If AllGood Entertainment chairman Patrick Allocco has his way, "90210" will come to mean something besides Beverly Hills in the concert industry.
The independent promoter has adopted the famed zip code as shorthand for an initiative he’s shopping that he hopes convinces artists to eschew massive guarantees.
His 90 percent to ("2") 10 percent offers, instead of a flat guarantee, a 90/10 split on the net after deducting pre-agreed expenses and adding 90 percent of sponsorship money.
It is a daunting proposition, considering how well-trained artists are to take the safe – and many times generous – guarantee. However, Allocco believes not only can an artist potentially walk away with a substantially larger cut of the money in the settlement but promoters can make a fair profit as well.
"There’s plenty of 90/10 offers out there," Allocco told Pollstar. "It’s often difficult when you’re paying seven-figure guarantees trying to meet that guarantee with all the other expenses – it’s not a business, it’s a gambling industry. What I’m trying to do is come up with a fair proposal for the industry."
The promoter recently sent a letter to major agencies and artist managers pitching his model, hoping to pick up some interest in the 90210 plan for artists touring not only the U.S., but in Latin America and Puerto Rico.
In the letter, AllGood offers responsibility for all tour-related expenses, the 90/10 net after agreed-upon expenses, a 90/10 split on sponsorship, and a guarantee to cover all expenses that exceed the original agreement.
"We’ll sit down and discuss the tour expenses – you’ll agree to them; I’ll agree to them," Allocco explained. "After we finish up, I’ll give your artist 90 percent of the net, and we’ll keep 10 percent. But the real thing is that we’ll give 90 percent of the sponsorship – and nobody does that.
"Promoters are living on the sponsorship right now," he continued. "Say in the instance where you have $200,000 in sponsorship for an event, we’re going to throw 90 percent of that sponsorship to the artist. It’s the most generous profit margin in the industry."
Allocco acknowledges it’s not a business model for everyone, but one that a lower-overhead company like AllGood can facilitate.
"If your artist is good enough to command a high six- or seven-figure guarantee then you shouldn’t have any problem playing to my agreement. I’m guaranteeing the expenses; if I go over, I eat it," Allocco said.
At first, it may sound like Allocco is pulling money out of thin air – after all, he’s claiming both the artist and the promoter can make more money from the same show than had the artist simply taken a guarantee. But he’s penciled out the numbers for a typical A-list arena artist playing a show in his Puerto Rican market.
"Typically, your total gross is going to put you around $1.4 million to $1.5 million," Allocco said. "You are going to have sponsorship on top of that, usually in the area of $200,000 to $250,000. That all gets lumped in together. Your typical expenses are going to run about $400,000.
"So let’s say you net $1.2 million. You’re giving 90 percent of that $1.2 million to the artist, and we’re taking our 10 percent in profit. In the state of the current industry, I could be walking away with nothing and the artist walks away with his guarantee and everybody makes money but the promoter."
Acknowledging that concert promotion is always a gamble at best, even for a top-tier artist, why should an artist or his agent forego a guarantee?
"To make more money. Greed. If you are an agent or a manager, and I can tell you that you’re going to make more money doing it my way, then there’s an incentive there for you," Allocco said.
"Instead of the usual offer, which is typically a guarantee plus an 85/15 split of the backend, why not take the shot to make an extra couple hundred thousand with this offer? It’s simply a matter of offering somebody the ability to make more money."
Now that AllGood has cast its idea far and wide, is anyone biting?
Allocco said that he’s currently in negotiation with four "A-list" artists who contacted him after learning of AllGood’s offer. He hopes to be able to make an announcement of agreements within the next few weeks.
"People are out there paying high guarantees and they’re not happy with paying them," Allocco concludes. "At the end of day, it’s like going to Vegas and gambling. There’s no guarantee there for the promoter. All I’m saying is, hey, I’ve paid my dues, let us have a chance at a fair profit.
"Ten percent is fair for us. Our overhead is low, we’re able to work for a lot cheaper than the big guys because our overhead is low, and we’re willing to make this offer to the entire industry."