Live Nation Stock Soars On Win

Live Nation validly terminated its ticketing software license agreement with CTS Eventim and doesn’t have to pay the German ticketing giant any compensation, the International Court of Arbitration ruled June 12.

Sparked by LN dropping Eventim after merging with Ticketmaster, the issue has rumbled around the court’s commercial division since Eventim chief Klaus-Peter Schulenberg brought the action in 2010.

In the hour following the announcement, LYV stock had a $2 jump.

The verdict was originally expected at the end of last year.

“We are very pleased with, but not surprised by, today’s ruling. The arbitrator’s final decision vindicates Live Nation’s steadfast position that we justifiably terminated our contract with CTS,” said LN chief Michael Rapino.

Although many Europeans including LN and Ticketmaster execs were expecting Eventim to be awarded compensation in the order of $50 million to $100 million, LN UK chief exec Paul Latham was also confident of his company’s position.

“If it had been a fist fight, the ref would have stopped it,” he told Pollstar after giving evidence to the arbitration court in New York in 2011.

Latham felt the weight of evidence was very much in LN’s favour.

Eventim said Live Nation broke an agreement to license its platform when it was close to merging with Ticketmaster. It also said the deal had seriously damaged its chances of getting a foothold in the UK.

When the LN-Eventim deal was announced in December 2007, Schulenberg said it was worth $100 million per year to his company.

It was a 10-year deal and, taking some punitive damages into account, he was believed to be asking the ICC for $2 billion. Live Nation was to license CTS’ software and pay a fee for each ticket sold in North America, while CTS would handle ticketing in the UK and parts of Europe.

LN’s counter argument was that the Eventim system broke down when faced with heavy onsale demand. LN cited its failure on major stadium shows and festivals in the U.S., the UK, The Netherlands, Finland and Sweden.

The problem was exacerbated by Eventim pointing out that it could upgrade the system at a cost, while LN continued to complain about the German company’s lack of technical support and backup. Eventim never set up a U.S. office.

The issues with Eventim are LN’s only hangover from the days before it merged with Ticketmaster and it’s now rid of it without having to pay its former partner any compensation. Investors seemed relieved by the news as well, as LYV shares jumped more than 8 percent.

The issue is believed to have cost both sides about $40 million in legal costs.

It wasn’t possible to get comment from Eventim at press time.

However, a note on the company’s website says: “[CTS Eventim ] has not succeeded in the legal dispute against Live Nation Entertainment Inc (Live Nation).

“Claims for damage compensation filed by the Munich-based company against Live Nation have now been rejected by the competent ICC Arbitration Court.

“The management board of CTS Eventim AG is disappointed but will accept the ruling without further comments. It is important, after 3 years duration of proceedings, that Eventim is able to fully concentrate on its operational business again.”

The Court Of Arbitration has become an increasingly popular method of dealing with the final determination of a contract, not least because the procedural rules are less stringent than would be the case in the UK High Court or the U.S. Federal Court action.