AEG Shakes With CTS

CTS Eventim announced August 18 an exclusive ticketing deal with AEG in Germany that the company thinks will be worth more than a million ticket sales per year.

The deal raises several questions because AEG has had a longstanding relationship with Ticketmaster. It was uncertain at press time if this agreement will remain isolated to Germany or if it is the beginning of an expanded relationship with CTS.

To that effect, TM spokesman Albert Lopez issued the following statement to Pollstar: “Our contract with AEG is global, multiyear and generally exclusive. We’ve been great partners for many, many years. We expect they’ll meet their contractual obligations, just as we will ours.”

TM would not say when the multiyear contract expires.

It also brings into question CTS’ relationship between two major competitors – Live Nation and AEG. Live Nation, which is cutting ties with Ticketmaster, is working with CTS to build its own worldwide ticketing platform.

And there’s a further significance to this, out on the fringe level of speculation: What would happen if TM was to purchase or merge with CTS?

An AEG spokesman was not available for comment at press time.

The deal takes effect immediately and covers major arenas including the O2 World in Berlin, which is set to open September 10, and Hamburg Color Line Arena as well as Anschutz-owned ice hockey teams Eisbären Berlin (Berlin Ice Bears) and Hamburg Freezers.

Live Nation announced its own deal with CTS Eventim in December, in which LN will license and utilize the Eventim platform in setting up its in-house ticketing system. CTS Eventim will also handle back-office ticketing services in the U.K. and across Europe.

News of the AEG deal coincided with the German ticketing giant revealing in its first-half results that its live music business sector – the Medusa Group of promoters – isn’t quite matching its record-breaking numbers from 2007.

CTS ticketing revenues and profits are up by a third but fewer major acts were on tour, leading to Medusa’s live music earnings before interest and tax (EBIT) being down by nearly the same percentage, falling from euro 18.4 million to euro 13.2 million.

Although the drop in profits is steep, Medusa still recorded its second-best earnings in the history of the company. Medusa comprises Marek Lieberberg, Peter Rieger, FKP Scorpio, Dirk Becker, Semmel Concerts and Argo Concerts.

In 2007 the group made euro 20.5 million, most of it in Q1 and Q2. Despite being about euro 5 million adrift of the mid-year total, CTS can realistically expect Medusa to have another record-breaking year.

It has another euro 2 million on the balance sheet – the amount that’s been paid out in deposits and pre-production costs for tours scheduled later in the year.

Overall, in the first half of 2008, CTS revenues were down 2.2 percent to euro 209 million and the EBIT dropped 9.9 percent from euro 27.1 million to euro 24.4 million.

The noises coming out of Munich are still bullish, largely because CTS’ deal with Live Nation will kick in now that the costs of setting it up have been absorbed.

CTS is also planning to make “further acquisitions,” but Rainer Appel – vice president for legal and business affairs – isn’t giving much of a clue as to which companies are being targeted.

“We are currently negotiating in a number of European countries and we expect to finish and announce some of those over the next couple of months,” he told Pollstar.

The company’s Internet sales, which CTS sees as having the most growth potential, were 3.7 million for the first half of 2008 – also up by about a third.

The German stock markets were cool about the news and the CTS share price hovered around euro 23, well down on the 52-week high of euro 33.15.