SeatGeek’s continued focus & influence on Gen Z can’t be understated either.
While seemingly every company in the world continues to throw money at exotic partnerships to attract the coveted 18-24-year-old audience, SeatGeek has dominated the space for years — shoutout to their head of influencer marketing Ian Borthwick!
Rather than just throwing money at direct response ads on Facebook, Instagram, and Twitter, SeatGeek spends millions of dollars each year on influencers through podcasts, YouTube vlogs, and more.
That might sound normal today, but they have been doing it for years.
And the results speak for themselves — Over 35% of SeatGeek’s customer base is under 24 years old, compared to just 15% to 20% for their competitors.
Remember, it’s hard to develop accurate attribution metrics for influencer marketing channels, so the first-mover advantage in this category is more potent than others.
The COVID-19 pandemic was incredibly tough on the event ticketing industry.
Most companies saw their revenue flat-line and tried to reduce monthly burn by churning their employee base. But SeatGeek’s robust funding enabled them to do the opposite, increasing headcount and shipping new tech throughout the pandemic.
That arbitrage of expansion & contraction led to an increase in market share.
SeatGeek’s Market Share (secondary only)
2017: 5%
2018: 6%
2019: 7.2%
2020: 10.9%
2021: 11.5%
Maybe I am just more interested in the fundamentals, margins, and future of these businesses than most, but I think it’s super fascinating.
So I recorded a conversation with SeatGeek CEO Jack Groetzinger this week.
We discussed everything, including the scams that led Jack & Russ to start the business, how the product has changed over time, where they make the most money, the future of NFT’s, and more.
SPOILER ALERT: Jack believes nearly 100% of tickets will include an NFT component within the next 5 to 10 years.
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I hope everyone has a great day, and we’ll talk tomorrow.
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Huddle Up is a daily letter that breaks down the business and money behind sports.
Join more than 50,000 professional athletes, business executives, and casual sports fans that receive it directly in their inbox each morning — it’s free.
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