Live Nation CEO Outlines Plans to Reopen Concert Business
Live Nation CEO Michael Rapino hosted a call with the company’s investors to outline its first-quarter earnings on Thursday, May 7, and as expected he fielded a ton of questions about when and how he saw the concert business reopening, in addition to inquiries about the company’s financial health.
Rapino rolled out a figure indicating that 90% of ticket holders have held onto their tickets instead of seeking refunds since the coronavirus caused mass concert cancelations, making no mention of the fact that the company’s misleading and ever-changing refunds policy may be responsible for a good chunk of that number. Still, Rapino touted the stat as a vote of confidence from fans that interest in attending live events is still strong. He explained:
“In a survey we just posted, we talked to 10,000 casual and ongoing ticketbuyers and the data is pretty compelling: 90% of fans are saying ‘I can’t wait to get back to the show,’ and I think our refund rate says everything — we’re running somewhere between a 5-10 refund rate right now on a global basis, that’s much lower in Europe [which is farther ahead in the recovery process], and that’s not out of line for when we reschedule a traditional tour [under normal circumstances]. Now we’re just going to [watch] the science and see when we can back out there on a safe manner.”
With word circulating in the industry that artists are being asked to take lower guarantees than they’re accustomed to due to future uncertainty surrounding fan willingness to attend live events, Rapino painted a somewhat rosy picture indicating that artists and their representatives have been accommodating:
“It’s been a unique time but we’re all in this together. And I would say artists, agents and managers have been incredibly supportive.
“The reality is, in ‘20 and ’21, the promoter can’t take all the risk on the business, as we historically have. We need to share some of that, especially refunds on the guarantees. So while we don’t want to get into the what and how of the deals, we absolutely are getting great latitude from the artists and agents to look at the traditional business of high guarantees and all of our risk, and to help share that risk, going into ‘20 and ’21, to get the shows back on the road and help us absorb it, and not take all of the [financial burden] of refunds, sales, sponsorship, food, beverages and unknowns for the next 6-12 months. They’re helping to share some of that risk to help us get back and scale fast, and not worry about losing money on the show.”
As for the question of when, Rapino indicated Live Nation would start dabbling in smaller shows this fall (small in the relative sense of clubs and theaters compared to arenas and stadiums) and would then look to expand to larger venues early next year (putting them on sale in the back half of 2020):
“So over the next six months, we’ll be starting slow and small, focusing on the basics and testing regionally. But whether it’s in Arkansas [where a socially distanced concert is scheduled for May 15] or [another] state that is safe, secure and politically fine to proceed in, we’re going to dabble in fan-less concerts with broadcasts and reduced-capacity shows, because we can make the math work.
“There are a lot of great artists that can sell out an arena, but they’ll do higher-end theaters or clubs. So you’re gonna see us [gradually reopening] in different countries, whether it’s Finland, Asia, Hong Kong — certain markets are farther ahead [in the recovery process]. Over the summer there will be testing happening, whether it’s fan-less concerts, which offer great broadcast opportunities and are really important for our sponsorship business; drive-in concerts, which we’re going to test and roll out and we’re having some success with; or reduced-capacity festival concerts, which could be outdoors in a theater on a large stadium floor, where there’s enough room to be safe.
“We think in the Fall, if there are no second hotspots, you’ll see markets around the world [reopening] — Europe, specifically, has talked about opening up 5,000-plus [gatherings] in September. And on the venue side, we’re dealing with federal, the White House, every government body you can imagine, and we’ve got a great task force around what we have to do with the venue to make you safe.
“So I think in the Fall you’ll see more experimenting and more shows happening in a theater setting, into some arenas. And then our goal is really to be on sale in the third and fourth quarters for 2021 at full scale.”
Whether fans feel safe enough to show up to these events, of course, remains to be seen.
Live Nation’s revenues were down 20% year over year in the first quarter even though the coronavirus shutdown only impacted the quarter’s final three weeks. Concert revenue was down 25% (from $1.318 billion to $993.4 million) ticketing was down 16% and fan attendance was down 6.2%.
Nevertheless, Rapino insisted the company was financial healthy, saying “long-term liquidity is not a concern” with $1.7 billion in cash available if needed. He added, “So we can go through this year without doing any shows at scale without any concern, even though we’re not likely to have a huge volume of shows.”
Read the full report over at Variety.