KP Buys-- Potentially-- Hot Ticket
The dot com boom was a blessing and a curse for everyone who lived, worked, or invested in the 1999-2000 Silicon Valley hype machine, myself included. I moved out here in late 2000 to take a job, luring my now-husband to follow. “You’ll be able to snap your fingers and get a great job!” I naively said. January 2001 hit and you can probably imagine how that turned out.
For venture capitalists, there was the obvious downside of investing in too many dumb dot coms that would go down in flames and the less obvious downside of subsequently painting all ecommerce deals with the same negative brush. Come 2003 or so, many fledgling Internet companies were making a lot of cash, and most VCs found themselves out of some of the hottest young companies.
The secondary ticket market was smack in the middle of all of that.
It came of age just as the bloom was off the Internet rose, but today there are several growing profitable companies-- few of which have any venture capital or angel funding at all. For more on the market, check out this article.
Well, late or not, Kleiner, Perkins, Caufield & Byers and Oak Investment Partners are placing a big bet. Yesterday, the firms announced a $26 million investment in RazorGator, one of the leaders in the very crowded and sometimes shady space.
The press release went on and on about how reselling tickets is a legitimate market. You don't have to convince me. And it’s far from perfected with existing players eBay, Craigslist, and StubHub. I still have a tough time finding hard-to-find or last minute tickets at a remotely reasonable price-- but by the same token whenever I have "hot" tickets I'm trying to sell I can't seem to command the premiums others do. The Internet has made the market more efficient for sure, but not efficient enough if you ask me.
But the RazorGator deal is potentially about more than just connecting buyers and sellers better. I caught up with Russ Siegelman, the KP partner who did the deal, to talk about what $20 million can do for a company that seems to have already done much of the heavy lifting on its own.
No. 1 is legitimacy. Now RazorGator has pretty good war chest and the KP name behind it—crucial in the often-shady and increasingly competitive secondary ticket world. This will help with partnerships. Not just partnerships with other Web sites to drive traffic; the company already has deals with Yahoo and MSN. But increasingly RazorGator needs to partner up with major league sports teams, concert venues, and the like to sell off their excess or returned season tickets.
Eventually, Siegelman sees a day when major league baseball ticket prices could fluctuate according to market demand and how a team performs over the year. Imagine a team sells its best tickets for $90 on opening day. Say, the season starts and their star player gets injured. (Barry Bonds come to mind here, Giants fans? Even this week’s Dodgers series isn’t sold out!) And say the team falls out of playoff contention before September even starts. Unless you live in Boston or Chicago attendance will fall off more precipitously than the team could have expected opening day. Wouldn’t a team rather get $60—plus parking and concessions revenues— for a seat that would otherwise be empty?
RazorGator doesn’t have any of these deals to announce yet, but Siegelman says they’re “having conversations.” That kind of shift in the market could make KP’s late stage—and most likely high valuation—bet a smart move and will benefit fans. And, yes, it could hurt regular ticket sales for small market teams, but let’s face it: Event tickets are really no different than airline tickets. They’re a perishable good. And when your players are warming up to a 7,000 seat crowd, isn’t $60 a seat better than nothing?
TrackBack URL for this entry: