Making Heads Or Tails Of It: Quarterly Earnings Hint At What Live’s 2024 May Hold

Many in the media characterized it as a gaffe, but there’s a good chance James Dolan knew exactly what he was doing.

During a quarterly earnings call, the loquacious Sphere Entertainment executive chairman and CEO — who has an oft-pugnacious relationship with the press — let some news slide while discussing the ways artists — first U2, then Phish and most recently Dead & Co. — use the technological wizardry available at the envelope-pushing Las Vegas venue. “Even if you’re not a Deadhead, you’re going to love that show. And I think the same will be true for the Eagles and for the next acts that we bring on,” he said. David Byrnes, Sphere’s CFO, quickly hopped in and pivoted the discussion to the more mundane topic of selling, general and administrative expenses.

Anyone with knowledge of Dolan’s business relationships isn’t going to be shocked that the Eagles are on the docket for Sphere, given his ties with the band’s long-time manager and consigliere Irving Azoff (also a co-founder of Oak View Group, Pollstar’s parent company and on U2’s management team). It’s been rumored since the big ball started emerging from the Nevada desert. 

And Dolan’s deep down a showman who knows how to generate interest in the show. So was leaking the next big Sphere residency a mistake? If so, it was a crazy one. Crazy like a fox. The headlines from the Sphere Entertainment May 10 earnings call were concrete without being specific. In addition to the Eagles maybe-a-leak, Dolan said he expects to announce the location of the second Sphere “very soon” with construction to begin in fiscal 2025 (Sphere Entertainment runs on a July-July fiscal cycle; FY2025 begins July 1, 2024).  And what’s more — there could be a Sphere in a neighborhood near you.

“I do think we put together a portfolio of Spheres of different sizes going all the way down to 5,000 seats, so we can adjust the project by the size of the marketplace,” he said. “If all of a sudden you landed a major sports franchise in your marketplace, what does that do for the marketplace? I think they’re looking at it that same kind of way that that’s what a Sphere would do for the marketplace.”

Earnings calls can be a Rooseveltian morass of abbreviations — SG&A. EBITDA, EPS, RSN — but as Dolan showed, they can provide news and — importantly — give a glimpse into the industry’s expectations.

Live Nation Entertainment’s May 2 call was a rich panoply for prognostication — and offered succor that gut feelings are sometimes spot on. Do you feel like it’s tougher for the big, multi-day multi-genre festivals to build their lineups? LN CEO Michael Rapino says you’re right.  “I think the only trend we see overall is the three-day massive festival that’s going to appeal to everybody with a great unique headliner, the original part of this business, that seems to be really hard to deliver year-in year-out,” he says. “Whether it’s Coachella or Bonnaroo, those are big missions to deliver and artists are making a lot of money in arenas and stadiums, so it’s not as easy to get that special headliner.” And where will festivals go instead? If you think the smart money is an uptick in shorter, genre-focused, boutique-style festivals, as Pollstar speculated in this space in our annual festival issue, Rapino agrees with you (and us).

“Where we’re seeing great success, though, is one- or two-day festivals that are appealing to a more of a niche, and it’s maybe 35,000 people, and it’s …  a certain genre of music or a lifestyle, and it’s maybe a higher-end business like BottleRock does in Napa,” he says.

As for the future, Live Nation says to think and act globally. A growth driver for the company in the fourth quarter of 2023 and the first of 2024 was sponsorships, which often reflect festival business. Given that those quarters cross the Southern Hemisphere summer, there was concern that the growth was just seasonal. CFO Joe Berchtold said, sure, that’s a factor, but international markets are where the company expects growth throughout the year and into next, hemispheres be damned.

“A lot of what you’re seeing in Q1 is, as you said, international. A lot of it is festivals…. and in particular, it’s what’s going on in South America and Asia,” he says. There’s also increased booking of global acts — Afrobeats, Latin and the first green shoots from the massive (but long-ignored) South Asian markets centered on India — and increased capital expenditure on venues in overseas markets. It all hints at more business outside Europe and North America.  It’s a rosy picture, but there has to be a softening coming somewhere and it’s likely to be in the stadium portion of the market. For one, the big stadium acts are winding their tours down. There just isn’t going to be an “Eras” or “Renaissance” every year. That’s going to reflect in revenue numbers as the year goes on, as Berchtold explained. “We expected that this isn’t going to be a big stadium year and stadium tickets sell earliest. … With a shift to more arenas and amphitheaters, you’re going to see the sales cycle come in a bit later,” 

he said.  Look to 2025 for a big stadium resurgence, though, if only by process of elimination. Rapino noted that late in 2023 and throughout much of this year, stadiums in France in particular were difficult to schedule due to the Rugby World Cup last fall and the Olympics in Paris this summer. French stadium business is relatively small pommes frites but those events did compete with concerts when Europeans decided how to spend their entertainment dollars.

The next big stadium scheduling strain in North America comes in 2026 when FIFA’s Men’s World Cup heads to 16 cities across the U.S., Canada and Mexico. There will be some ramp-up as venues prepare for the world’s eye’s and FIFA’s exacting standards, but Berchtold said, nevertheless, 2025 should be another strong stadium season.

In the meantime, arena and amphitheater acts are still selling — in fact, outpacing previous years, even among acts who are consistent tourers, where one might worry about cannibalization. of global acts — Afrobeats, Latin and the first green ture on venues in overseas markets. It all hints at more business outside Europe and North America.  It’s a rosy picture, but there has to be a softening coming stadium portion of the market. For one, the big stadium acts are winding their tours down. There just isn’t going to be an “Eras” or “Renaissance” every year. That’s going to reflect in revenue numbers as the year goes on, as Berchtold explained. “We expected that this isn’t going to be a big stadium year and stadium tickets sell earliest. … With a shift to more arenas and amphitheaters, you’re going to see.

The takeaway: the Great Return was a deep flood — huge acts doing huge numbers in huge venues in the places you’d predict. What comes next is going to be shallower, maybe, but broader, with growth spread to more markets in more places.