semi-OT: "the Dark Ages of the concert promotion business"
The subject of concerts and their effects on arena and thus owner revenues comes up periodically in multiple threads here:
- The small number of acts booked recently in Jobbing.Com and the competition with the US Airways Center.
- The losses at Nationwide Arena due to competition from ths Schottenstein Center at OSU.
- Whether Atlanta (or Toronto or ..) could make more money booking more concerts instead of NHL dates, etc
This piece on On The Media (rebroadcast from last Sept) touches on the consolidation in the concert promotion business, the increase in ticket prices, and the reduction in number of touring shows.
RICK KARR: Most musicians historically have never actually earned their livings by selling records or downloads. Only the top superstars ever got rich off of royalties. Instead, most musicians have earned their livings by putting butts in seats, playing live, touring.
But the concert business has been going through some pretty substantial changes, too.
Let's go back to 1975 when the Rolling Stones recorded this concert album, Love You Live.
You could have seen the group that had already declared itself the world’s greatest rock n' roll band for $8.50, that’s eight dollars and 50 cents. In today’s terms, that’s just 34 bucks. By comparison, the last time Mick and Keith and the boys hit the road, four years ago, most tickets were 100 dollars, in other words, three times as much.
Some longtime observers of the concert business say there’s a good reason for that spike in ticket prices. Back in ’75, the Stones played in 26 cities in North America. That meant that 26 different concert promoters handled the shows. But through the '80s and '90s, a couple of mega-promoters started to buy up their smaller rivals nationwide.
John Scher has been promoting rock shows since the 1970s. He’s worked with everyone from the Grateful Dead to Liza Minnelli, mostly in the Northeast. He says fans are paying more because the consolidated promotion conglomerates beat their local rivals by paying more to artists.
JOHN SCHER: Say there was XYZ artist and that artist was normally seeking a guarantee of 250,000 dollars a night to do an arena tour. Well, these consolidated companies were saying, well look, if you give us the whole tour and you play where we want you to, we'll pay you 350,000 dollars a show.
JOHN SCHER: What’s terrible about it is, forget the promoters. It’s the public. When you’re looking at 250- and 500-dollar tickets as being the norm for big shows, and if, you know, you’re going to spend 250 dollars to see the Rolling Stones or to see U2 or to see Madonna or Paul McCartney or, you know, any of the giant acts, that’s probably the one concert you can afford to go to all year.
RICK KARR: Doesn't something have to give at some point, though? I mean, these artists aren't going to be on the road forever. At some point, you know, Paul McCartney’s going to say, I can't tour any more. The Stones, I'm assuming at some point Mick and Keith [LAUGHTER] are going to say, we can't tour anymore. Won't the market correct itself at some point?
JOHN SCHER: Well, there’s no question that something’s going to give, and I think we're right on the edge of that. I just, a little earlier today had a conversation with a facility manager who had historically had an arena that was doing 50 to 60 show a year. This year it’s going to be under 40. It’s a direct result of there are less and less big acts. It used to be as the older acts retired, broke up or, God forbid, died, there were younger up-and-coming acts.
But if you look now at what are considered the sort of younger superstars, you know, you look at Radiohead, you look at Coldplay, you’re looking at acts that have been around for 15 years. There’re very few, very, very few artists that have become arena or amphitheater headliners with any staying power. There are, every year, a couple of artists, often in the urban world, that become very, very big for a short period of time, but the American Idol model, it’s about now, not about three or four or five years from now.
So, will it correct itself? I think it'll correct itself, but there'll be the Dark Ages of the concert promotion business probably for anywhere from five to 10 years.
That would be another point in favor of "The Atlanta Spirit Group isn't selling the Thrashers."
Ticket prices going up would be a point in favor or against - depending upon how much of those increases are going to the promoters (Live Nation, etc) and the artists and how much is going to the venues.
The decline in the number of arena touring shows is definitely not a point in favor.
Although, in either case, Philips should do fine - they are currently listed as the #8 arena in the world - and # 3 in North America, behind the Bell Centre and MSG - in Pollstar's 2009 Top 100 Venue list (based on # of tickets sold to non-sporting events).
Why venues are struggling according to AthleticBusiness.com.
Some interesting snippets:
Making the situation even more critical is increased regional competition for concerts and other special events from Kentucky's new Louisville Arena, slated to open in November a mere 190 miles to the southwest, and Conseco Fieldhouse, located 175 miles to the west in Indianapolis. Closer to home, there's Ohio State University's Jerome Schottenstein Center and Cincinnati's U.S. Bank Arena. According to The New York Times, concert promoters use some of those facilities as leverage against Nationwide Arena, forcing management there to guarantee as much as $1.1 million for a major band that would command $350,000 less at Conseco.
There are only so many monster-truck events, home-remodeling expos and boat shows to go around. So arenas, especially midsize ones, rely on concert tours to generate additional revenue. But Billboard.biz reports a 9 percent decrease in the number of concerts staged in the United States during 2009.
"This is not 'Grapes of Wrath,'" Rosentraub says, confident that the United States will rebound from the recession within two to three years — although probably with fewer active arenas. "I'm hoping the lesson learned is that we built too much. It's better to have excess demand than a glut of excess supply. And right now, we've got too many arenas out there."
For developers mulling an arena project, he recommends a careful analysis of the markets a specific facility would serve — including a detailed look at existing and potential inventory, as well as a conservative projection of discretionary income growth. It also wouldn't hurt for operators of existing arenas to conduct revised feasibility studies and determine how to survive another 24 to 36 months in a down economy.
Facilities that lack a plan to weather this storm are going to go under, warns Rosentraub. So don't be surprised to see tennis matches and religious gatherings coming soon to an arena near you. "Anything that covers expenses is good," he says. "You're going to see things in arenas that you didn't think you'd ever see."
And an interesting story linked from that one - on the conversion of a venue for concerts / basketball / hockey / etc.