IEBA Day 2 Recap: Underplays, Redlines, Festivals, Casinos and Partying With Pablo Cruise

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Big Time Opportunities In Small Cap Rooms

When you’ve got WME’s Abby Wells Baas at the helm getting to the realities, opportunities and real bottom-line of underplays, victory laps and career building is inevitable. Having assembled a blue-ribbon panel of Amanda Bonafine (Professional Facilities Management), Rick Hanson (Historic Theater Group), Nate Krantz (First Avenue), Shlomo Lipetz (City Winery) and Aaron Zimmerman (Tobin Center for the Performing Arts), the talk was to the point.

While Krantz cited artists needing to increase the recorded music shortfall being a factor in raising ticket prices, he also notes a falloff in sellouts – “We’re not selling out at the same rate; what was 80% is now closer to 65%,” Zimmerman leaned into another indisputable truth – “There’s no cap for the rich. There’s always a premium those people are willing to pay for the best seats, a better experience, access to the artists.”

Lipetz points to 10 nights of $225/ticket Gregg Allman as a perfect example. And for all the impact of social media, Lipetz was also the first one to cite email lists – when it makes sense for the target audience – when Allman had to cancel on short notice, and he was scrambling to book and fill the room.

Whether Steven Tyler’s agent being told if he needs to bring a $15,000 production package, he’s going to have to pay for it, or lamenting tour deals making it hard to compete –  “My favorite agent conversation is ‘It’s $100,000 and a $50 ticket,’” laughed Hansen who stressed being creative versus conveyor belt in the deal – with national tours, there is a clear path for the win in underplaying. Indeed, for some acts, not having the 20 semis and number of crew needed for that size production can take two nights of underplay and yield almost the same cleared revenue. – Holly Gleason

 

Terms & Conditions: How Redlines Impact Bottom Lines. 

In which we were reminded that the ne plus ultra of financially sound contracts is to write them carefully, to read them carefully, and to have specialists involved in the process. Moderator Jason Bernstein (Senior Counsel, AEG Presents) opened with a hair-raising tale of a clause in an offer to Paul McCartney that stated the licensor in question could terminate the agreement “at any time with or without cause and without penalty.”  When Mr. Bernstein redlined the clause, the venue immediately recognized him as someone who actually reads contracts and readily agreed to remove it, acknowledging in the process that this particular clause is often overlooked.

Take home No. 1: Read the contract/offer/revisions. Tim Epstein of Duggan Bertsch, LLC, who usually represents promoters (including Pitchfork Festival, Life is Beautiful) fielded Bernstein’s first question: what contractual provisions or topics matter more than others and what are you always sure to include or redline? Epstein suggested the audience picture a Venn diagram of insurance, indemnification, and force majeure; where the diagram doesn’t overlap (i.e., there are gaps in coverage), promoters must get specific in order to protect the artist from risk. For example, he recommended recruiting specialized insurance brokers who work in the industry to develop language that covers such specifics as weather location and timeline (are we talking weather at the time of load-in? on the day of?).

Take home No. 2: Looking for gaps in the insurance, indemnification, and force majeur Venn diagram and spending money on the front end for specialists beats hemorrhaging money on the back end in litigation. So what happens when, say, a venue wants language that protects them from force majeure and the venue defines force majeure very broadly? Epstein takes the business-building approach and tells a venue that he wants to develop a relationship, bring in artists, grow a relationship, etc., but he “can’t take that risk where if you can’t put on the show, then the show doesn’t happen; but if I can’t put on the show, I’m penalized for it … I just don’t have that economic wherewithal.”

Which brings us to take home No. 3: If you’re going to make a change to a contract, provide a rationale. This is, after all, a conversation so communicating and providing feedback goes a long way to getting what all parties want.

The panel moved into different territory with the introduction of Frank Page of CWA Management, who explained that per IRS code section 1441, if a venue brings in a foreign act as an independent contractor, it must withhold 30% of that act’s income unless there is a Central Withholding Agreement (CWA).

A CWA allows an act to be taxed on net income, at a lower tax rate up front. Page provided a useful example for those of us who don’t always want to do the math in our heads: “Let’s pretend the Beatles are coming to the U.S. and they’re going to do one show and that show’s $100,000. Without a CWA, the promoter withholds 30% and hands the Beatles a check for $70,000, which could be a problem for them if their expenses are $80,000 … So they hire us, we petition the IRS and say, ‘Yes, they’re going to make $100,000 but their expenses are going to be $80,000 so don’t tax them on $100,000 tax them on the net of only $20,000. And don’t tax them at 30%, tax them at U.S. tax rates that start at 10%.”

Having a CWA solves all sorts of problems, enables fiscal flexibility and, since the IRS has started placing holds on foreign refunds over $5,000, avoids putting that income out of reach and into a long, drawn-out process.

Page provided a few caveats:  The Agreement must be filed at least 45 days in advance of the event and if you are planning to use CWA Management for your CWA filings, they like to have two weeks in advance of filing.

Take home No. 4: If you’re booking a foreign act, start planning to file for a CWA now. – Meghan Hayes

 

Festival Trend Report 2019:

Green challenges, cannabis, data technology and sponsorship activations were the cornerstones of the panel presented by Summerfest’s Bob Babisch. As the festival world morphs, certain topics are rising to the surface – and each was addressed as its own segment.

Global Inheritance’s Eric Ritz talked about using creativity to make environmental responsibility something want-to instead of have-to. Invoking their #carpoolchella, instituted in 2007, as a way to cut down on cars coming to Indio, Calif., having decorated trash bins to create “an art experience” and a leave behind for various schools to decrease littering and having “plastic surgery” to raise awareness of how to lower one’s plastic use as part of a “between sets” engagement for fans, Ritz believes this is a growth opportunity for festivals to create awareness, give attendees more activities and a sense of social responsibility and increase messaging opportunities.

Red Light Management’s Jim Lewi recognizes that as cannabis becomes more legal, the opportunities will be exponential and at all events. For now, the Emerald Cup – North America’s longest running competition – is attracting more than 1,000 entries, 130 speakers and activations. Every state has events, even if they’re not in the consumer space, including more than 19,000 paid at Washington, D.C.’s Cannabis Fest. Though the FCC will not allow cannabis advertising, look for legalization to come more quickly than anticipated – and expect this festival space to explode.

Greencopper’s Jeff Goodman looked at all event technology (operations, ticketing, mobile apps, experiential possibilities) to demonstrate how encompassing tech is in the festival space. For the festival, sponsors, brands and sports teams (where applicable), these events provide a pumped up environment to collect data, with purchase yields from email confirmations and registrations that yield personal codes. With 71% of app uninstalls coming from push notifications, this provides a way to qualify and measure what consumers really want. It also provides real time check-ins, photos/videos/surveys as well as post-event analytics.

For the NFL, this sort of data gathering saw fan engagement up 220% in 2017. Am Ex cardholders at Coachella who opted in could randomly receive notices of VIP upgrades or tickets to next year.

As sponsorship and unique revenue streams become a larger piece of the conversation, Chippewa Valley Music Fest’s Wade Asher spoke to activations and upgrades – including a VIP that can only be purchased from the Festival, pit passes which could be added onto whatever level ticket had been purchased and a Top Tier Lounge, which assigned elevated platforms with box seats for six, a private area, waiters and high-end food/drink service.

Each caters to a specific concertgoer, and there is little overlap, though the biggest across the board revenue generator he’s seeing is the move to RFD cashless technology. Not only does it cut down on personnel (34%), but with the ability to load your credit card onto your wristband, they’re seeing 18% more spending.

REACH’s Lindsey Bartelli seconded that finding, saying 74% would rather open their wallets for an experience than material things. By tailoring the experience,  they are gaining shareable content, metrics and data capture that is specific and unique to each event (Lollapalooza had a Toyota activation where people could get in the car, or have their band schedule tattooed on their arm – and gain something useful, while experiencing the sponsor’s product in a tangible way). “Make sure the brand experience is also elevating the festival experience,” she reinforced. “Because done properly, it creates an enduring impression for both.” – HG

 

Casino Entertainment: The Value of a Talent Buyer

To outsource or not to outsource casino talent buying, that was the question. The resounding answer: outsource! Andrew Blank of C3 Presents moderated this panel, which for the first time included only buyers.
Panelists outlined multiple reasons for outsourcing, from convenience and bandwidth (“My life is insane…so if you were an agent waiting to hear back from me, I would … never get back to you” — Ryan Frohberg [Casino del Sol Resort]) to reaping the benefits of buyers who can access national acts, provide efficient routing and are savvy about pricing in multiple markets.

Outsourcing’s desirability once established, talk moved to the problem of contract addenda. Notably, none of the panelists ever lost a contract due to an addendum disagreement, but Kell Houston (Houston Productions), the outside buyer for Casino del Sol, reiterated a point made in the earlier “Terms & Conditions” panel when he argued the dearth of entertainment attorneys on Tribal Councils becomes an impediment to finalizing contracts when the specialized language of entertainment contracts is put under the microscope by non-specialized attorneys, often leading to a “stalemate.” Deana Baker (Choctaw Casino Resorts) has attempted to solve that problem by inviting the Tribal attorney to attend a show, saying, “Come to the show, come to load-in, see what everything is from start to finish so you can understand the language” of the entertainment contract.

The panel also addressed the sticky wicket of VIP packages, with Ryan Frohberg announcing, “all our contracts are going to start taking a cut of any VIP package.” While Tammy Kite of Golden Nugget Casinos said her group does not have plans to take a cut of VIP packages, but acknowledged that “it is something that you have to stay in front of … the property level is the one to deal with the execution of the VIP package.” 

Panelists also had a lively discussion of new entertainment trends in the casino buying industry. Lori Otelsberg (Signature Entertainment), explained that she has attracted a share of the growing Asian and Latin markets with MMA and has had great success bringing in TV-personality mediums like Teresa Caputo. Yet a troubling trend for this group are entities invoicing for global music rights. Frohberg estimated that his in-house negotiates “endlessly” with invoicers, recounting with a certain amount of pride that this lawyer got a $180,000 invoice reduced to $8,000. Houston bemoaned the lack of clarity in the global music rights business model. Try as he might, he has not been able to find someone who is a decisionmaker to discuss invoicing specifics, and therefore can’t establish any basis for these charges. 

Ultimately, the recurring theme was the importance of communication and education – with artist agents, casinogoers (know thy demographic!), Tribal Councils, and even global music rights invoicers. – MH

 

Yacht Rock Party

Pounding out details regarding force majeure clauses and determining percentages of cuts on VIP packages is grueling work, so with the dreamy vocals and juicy instrumentation of Nashville Yacht Club Band (“we make yacht rock dreams come true”) lapping at their ears, attendees of the Yacht Rock Party happily set sail on a sea of feel-good covers.

The all-star tribute band handled such faves as “Saturday in the Park” and “What a Fool Believes” with great aplomb while conferencegoers grazed on island fare (jerk chicken, fresh fruit) and adult beverages.

When Pablo Cruise, which boasts three original band members, kicked off what frontman Robby Wyckoff called “the shortest set we’ve played in a long time” with their 1978 hit “Love Will Find a Way,” nostalgia became real time. 

He then, with tongue planted firmly in cheek, asked that no members of the audience storm the stage and that ladies refrain from throwing garments onstage before launching into “I Go to Rio.”

Hips did sway appreciably. The set ended with 1977’s “Whatcha Gonna Do?” and a reminder that Pablo Cruise will be touring in 2020. – MH