Dollars Make Sense

For the last few months, the dollar has been rising in value. A few outlets, notably Online Forex Trading, have reported this is a boon for U.S. artists who negotiated their overseas tours in American dollars while those who went with local currency are feeling the pain.

Why the U.S. dollar would be rising in a time of economic crisis is debatable. Many experts say it’s because investors are tucking money into safe havens like U.S. Treasury bonds. Then again, if bad news equals higher dollar value, it wouldn’t explain why the dollar took a quick plunge in mid-December after more bad news about housing prices.

Another curiosity is why anyone would negotiate an overseas tour in anything other than U.S. currency. One veteran industry insider, who would only speak to Pollstar on condition of anonymity, was perplexed. If a U.S. artist wants a $100,000 guarantee for a London gig, that artist asks for $100,000 in U.S. dollars, no ifs, ands or buts. Speculation is not an option: the artist gets the agreed-upon guarantee whether the currency rate changes for better or worse.

This is such an industry standard that it’s hard to imagine that the alternative – negotiating in local currency – takes place. What’s likely occurring is a loss of money value on the back end. The overage is calculated in local currency so that the artist can pay a local lighting or sound company at settlement, or to get some cash for the nearby pub. And that can become costly if the dollar has dropped since the contract was signed.

But these are not ordinary times. Those who deal in these kinds of negotiations have likely never seen this kind of fluctuation.

A recent tour downunder lost the promoter money. That happens, but not usually when the tour is completely sold out. The promoter negotiated a deal in U.S. dollars when the Australian dollar was at near parity but, four months later when the tour started, the Aussie buck was worth about 60 percent of a greenback. It was great business, a great tour – but a financial loss, sources said. There are shows out there with great business that are costing promoters tens of thousands of dollars.