Live Nation Posts $10.3B Revenue, 24 Percent Growth On Year

Live Nation CEO Michael Rapino
Waterproof Pictures
– Live Nation CEO Michael Rapino
speaks during a Keynore Q&A moderated by Emporium Presents

Live Nation had another record-setting year in 2017 as total revenue rose 24 percent to $10.3 billion, an astounding $2 billion gain from the prior year, the company announced Tuesday. 

Concerts were worth $7.9 billion in 2017, up 26 percent, while concert attendance—from 30,000 shows in 40 countries—grew 21 percent to 86 million.

Revenue from Live Nation’s 97 festivals rose 14 percent. Its festival portfolio includes the eclectic Lollapalooza, EDM giant Electric Daisy Carnival, and the veteran Reading and Leeds Festivals.

Concerts gained an incremental $210 million from acquisitions made in 2017, among them United Concerts in Utah, Cuffe & Taylor in the U.K., and the BottleRock Napa Valley Festival in the wine region north of San Francisco.

Speaking about amphitheater shows, president Joe Berchtold said during Tuesday’s earnings call the company expects an increase in business in 2018.

“If anything, the trend in [amphitheaters] over the last five years has been on the upswing” and Live Nation will look to expand its amphitheater presence through buying and building. “They’re an incredible piece of business,” he said.

Amphitheater growth has the additional benefit of Live Nation’s attention to consumer spending at the venues.

Last year, a focus on high-end products and increased points of sale—a better ability to move the lines—resulted in 9 percent growth in per-head spending. But concerts don’t—and aren’t expected—to generate a profit.

Live music drives ticket sales and sponsorship and advertising opportunities. In 2017, concerts had an operating loss deepen to $94 million from $63 million.

The Artist Nation division, an artist management group, was folded into the concerts division in 2017 because “the strategy behind artist management is to provide a full range of services related to concert promotion,” explains the company’s 10-K filing. Ticketing revenue grew 17 percent to $2.1 billion.

Gross transaction value (GTV) rose 6 percent. GTV of primary tickets, which account for 85 percent of fee-bearing GTV, grew 15 percent. Secondary GTV rose 16 percent. Ticketmaster breaks down tickets into two categories: fee-bearing and non-fee bearing.

Fee-bearing tickets include both primary and secondary tickets sold on the Ticketmaster platform or through affiliates. Non-fee bearing tickets are sold through Ticketmaster platforms include season packages (to sporting events, for example) and sales at venue box offices.

Ticketing operating income declined 53 percent to $91 million, although this deserves a caveat.. Although announced in January, Ticketmaster’s $110 million settlement in a lawsuit with Songkick hit the books in the fourth quarter of 2017. Without that expense, ticketing operating income would have been $191 million, an improvement from $174 million in 2016.

Acquired by Warner Music Group in July 2017, Songkick had sued Ticketmaster in 2015 alleging anticompetitive behavior in ticket pre-sales. An amended complaint claimed a former Crowdsurge employee—Songkick merged with ticketing company Crowdsurge in 2015—working at Ticketmaster accessed Crowdsurge’s system and stole sensitive information.

The Live Nation business model relies greatly on the high margins of its sponsorship and advertising division. Sponsorship revenue grew 18 percent to $445 million. Although its operating income dropped to $252 million from $365 million in 2016, Sponsorships was a vital contributor to the company’s bottom line.

Sponsorship revenue comes from such things as venue naming rights, on-site signage, and exclusive partnerships that currently include Citi for credit cards and PepsiCo for beverages. Acquisitions made in 2017 added $21 million to the division’s revenue. Ticketing is never without controversies.

A new Ticketmaster program called Verified Fan received incredible media attention—not all positive—in 2017. Most visibility came from Taylor Swift’s decision to use Verified Fan to keep her tickets away from the secondary market. A fan buying a Verified Fan concert ticket must register ahead of time and receive pre-approval.

Once verified, the buyer will receive a code used to purchase the tickets. Some fans’ complaints, usually about a confusing process, received widespread media coverage. CEO Michael Rapino said during Monday’s earnings call “there’s always going to be secondary tickets,” but Verified Fan’s main goal is “price the house right” and primary tickets directly to fans.

Some artists—Bruce Springsteen, Dead & Company, Foo Fighters—have been open to the idea; more than 80 Verified Fan concerts sold 3 million tickets in 2017.

The company’s shares were down 1.5 percent in after-hours trading after closing Monday

Nevertheless, Live Nation stock is up 68 percent in the last year and the company’s market capitalization is $9.9 billion.

With its 2017 gains, Live Nation has grown to gigantic proportions. At $10.3 billion, Live Nation had almost twice the annual revenue of the largest music company, Universal Music Group, whose 2017 revenue was $6.9 billion.

The concert division alone, at $7.9 billion, surpasses any music company.