Moody's Investors Service recently completed what it called a ‘periodic review’ of the ratings of PUG LLC (the legal entity behind Viagogo) and there was some good news and bad news for those of us in the Live Event industry for whom Viagogo is a constant source of frustration, lost revenues and customer heart-ache.
The key rating considerations that Moody’s summarised are quoted verbatim below.
‘Viagogo's B3 Corporate Family Rating benefits from its asset-lite business model and large scale, with leading market positions in most major global regions including North America. The company's credit profile is also supported by a faster than expected increase in the number of scheduled live events, particularly in the U.S., and pent up consumer demand for in-person live sports and entertainment. Given realization of additional cost cuts (e.g. optimizing marketing spend) after Viagogo is permitted by UK regulators to combine operations with StubHub globally, Moody's believes Viagogo will be able to exceed historical EBITDA margins as live events and secondary tickets sales approach pre-pandemic levels.’
[Note a Moody’s B3 rating is judged as being ‘speculative and a high credit risk’. The equivalent rating with S&P and Fitch would be B-. In a separate development that Moody’s refers to above, earlier this month the UK’s Competition and Markets Authority approved the acquisition of StubHub by rivals Viagogo, after Viagogo sold off StubHub’s international operation to a US investment group.
From this Moody’s paragraph above, we took a certain amount of good news that applies across the whole Live Event Industry, not just to Viagogo:
- ‘A faster than expected increase in the number of scheduled live events’
- ‘Pent up consumer demand for in-person live sports and entertainment’
But there will be many in the Live Event business who have tangled with Viagogo in the past and would not share the analyst’s enthusiasm that ‘Moody's believes Viagogo will be able to exceed historical EBITDA margins’.
And if you thought higher than ever future EBITDA margins for Viagogo was alarming, this Moody’s analysis of the current state of Viagogo’s books is even more concerning for those, like DAIMANI, who consider the online secondary market a malign presence:
‘Viagogo has good liquidity including ample cash balances, working capital inflows from upfront cash receipts in advance of reimbursements to ticket sellers, and minimal capital expenditures. However, there is uncertainty over the timing of Viagogo's full recovery, and the ticketing market remains very competitive with Vivid Seats, the next largest secondary ticketing provider, planning to go public and Sports Illustrated launching its own ticketing platform, SI Tix. Moody's expects adjusted free cash flow and leverage will improve meaningfully as Viagogo's top line grows and excess cash is applied to debt repayment.’
As this Tweet from anti-Viagogo lobby group Clean Up Tickets makes clear, Viagogo is sitting on a pile of cash or ‘ample cash balances [and] working capital inflows from upfront cash receipts in advance of reimbursements to ticket sellers’.
Eltons john’s biggest fan today is viagogo. Using the word “reschedule” instead of “cancel” will allow them to hold millions (illegally btw) for another 2 years. They’ll tell customers their terms are above LAW @CMAgovUK STOP THIS NOW pic.twitter.com/km8SOENTVd— Clean Up Tickets (@TicketsClean) September 16, 2021
But some of the cash will be exiting Viagogo – now owners of StubHub – following the settlement last week of a multi-state claim against StubHub for failing to honour the terms of their FanProtect Guarantee when the Live Event industry went into lockdown in March 2020.
A total of USD16.7m in cash refunds will have to paid out to 75,000-plus customers in the states and territories of the District of Columbia, Arizona, Arkansas, Colorado, Indiana, Maryland, Minnesota, New Hampshire, Ohio, Virginia, and Wisconsin.