EBay deal just the ticket for Stubhub founder

EBay has snapped up the online ticket reseller Stubhub in a $310m (£160m) cash deal as it continues its expansion into growth markets outside its core internet auction service.

Stubhub users buy and sell tickets for major sporting and entertainment events on the site. Tickets regularly sell well above the face value yet the transaction often has the blessing of the original vendor as Stubhub ensures the tickets are authentic.

The company has in effect moved the shady business of ticket touting from outside a venue on to a secure online platform. Touts have gained infamy for charging desperate punters exorbitant amounts for tickets that sometimes prove to be fake.

Stubhub has sold more than 5m tickets through its site since it was founded in 2001. Its buyers spent over $400m on tickets in 2006. The site charges sellers a 15 per cent commission while buyers are charged a 10 per cent commission.

EBay tried to buy Stubhub back in 2002 for around $20m but talks broke down and it had to bide its time.

Eric Baker, co-founder of Stubhub and its former president, said online ticket reselling represented a multi-billion pound opportunity. "People have been reselling tickets since the times of the gladiators in Rome," he said. Mr Baker, who left the company in 2004 but retained a 10 per cent stake, is set to make a $31m profit from the deal.

Since leaving Stubhub Mr Baker has launched viagogo to focus on the European market. "Europe was a wide open landscape - there was a vacuum and no one was filling it," he said. The site launched in August last year and has already signed up Manchester United and Chelsea to direct fans to viagogo for sold out events.

The company is set to expand outside the UK and Germany over the next 18 months as it looks to cement its position as the dominant online ticket reseller in Europe. Mr Baker said that the volume of tickets sold on viagogo in its first month was three times the level Stubhub sold in its first six months.

A number of sites, including eBay and its subsidiary The Gumtree, allow users to sell tickets. Music fans looking to avoid inflated prices can use Scarlet Mist, a site that allows transactions only at face value.

The online ticket reselling market has met with significant opposition in the US. The New England Patriots, an American Football club, sued the site for selling tickets well above face value while the New York Yankees baseball team has revoked the season tickets of fans that used Stubhub.