Apr 1, 2020 - Sports

Why StubHub halted refunds

Kendall Baker, author of Sports

Illustration: Aïda Amer/Axios

With sports on pause and large gatherings banned across the globe, the live events industry has effectively ground to a halt.

The state of play: In the U.S. alone, more than 23,000 events have been canceled, postponed or rescheduled in the past three weeks.

Driving the news: Online ticket exchange StubHub, which facilitates the constant selling and re-selling of tickets, recently changed its refund policy for canceled events.

  • Old policy: StubHub has historically refunded buyers for canceled events before collecting money from sellers, while also paying sellers for ticket sales before events actually happen.
  • New buyer policy: Two weeks ago, buyers were being offered (1) a refund or (2) a coupon valued at 120% of their order once an event was officially canceled. But as of last week, refunds are no longer being offered unless the buyer's billing address or the event is in a state or international jurisdiction with consumer laws around refunds.
  • New seller policy: If sellers were paid for tickets to canceled events, StubHub will charge their credit card to reverse the transaction and direct sellers to contact the original ticket company for a refund.

The response: With an estimated $1 billion tied up in tickets at a time when Americans are filing for unemployment at record rates, StubHub's decision to stop issuing refunds was met with plenty of criticism.

  • Yes, but: Most complaints failed to consider the "seller" side of StubHub's business, which appears to be what forced the company's hand — and could force the hand of other two-sided ticket marketplaces, too.

Interview: I spoke with StubHub president Sukhinder Singh Cassidy.

KB: A week ago, you were offering refunds for canceled events. Now you're not. What changed?

"We have a situation right now where we had over 20,000 events canceled, basically at the same time. In addition to our buyers, we also have a million sellers on our platform, all of whom are trying to figure out how they're going to get recouped from the original seller — the venue, the team, the artist — and the timing delays are going to be significant."
"In normal times, we would take the risk of giving refunds to buyers before recouping the same refund from the seller. At regular volume, we can afford to take that risk. But these are unprecedented times."
"I understand that by going first, our policy change may have come as a surprise to people. But remember, we're not the original sellers of the tickets or the holders of the inventory. So there's just no way for us to take that timing risk on behalf of sellers, at scale, all at the same time."
— Sukhinder Singh Cassidy, Stubhub president

KB: Last week, you began furloughing employees. What went into that decision?

"We took the furlough option because we wanted the optionality to understand how this industry will recover. We felt like the only way to give us flexibility was to take those actions early."
"I'm not proud of having to do it, but in order for us to be there for our customers post-recovery, we have to make these tough decisions now."

P.S. ... Something else to watch as MLB start dates get thrown around and football season approaches: Postponed games vs. canceled games.

  • For postponed games, buyers can't even get a coupon from most ticketing companies, leaving them with two choices until the game is officially canceled: Try to re-sell the ticket or plan to attend on the rescheduled date.

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