Live Nation, SMG Agree On Ticketing Exclusive

In what is becoming a battle royale between Live Nation and Ticketmaster for dominance of the ticketing business, LN has fired another salvo by sealing a five-year deal with facility management giant SMG to sell tickets at most of the latter’s facilities.

Live Nation will end its agreement with Ticketmaster in 2009 and the two will become competitors for concert tickets. LN has a strategic alliance with CTS Eventim to build its own ticketing system which will be used at LN events and inside LN buildings.

SMG, which manages 216 major venues, had stayed out of the fray. But with the deal, announced September 11 by Live Nation, SMG will begin transitioning its buildings’ ticket sales to Live Nation Ticketing in late 2009. Live Nation said it will sell an estimated 5 million tickets annually by 2011 as SMG’s current ticketing contracts expire.

Live Nation estimates the agreement with SMG will bring in sales of about 25 million tickets over the life of the deal.

In the first year of operation, LN Ticketing is expected to handle more than 10 million tickets for Live Nation alone, the company said. As House of Blues contracts with Ticketmaster expire and those tickets come online, that number increases to 13 million by 2010.

And the addition of incremental tickets included in the SMG deal represent an estimated 25 percent annual increase from the 13 million LN Ticketing will service to its own venues.

“This alliance increases our expected total ticket inventory by 25 percent over the next seven years, and that’s before we even flip the switch on Live Nation Ticketing,” LN Ticketing CEO Nathan Hubbard said in a statement. “The fact that SMG, the world leader in venue management, has selected our new ticketing platform as its exclusive service provider validates that our unique content plus ticketing proposition delivers a double win via one single provider.”

SMG President Wes Westley said in a statement such a deal will “enhance our ability to drive content to our venues.”

TM CEO Sean Moriarty released a detailed statement as to why the LN/SMG deal was nothing more than “theatrics.” Ticketmaster and SMG had, one week earlier, “signed an extension to our global master agreements … through the end of 2010” and ratified multiyear contract extensions to half of the SMG-managed buildings. That means only 250,000 tickets of the 141 million sold through Ticketmaster – based on 2007 numbers – would immediately shift to the new agreement, Moriarty said.

As for the long-term, Moriarty noted that SMG does not own the buildings it manages and needs to compete with Global Spectrum, AEG, VenueWorks and other facility managers when negotiating a new facility management contract.

Moriarty ended his statement on an interesting note:

“If SMG makes decisions which no longer reflect the best interests of their clients, the results will be obvious – and causes us to consider whether we should enter the venue management business as well.”

A spokesman for SMG’s nearest competitor, Global Spectrum, noted to Pollstar that its parent company, Comcast-Spectacor, has its own ticketing system in New Era Tickets.

Meanwhile, AEG – a past proponent of Ticketmaster – recently signed an agreement with CTS Eventim for Berlin’s O2 World arena. An AEG spokesman was not available at press time to say where AEG stood on the LN/SMG announcement. MSG Entertainment spokeswoman Mikyl Cordova told Pollstar the company had no comment other than to say it has a contract with TM. Sources tell Pollstar the Garden’s TM contract is soon to expire.

LN shares jumped 6.5 percent on September 11, closing at $16.90 a share. Over the past 52 weeks, the stock has traded between $9.26 and $24.03. Ticketmaster shares, which had been humming at a steady rate, dropped 17.7 percent, closing at $15.45 a share.