AEG Arena Milestone For China

Near-instant sellouts of the first nine concerts at AEG’s 18,000-seat Mercedes-Benz Arena in Shanghai herald the opening of a world-class live entertainment market in China, if AEG President/CEO Tim Leiweke is reading the tea leaves correctly.

And given AEG’s track record managing buildings like London’s O2 and the Staples Center in Los Angeles, there’s little reason to doubt him.

The Mercedes-Benz Arena’s first public ticketed event, a five-concert run by Chinese superstar Faye Wong launching Nov. 19, was an immediate sellout, according to AEG. That string stretched to nine, with the addition of four shows with Cantopop star Jacky Cheung also going clean in a single day, the company reported.

It’s encouraging news that, unlike many prior events on the Chinese mainland, it’s homegrown talent driving the sales rather than Western artists playing primarily to Westerners working or traveling in Asia. But even more encouraging, according to Leiweke, is the promise of other state-of-the-art venues in the planning stages in other cities joining Shanghai to create routing opportunities for full tours by international superstars.

Built by the Shanghai government and managed by AEG-Oriental Pearl Group Culture and Sports, Mercedes-Benz Arena is already a draw on its own, attracting some 50,000 people per day during Shanghai’s World Expo that concludes Oct. 31.

It’s the prospect of breaking open a new market in China that has Leiweke excited.

“This is amazing because it’s going to be a turning point in the live entertainment, music and sports business within that part of the world,” Leiweke told Pollstar. “As for live music, seeing nine events sell out in one day is a pretty clear indication of how successful that building is going to be.”

China has long had a reputation for being a difficult market, lacking spacious and modern facilities for international touring artists. That began to change with construction of new venues for the 2008 Summer Olympics in Beijing. But it doesn’t make a lot of financial sense for an artist to travel to Beijing for a one-off.

“It’s not that China itself is a difficult marketplace, but it’s difficult to make economic sense out of touring if you have no venues that ultimately are built around the way we do business today,” Leiweke explained. “Now we have an 18,000-seat arena that is as nice as The O2, Madison Square Garden and Staples Center. Our ability to go in there and have an economic model when two, three or four of these buildings are built gives us the ability to do real tours, real routing and real value for tickets. It’s a lot easier to get an artist to want to go play China.

“Now it’s not, ‘Hey, you’re going to lose a lot of money by putting your production over there, but you’ve got to break into the marketplace.’ Now we get to go back to the artist and say there is a real chance to make some money in China and break through in that marketplace. You can do that with the Mercedes-Benz Arena. That’s the change,” Leiweke said.

AEG is banking on a full plate of live music, sporting events including professional hockey and basketball, and family events to keep turnstiles spinning. The model differs from that of many western venues that rely on anchor tenants such as NBA and NHL teams, but Leiweke maintains it’s a sustainable one.

“Chinese artists were the first ones to go on sale because they’ve clearly seen what we’ve seen, but maybe the rest of the industry hasn’t: that market and Mercedes-Benz Arena are going to be unbelievably successful for them. Before that, they were playing in old buildings that seat 8,000 people. This is going to open the door for them.

“The real key is going to be that international artists are going to look at Shanghai and see it’s a must-play building just like The O2 is in London. We’re going to create an economic model for us and our partner, Oriental Pearl Group, that is not going to require an anchor tenant. Shanghai is that vibrant a market and this building is that brilliant,” Leiweke said.

Mercedes-Benz Arena is part of a live entertainment destination district in Shanghai not unlike the L.A. Live campus and adjacent Staples Center. In addition to the arena, there are movie theatres, restaurants, a 1,000-seat music club and ice-skating rink in the immediate vicinity.

The inside of the venue is just as dazzling as the outside, according to Leiweke, with production and technical specs rivaling and in some cases besting amenities at The O2.

“When you look at their back-of-house and see the production capability, broadcast studio, security room and food service prep area, it’s as good and as sophisticated as any building of its class around the world,” Leiweke said.

With full rigging points, loading dock areas and plenty of marshalling space, Mercedes-Benz Arena is able to accommodate the largest international touring productions, he added.

The multi-purpose venue boasts cutting edge light, sound and video systems, six levels including world-class VIP clubs, luxury suites and a 20,000-square-meter retail platform.

It’s already getting its shakedown cruise with its World Expo debut. By the time the Expo closes, Leiweke estimates Mercedes-Benz Arena will have had 8 million people tour the facility before it hosts its first concert.

“Unfortunately, I’m going to have to break the news to [GM] Lee Zeidman that Staples Center is no longer the most heavily trafficked building in the world,” Leiweke said, laughing.