Talking The Tertiaries

Morgan Margolis, CEO of Knitting Factory Entertainment, gets to attend the Pollstar Awards shows but is first to joke that all he really gets to do is this: Just sit there and watch the awards go by.

The company works in tertiary markets and has brought big names to smaller cities, which is no small feat. For instance, The Idaho Botanical Gardens’ summer lineup includes Feist, Wilco, Lyle Lovett, Last Summer on Earth (Barenaked ladies, Blues Traveler, Big Head Todd, Cracker), Norah Jones and Bonnie Raitt. Yet, despite being tucked into the list of top promoters of the world (last year Knitting Factory was listed No. 28 between Australia’s Frontier Touring and Beaver Productions), the company has had a low profile. Margolis wants to change that, and one of the first steps is easy: just talking to us.

Can you please break down the elements of your company?

Knitting Factory Entertainment is the parent company, and we have tentacles. It’s been around since 1987 in different machinations. Our hands reach out to about 25 primary markets. We probably promote 3,500 shows a year, with 3,500 bands in 1,000 concerts plus private events. We were in the Top 20 domestic promoters 2008 to 2011.

There are four physical plants we operate – Knitting Factory Brooklyn, Knitting Factory Concert House Boise, Knitting Factory Reno and Knitting Factory Spokane. Then we are either the exclusive or primary promoter in about five different outdoor spaces and interior markets being Wilma Theatre in Missoula, The Warsaw in Brooklyn, the Toyota Center in Kennewick, Wash., Idaho Botanical Gardens in Boise and the Big Sky Brewing Amphitheatre in Missoula.

The big concert tours we did in the past couple years have been the Music of the Web tour, Avenged Sevenfold, and the Pedal to the Metal tour. We’re also the producer of the Broadway show Fela! with Will Smith and Jay-Z, and now that is on a national domestic tour. Then there are about a dozen other venues around the country where we put in shows.

When I describe the company, I say we’re a 360 media company. Our hands are in the Broadway circuit; I just partnered up with a film and television division where we’re handling numerous actors and producers; we’re working on our film projects. I think there was a write-up about our partnership with the Van Johnson company. And a bunch of our actors just got picked up for a series this week.

Then we have Knitting Factory Records and Partisan Records, where we just released a Heartless Bastards album. We have Deer Tick, Holy Sons, several other artists on it. We have Figure Eight Management, which handles bands like Field Report which is the support act for Counting Crows right now. Then I just brought on a director of brand strategies. So I’m trying to take Knitting Factory and turn it into the next CBGB brand. We’ve got shirts out in Asia at this point, and we’re working on skateboards, hats. We’re into licensing shows, trying to break into that whole world.

I think those are the main areas: venues, label, touring, branding and we do consultation. I left out our bar division – the Federal Bar in Hollywood, which has become my baby. It’s a two-story gastropub. It’s done tremendously well and has a 350-cap room upstairs where we do DJs, to shows but downstairs which has 20 craft beers on tap and a full menu. And I’m about to open the Bow & Truss, which is a Spanish-themed restaurant right around the block in North Hollywood.

And them I’m involved in a venue launch downtown which I can’t spit out yet.

Sounds like Hydra. Any covert operations in the works?

My wife might think so. But I do have time for my three kids. I have great people in all divisions and am not a one-person operation. If I didn’t have the guys and ladies around me I would crash and burn. I give them a lot of props and we’re all friends on top of it. These are people I eat and drink with, and together we wonder what the hell we’re doing.

I’m not a micro-manager. I may be a little bit on the bar/restaurant side because I came from that world 20-plus years ago in New York City, slinging drinks. That’s always my baby and it’s hard for me to not look closely at our venues. But I try to hire people who can do the job who have creative, artistic ideas. I’m a Yes Man; there’s not bad idea on the table. A lot of people say they haven’t dealt with me in a long time. I say, “I’m busy, I know you’re doing your job, I’m not watching the clock when you come in and out of the office. If you’ve got to take care of family stuff, take care of it. I know you’re handling it.” I know my talent buyer, if he’s not in the office for three days, he’s sending me emails at 2 a.m.

In Knitting Factory, there are a lot of people who came externally, but a lot of it is internal. My buyer in Brooklyn was a sound guy at the KF Hollywood and worked his way up. My senior buyer was the Hollywood buyer and became the Boise buyer.

We live in Fresno and we’ll never have Wilco here. But Boise does.

We’ve looked at Fresno, Sacramento, those kind of regions. We’re in Boise, Spokane, Reno. It’s these tertiary markets where we’ve made a name for ourselves. Originally, I don’t think that was our overall plan, to kind of capture this Northwest and Pacific region, but we’ve just gotten a pretty good foothold there and we’ve tried to build on that.

I’ve been with the company for 12 years. I’ve moved up through this company. But essentially we were looking for expansion and I was part of that team. We explored different areas. We were already in L.A. This opportunity came up with Bravo Presents. They were a small, regional touring division. They weren’t doing national shows like we are. They did a couple shows up through Montana, Washington, Idaho and so forth. And then they had the Big Easy in Boise, which is a 1,100-cap room, and the Big Easy in Spokane, 1,400 cap. It just came as an opportunity. We were looking for expansion, the deal was right, and we stepped into it. At that point, I was the vice president of West Coast operations, and my hands got deep into Boise and Spokane as we took over that company.

I was the one who pushed the button on changing the name to Knitting Factory. We were toying with ideas. Do we want to brand Knitting Factory? Do we want to change the name? Big Easy, to me, and to a lot of executives at that point – we also dealt with Katrina. To me, it was all about New Orleans, so we wanted to stray from that and expand our company brand.

In that market we do huge outdoor shows. The Idaho Botanical Gardens, which is a 5,000-cap outdoor series. They were doing one or two shows, now we’re doing 10 or more a year. That’s in Boise proper, about 15 minutes from the club. It’s really gorgeous, a wide-open field with horticulture and botanical gardens. We do all the staging. This year it’s Feist, Wilco, Lyle Lovett, Barenaked Ladies, Counting Crows, Norah Jones, Crosby Stills & Nash, Bonnie Raitt. We really create a series up there, which led us to creating more outdoor festivals in that region. We went to Wyoming last year, did three days of Widespread Panic. Then we tied in with Big Sky Brewery in Montana, another big field. This year we’re doing Korn, Wilco, a couple of other big shows. We’ll do five to eight big shows this year.

So what is the competition?

(pause). Um, not a lot! We’ve kind of taken over these markets. We try to go into noncompetitive markets. We don’t want to butt heads with AEG and Live Nation. That was a point of us expanding into markets. When we came into, let’s say, Boise proper and Spokane, at that point the Thorntons had a bit of a history there; we bought that history and expanded. Creston is opening a Boise venue as well but how many 1,000-cap venues do you want in Boise? It’s a strange move for him to make. I know he wants to be back in the game. But …

We know a promoter who tells people that if they want to get into the business, find a map and go to a city where there are no name promoters. Go to the small cities, don’t set up shop in Los Angeles.

Yeah, we do a lot of consulting for clubs around the country that have opened up and tried to compete. They come to me and say, “You’ve got to help us here.” And I’ll say, “Well, it would be the same thing if you came to Spokane and try to compete against me. I’m the one with the history. Unless you’re a big-time player, you’re going to get beat up.”

We try to look at markets like Eugene and even saturated markets like Seattle but mostly when we’re doing things like that, we’re going into the market as a promoter and buying out the room and sending a tour through. We’ll do a lot of business with Tech N9ne. We’ll send him on 10 dates through the Pacific Northwest, and even spotted dates back East. There will be our physical venues or we’ll cut a deal with a venue and co-pro. We’ll also deal with Live Nation or AEG. Like last year, we did Avenged Sevenfold, Korn, Disturbed, 25-30 dates on those tours. Obviously if you come into Chicago or New York or L.A., you’re giving up a piece, you’re co-pro’ing with those guys. You’re not going to be stupid about it.

All that being said, again, using Wilco performing in Boise as an example: Do you have to do a lot of marketing to draw the crowd, or is word-of-mouth enough?

I think it’s really show-dependent. I think every promoter will tell you that. I don’t think it’s necessarily market. Some shows just sell. And some shows you can market to the end of the Earth and you just can’t sell it. A lot of it is trial and error.

We know what works in the market; we keep a lot of history on the bands. I give props to my talent buyers. I don’t claim to be one, and they know these markets very well. We do a lot of statistics, graphics and numbers and we watch their routing.

It’s a hard answer to give. Some shows we think are going to blow through the roof, then we get crushed. If we’re just talking about Montana, we’re also the exclusive promoter at the Wilma Theatre in Missoula. It’s a big college town, a big summer community and there’s not a lot of entertainment outside of going to fairs or hiking and camping. So we really try to pinpoint these areas and go, “Where would they route in from? How far are they coming? How many people are in the town for the summer?” It’s a calculated roll of the dice.

But we’ve done this for a long time so I sometimes joke with my buyers that I’ll see a show and go, “My God, how many times has it played the market?” But it keeps selling. I joke on Tech N9ne. Man, we do so much Tech N9ne business. That guy just always sells. Norah Jones and Counting Crows back on tour – we think those are good plays to make. We’re doing about 10 dates with Dierks Bentley and there’s a history between Dierks and our buyer, and I think there’s a big upswing.

Brad Garrett from Police Productions once said you don’t know a smaller market until you learn not to compete with a Friday night high school football game.

That’s a good point. And as your friend said, you’ve got to live in the market. My buyer, my senior president, Chris Moore, he lives in Boise. My COO is in that market. We have people who live in these markets and we’re gauging all these things. But, yeah, when you’re buying a show you look at the calendar and, say it’s Barenaked Ladies at the Botanical Gardens in August, we’ll look for similar shows with a 50-mile radius or if there’s a big county fair that will kick our ass.

I’ve seen that happen in Reno. Reno is a big example of that. You have to know what’s gong on in the casinos. We learned in the first year we can’t put certain acts into the Reno venues because there’s a whole crowd used to not paying that hard-ticket price. They’re not used to a GA setting and they don’t want to see X-country act in a club. They’d rather sit in a seat, pay less money then hit the tables. That was a hard learning curve.

Do you get a lot of acts on the weekends?

It’s hard to say. These shows are routing, they’re on a bus, they’re cut-and-dry through Idaho. They may only have a Thursday or a Sunday. And it’s beautiful up there and people want to sit outside. I don’t think it matters. And a lot people like to split town on the weekends. So sometimes a Tuesday show at 6 p.m. is a good thing. They’re coming out with their kids, they’re laying a blanket out, they’re having a picnic. And we control the food & beverage. That’s another big piece. That’s a big factor in booking the shows. As we all know, you can get hurt on the ticket but you make it back in food and bev. Most of the shows fall on Friday, Saturday and Sunday, though.

Another big thing for us – I don’t think I’m telling any big trade secret here – we can get shows less expensively because you’re the bus stop on the way through. We’re not going to pay the same as a national market. First of all, people can’t afford that ticket price. We’re arguing with agents and manager over price not because we’re trying to make more money but because of what the market will bear. Spokane doesn’t have the same dollars to spend as Seattle.

So you’ve said you haven’t made a lot of “noise” in the industry?

Well, at the awards show, we just sit and watch, and that’s odd to me. I don’t mind being quiet and independent but we’re the second-largest multiple venue to the House of Blues. I’m ready to come to the ball with the company, to be honest. There’s a lot going on.