London based Seatwave, like StubHub (acquired by eBay for $310 million) and TicketsNow (acquired by Ticketmaster for $265 million) resells tickets to major events. The company was founded in 2006 by Joe Cohen, formerly with Ticketmaster and Match.com.

According to PEHub, the European market hasn’t had a strong online reselling presence, particularly compared to the United States.

Scalping tickets (reselling tickets) is not the easiest market to be in, with the practice frowned upon by many, and often illegal as well. The resale of football (soccer) tickets is illegal in the United Kingdom unless the resale is authorized by the organizer of the match, such as an under an agreement Seatwave competitor Viagogo has.

The site was founded by Eric Baker, one of StubHub’s founders, and launched in 2005 after a falling out with the company. Baker is now returning to the US market to take on StubHub, with a fresh $30 million coming from a series C round led by Index Ventures. Other participating investors included LVMH Chairman Bernard Arnault, German media mogul Dr. Herbert Kloiber, and international financier Lord Jacob Rothschild. The company has a total of $50 million in financing.

For their US launch, they’ve closed a deal with the Cleaveland Browns to be the official secondary ticket provider. The deal, however, comes on the heels of StubHub’s larger exclusive deal to be the MLB’s official online ticket resale marketplace.

Viagogo still has a larger presence in Europe, making exclusive ticketing deals with a number of Europe’s top teams, including Manchester United, Chelsea Football Club and Bayern Munich. Baker’s previous experience at Viagogo seems to be helping. The company claims to be generating more revenue in June, its tenth month in operation, than StubHub did in its first 15 months combined.

Viagogo makes money by adding a 10 percent service charge to ticket prices for buyers and takes a 15 percent service charge to sellers. So, a ticket listed for $100 costs a buyer $110, with $85 going to the seller. StubHub follows the same pricing structure.

Individual franchises that operate independently of MLB.com are free to use ticket resellers of their choosing, as are fans reselling tickets. All tickets resold by MLB.com operated sites, however, are now required to use StubHub exclusively — making the company that’ll be most largely affected by this deal a little outfit called TicketMaster.

Major League Baseball taps StubHub as ticket reseller [Reuters]

It looks like the rumors forced eBay’s hand and they are announcing the deal earlier than expected – they are acquiring San Francisco-based StubHub for $285 million plus the cash on StubHub’s books, which is about $25 million. The deal has been signed and should close in 30 days or so. eBay will be releasing a press release shortly.

The original source of the leak may have been one of the StubHub founders who left the company over a year ago.

StubHub is rumored to be doing $10 million or so in profit on $400 million in gross annual sales, implying just over a 30x multiple to EBITDA. That’s quite a valuation.

The secondary market for event tickets is a dirty but lucrative place to be. I have first hand knowledge from my time as COO of RazorGator, a Kleiner-backed ticket marketplace based in Los Angeles. There’s a food chain, starting with the guys that hang out at stadiums before games and concerts scalping tickets, up through ticket brokers that actually have a place of business, finally ending with the ticket marketplaces offered by companies like eBay and StubHub.

The entire food chain is closely connected, and the ticket brokers in the aggregate control most of the market. They have elaborate computer systems for trying to obtain the hot concert tickets from Ticketmaster the second they go on sale. Theater is covered with insiders at the box office who hold the best tickets for hot shows for brokers, and receive a cash kickback for their trouble. Brokers also own season tickets for the hottest sports teams, and develop long term relationships with fans who control good season tickets and don’t want to give them up, but rarely attend games. It’s a relationship, mostly cash business, and the best ticket brokers make millions a year. Little of that revenue actually gets reported to the IRS.

Most people would be surprised at how few people control most of the tickets for the really big events like the SuperBowl and March Madness.

Brokers sell tickets any way they can. They hire scalpers to hang out at events, telling them not to hold too many tickets or cash at any one time in the likely event they are arrested or shaken down by the police. They have their own websites. And they list their tickets on marketplaces like eBay, RazorGator and StubHub. Usually they list the same tickets in multiple places, and if they are sold multiple times they try to find comparable replacement tickets, or just bail on the customer.

eBay keeps their hands fairly clean, although they move a lot of event tickets. They never own the tickets directly which keeps them above the ticket scalping laws, and they try to enforce the complicated and varied state laws regulating secondary ticket sales. The many brokers who sell tickets on eBay tend to treat eBay customers pretty well, mostly out of fear that eBay will ban them if they don’t.

Will eBay Acquire StubHub?

StubHub is another ticket marketplace that has done extremely well in the last few years. Rumors suggest they moved more than $400 million in tickets last year, earning $10 million or so in profit. There have been rumors for some time now that eBay is in the process of acquiring StubHub for $300 million or so. Bambi Francisco first reported this last October. The Wall Street Journal (subscription required) is repeating the rumor today, saying a deal may come as early as this week.

Our sources at ebay denied the October rumor, but they are strangely silent today.