Ebay (EBAY) is reportedly purchasing ticket auction operation StubHub for $300 million. That is about 30 times cash flow according to the Wall Street Journal. Ebay currently has a unit that competes in the same space.
The deal is very expensive, considering that a number of sports teams have blocked StubHub from selling tickets to their games. The teams consider the sales a form of "scalping" which is actually not legal in some states. Many teams also have provisions on the tickets saying that they cannot be resold in the open market.
But, Ebay has a big bank account and the New York Yankees and Oakland Raiders may want to ask for some of that cash for selling tickets which are marked "This Ticket Is The Property Of The Owner, And May Not Be Sold To Third Parties."
Thirty times cash. Ouch.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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