The Fight For Clubland: What Spaceland Presents’ Sale To Live Nation Portends

(Photo By Teresa Lee / Getty Images) – Pour Out A 40 Oz. For CBs:
New York City’s storied CBGBs, when faced with higher rents in 2008 was forced to shutter, a fate it might not have faced in today’s heated live market that’s trickled down to the club market.

When CBGBs, New York City’s iconic venue and temple to so much pioneering punk rock and underground music, died an ignominious death in 2008 only to be replaced by an upscale John Varvatos boutique in 2009, it was notable that no one stepped in to save the venerable dive bar and cultural institution. A decade later, in what has since become an increasingly competitive club market, that outcome would seem unlikely at best.

Last week, on the opposite coast, Live Nation Entertainment announced it had acquired Los Angeles’ iconic Spaceland Presents, the club and promotions company founded in 1995 by Mitchell Frank. Its holdings include The Echo, a bastion of underground indie fare in L.A.’s Echo Park with a capacity of 350, as well as the adjacent Echoplex (cap. 660) and Downtown L.A.’s Regent Theater (cap. 1,130) which was opened in 2015 in partnership with Knitting Factory and Arts & Recreation. Spaceland also promotes outside shows at L.A’s Natural History Museum, Getty Museum and the Santa Monica Pier and in total puts on some 1,200 concerts annually.

With a solid business, then, what compelled Frank to sell? “The business has changed dramatically,” Frank told Pollstar. “About two years ago I saw the writing on the wall with Goldenvoice/AEG going into San Francisco and acquiring Slim’s and the Great American Music Hall and realized the competition on the club level was starting to happen. That opened my eyes and I realized I had to do something. I went through my options and Live Nation seemed like a perfect fit because they had an opening in their portfolio. And on my end I’m interested in growing what it is we do beyond the current three clubs we manage.”

According to Pollstar Boxoffice reports, The Echo over the past 36 months has had an average gross of $3,054 a show with an average of 312 tickets sold; Echoplex brings in an average gross of $10,627 and 593 ticket sold per show over the same time period; and The Regents’ average gross comes in at $18,889 with 796 tickets. While those may be decent figures in the club market, by Live Nation standards it’s a relative pittance.

“Yes, the margins are low,” says Ron Bension, Live Nation’s president of clubs and theatres and the executive leading the company’s charge into clubland. “We are in many, many markets and in that space already. We made an acquisition in Denver with the Marquis Theatre. The Philadelphia Fillmore has a 450-cap room with the Foundry, so around the country we have several small rooms. The margins are not great, but where we have the number of venues like we have in Los Angeles, and where we can create a ladder of venues so that fans who are familiar with us are able to continue with us from 500 to 5,000 or whatever the number may be, we see that as an advantage to bands and fans.”

That sentiment has translated into Bension’s division’s rapid expansion. Live Nation’s Clubs and Theatres division today has some 85 venues it owns and operates with another 50 venues booked exclusively by the company. Only a few years ago, when the division was known as House of Blues, it had roughly three dozen venues in its portfolio. Today, Live Nation’s holdings or buildings it operates include the famed Bowery Ballroom and Mercury Lounge in New York, The Masonic in Cleveland, the Van Buren in Phoenix, the Tabernacle in Atlanta and its growing Fillmore and HoB properties. In just this year, Live Nation made deals for seven Southern California venues: the three Spaceland venues, Ventura’s Majestic Theatre, two Observatory clubs and a booking deal with SOMA in San Diego. By the end of 2020, Bension says he expects to hit the 100-owned-venues mark.

Liz O. Baylen / Los Angeles Times / Getty Images – Mitchell Frank
A Prominent Angelino: Mitchell Frank, who once played in the band Gutbucket and started Nickelbag Records with the Dust Brothers (before it got bought out by Mammoth/Disney), last week sold his iconic and independent promotions venue Spaceland Presents to Live Nation.

Part of what has made Live Nation’s acquisition strategy so successful is that its official practice is to empower its aqcuired businesses and business owners and leave them relatively autonomous rather than micromanaging or dismantling. Whether it’s Michael Swier running the Bowery Ballroom, the three Charlies running C3, Charlie Levy helming The Van Buren or Mitchell Frank continuing to run Spaceland Presents, Live Nation partners have every incentive to continue building their businesses as they always have.

But what does that mean for the larger market when a promoter such as Live Nation or AEG vertically integrates different strata of venues in a market? Bension and Frank sound like agents when they discuss nurturing artists’ live careers from small to large venues though Bension says that’s not something they’re considering. He emphasizes the club market is a vehicle for Live Nation to find bands earlier in their career and to develop and build relationships with them and their fans as they move up the live business

ladder.

When asked about ticketing, Bension notes most of their venues do use Live Nation owned ticketing platforms but not exclusively. “When we acquire a venue for the most part it’s usually a venue that already has Ticketmaster or TicketWeb,” he says, “But we also have venues with competitive ticketing companies. We honor those agreements.”

To some, however, there are still concerns what a growing concentration of venue ownership will mean in the market place. “The fewer independently owned venues within the separate markets that exist, the less competitive it’s going to be in those individual markets,” says Rev. Moose, a managing partner at Marauder, a boutique music marketing company that produces the U.S. edition of Independent Venue Week, which celebrates its second year July 8-14, which at this point includes 75 venues in 47 cities and 27 states.

“[Consolidation] has a very real ripple effect throughout the rest of the music community from the consumers to the bands, the booking agents, the way offers are being made, the way tickets are being negotiated, the way things are being sold through ticketing partners and resellers,” Moose continues. “The fewer people that are making these decisions, the more difficult it is going to be to develop these small pockets of support.”

Bension, when asked about the negative side of consolidation, says,“We see a marketplace full of competition …This part of the business is really robust. There’s more volume coming through these clubs than ever before.” A cursory look at the plethora of club listings on any given day in major markets like Los Angeles or New York bears this out.

“No one’s going to come to my venue if we start jacking up the prices and the type of artists we’re booking isn’t quality,” says Frank, whose Echo last year actually participated in Independent Venue Week. “With basic economics, you can’t charge people hundreds of dollars to see a show when it’s not worth hundreds. On our end, all this really does is shore up our networking capabilities within a larger entity. We’re on the ground daily, we’ve got a lot of A&R that we can offer and once everything settles what people will see is each entity pushing the other one to be better.”

And really, if given the choice between having Mitchell Frank continuing to run The Echo under the aegis of Live Nation or have it turn into an expensive jeans store, the choice for most music fans is an easy one.