Struggling secondary ticket company Razorgator, which recently cut about 25 percent of its staff and restructured its business model, reportedly lost $3.5 million on underperforming World Cup ticket sales, which contributed to the layoffs.
The company announced the layoffs, which totaled about 30 employees, earlier in the month and said it would no longer sell its own ticket inventory, opting instead to turn into a ticket exchange similar to rivals StubHub, TicketsNow and TicketNetwork. At the time, Razorgator President and CEO Brendan Ross said the reorganization was necessary to help the company better focus on its core business of selling tickets through its exchange.
“By narrowing our focus, we’ll ensure that our talent and creative energy is focused on the activities where we are best positioned to grow and create value. I look forward to continuing to build a stronger Razorgator based on our most exciting, core assets,” Ross said in a statement.
But, the immediate reason behind the moves was unknown until now. According to a report by sports business journalist Darren Rovell of CNBC, the bet on buying thousands of World Cup tickets for resale did not pay off for Razorgator, and other ticket resellers, because several of the 64 matches in South Africa did not sell out. The announcement of Razorgator’s restructuring occurred just days after the World Cup concluded on July 11. See the video below.
Losses occur all the time in the secondary ticket market, in part because so many events initially fail to sell out, but a $3.5 million loss on one event is substantial, particularly for an already anxious company that slowly had been paring down staff for months. The loss helped lead to Razorgator jettisoning its Atlanta-based PrimeSport ticket and travel package business back to Sam Soni, who is currently running it.
When reached for comment today, July 27, Ross declined to comment on the World Cup, but sought to reassure brokers that the company was in a stronger fiscal position since making the moves. By becoming a commercial ticket exchange only, Razorgator assumes less risk, and also stops it from competing with its own broker clients on ticket sales.
“The important thing for brokers to know is that we’re selling tickets and paying brokers just as we have since 2001,” he told TicketNews.
TicketNetwork is the parent company of TicketNews.