AEG And LN Scrap For Copenhagen

While Danish media question why the cost of a new Copenhagen arena comes out three times as expensive as a similar building in Herning, AEG and Live Nation are fighting toe-to-toe to run it.

The popular daily newspapers have focused on the “astronomical” cost of the building – something in the region of 1 billion Danish kroner (nearly $180 million) – but for the two American conglomerates, winning the contract for the Copenhagen venue may determine who wins the battle to control a huge tract of northern Europe.

It was made public that they’re the only remaining bidders left in the ring at a press conference at the city’s Bella Sky Hotel Sept. 23. Danish media previously speculated that SMG, Global Spectrum Europe, and FC Amager soccer club chairman Brian Mollerup may also have thrown their hats in the ring. Mollerup headed a consortium that lost out when AEG won an earlier bidding process in 2009.

Since spring, it’s been obvious that AEG and LN would be among the leading candidates. Both attended a meeting at the offices of city redevelopment agency Realdania April 19.

The meeting was set up to gauge the level of interest the project was attracting from developers, builders, venue operatives and promoters.

The winner will likely be announced in December.

The Danish bidding process isn’t new territory to AEG, having won the 2009 tender. The project fell apart because AEG couldn’t round up enough backers to fund the build.

LN didn’t enter that bidding war, apparently because it wasn’t comfortable with competing for a civic venue when the local authority didn’t appear to have the confidence or the cash to pay for it.

What’s changed in the last two years is that a study by London-based global construction consultants Davis Langdon apparently shows it’s financially viable for Realdania, Copenhagen City Council and the City & Port Development organisation to pay for the building and then lease it to the developer. City & Port Development owns the Ørestad site earmarked for the development.

That means that this time around, whoever wins the bidding to run the venue won’t have the additional burden of being its chief fundraiser.

Rather than just being another story about two huge American venue operatives scrapping to run another new European arena, the battle for Copenhagen has a greater significance because of the city’s location and its strategic importance.

Roskilde University lecturer Fabian Holt, who specializes in music and events, told leading Danish business paper Børsen that it’s a battle between giants.

“It is a battle for the market, which neither of the two players wants to lose,” he said.

If, for example, AEG came out on top it would then be running arenas in Berlin, Hamburg, Copenhagen and Stockholm.
It’s not a bad routing for a touring act, particularly an American one, that can afford the time to do only four shows in Germany and the Nordic region.

Such an arrangement has the potential to marginalise Live Nation’s standing in the region and its influence in a wider chunk of northern Europe.

LN’s best counter attack may be based on its track record of procuring international talent, which is of vital importance to a city that wants to hear the arena’s tills ringing as often as possible.

AEG may find it hard to get enough names in the diary without LN’s involvement as the promoter. AEG’s own efforts to set up shop as a promoter in Scandinavia fell apart and it shuttered its Stockholm office within three years.

Dave Maloney, one of the promoters AEG poached from Live Nation Sweden to run the operation, is now back in the LN fold at Luger, a wholly owned subsidiary.

Two of the most recent AEG tours to visit Copenhagen – Justin Bieber and Bon Jovi – were promoted by LN.

At press time it wasn’t possible to get comment from Brian Kabatznick, AEG’s European vice president of facilities, on whether he felt LN would support the arena if his company secured the contract to run it.

Neither has Live Nation Denmark chief Flemming Schmidt commented on how his company would react if it lost out on the new building.

If LN wanted to play hardball it could arguably switch its future arena-sized shows in Copenhagen to the 15,500-capacity Malmö Arena (or Hyllie Arena) in Sweden, thereby starving the new Danish venue of the talent needed to make the numbers stack up.

Danish music fans would hardly be inconvenienced by the switch. It would mean crossing the border into Sweden to catch the act, but the bridge that links Malmö with Copenhagen means the journey is arguably less hassle than crossing London.

In most cases it wouldn’t even be necessary to switch to Malmö. Family shows and musicals, or any event with multiple bookings, can easily be accommodated in Copenhagen’s 5,000-capacity Forum.

It could be even more problematic for AEG if ICO Concerts, Denmark’s second-largest promoter of international acts, continues to show indifference to the new area.

ICO told Børsen that, “from a concert-related point of view,” it was hard to defend spending three times as much on a multi-arena in Copenhagen than was spent on the 1-year-old Jyske Bank Boxen arena in Herning.

The Herning venue, which cost about $59.2 million, has already hosted shows by Lady Gaga, Roger Waters and Eric Clapton.

Having been in the planning stage for almost 10 years, the new Copenhagen arena is expected to be completed by fall 2015.