Live Nation CEO Michael Rapino outlined the company's plans to slowly reopen the concert industry. Rapino made public statements on the company's plans during a recent earnings call.
Overall, revenues were down 20% compared to the prior year, and revenue was down 25% from $1.318 billion to $993.4 million. Ticketing was down 16% and fan attendance in general was down 6%, a troubling number (keeping in mind, concerts were only canceled in the States with two weeks left in the first quarter).
But there was good news, according to Rapino. Variety reports he claims 90% of fans are holding onto their tickets rather than seeking refunds, making no mention of the company's controversial updating refund policy. Rapino claims that based on internal surveys, most fans are ready to get back to shows.
“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."
President Joe Berchtold noted that Live Nation has "$870 million in available cash, $900 million untapped, so that’s $1.7 billion in untapped liquidity to start with. 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.” [emphasis mine]
Rapino was asked about lowered guarantees for artists, and it's clear that it will be the norm for the immediate future.
“It’s been a unique time but we’re all in this together,” he replied, “and I would say artists, agents and managers have been incredibly supportive.
“The reality is,” he continued, “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.”
Rapino also discussed their strategy for reopening:
“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” — which he may have mentioned because a socially distanced concert is scheduled there 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,” he continued.
“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.”
Based on our own polling (below), while most metal fans want to return to attending shows, the majority would not do so until there is some form of adequate safety in place.
