Sometimes in business it is hard to comprehend all the moving parts. This is particularly true when those parts are spread in divisions which conquer the world by quadrant, host events on varied continents and move both entertainment to the people and people to the entertainment. These sorts of businesses are complex by nature, and further complicated when ownership is centralized in the hands of Philip Anschutz, a very accomplished Forbes listed billionaire.
Now, imagine taking this business and shutting it down, suddenly, as all the revenue sources are sacrificed in service of fighting the Covid-19 pandemic. This leaves the remaining team to refund the tickets or reschedule the events, maintain the venues, massage the relationships with the artists under contract, the teams in which they hold ownership stakes and the fans who have put down their money in anticipation of going to something fun.
The live event world is truly divided into the large and the scrappy. There are few players as diversified as Anschutz Entertainment Group. AEG owns teams, music festivals and venues around the globe, promotes concerts, and operates AXS and Elevate, their division which provides ticketing services at its various properties. AEG operates more than 300 venues worldwide, owns or hosts 50 sports teams in their venues, has an interest in 25 music festivals and promotes more than 10,000 events worldwide annually. In addition, AEG owns LA Live which is where Staples Center and the Microsoft theater anchor a complex which surrounds the venues with shops, bars, and entertaining space. They are currently replicating that model in Berlin with more locations to come.
In March of 2001 AEG acquired Golden Voice, a Los Angeles based concert promoter best known for their Coachella music festival. Coachella sets the standard for music festivals, their event running identical festivals over two weekends in April is perhaps the single most respected festival in North America, if not the world. Coachella leverages its location at the Eldorado Polo field in Indio, CA to produce an event drawing an audience with a heavy concentration from Southern California, allowing a convergence of the cool kids, the Los Angeles music and influencer scene, and the requisite component of cool Dads.
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It is not easy wandering the halls and festival fields of concerts once you have left your youth behind. There is a tilt which favors the young. However, a certain cadre of us who simply accept that we are “Dad in residence” wherever we go. That is fine. Everyone loves the cool Dad. Dan Beckerman is that cool Dad. He is the CEO of AEG, which is one big job.
So, after nearly 14 months of there being nothing to do on stages, it is big news when AEG says they’re back to the work of presenting live entertainment. Dan Beckerman and his teams are working on bringing back many of the workers who were furloughed when the live event world shuttered in mid-March 2020. It is no small project to rehire the teams, staff the venues, reassemble the road crews and get the musicians and athletes back on the road.
I spoke with Dan at length and as we went through our discussion. I couldn’t help but appreciate his joie de vivre and excitement for the return of live. This is not like starting a balking lawn mower. AEG venues operate around the globe. This is a complex logistics puzzle, complicated by Coronavirus issues beyond the borders of the United States, combined with political roadblocks like how Brexit affects the ability to move trucks in and out of the UK. Big events do not move in a van, they move in a dozen or more full-sized trucks plus crews of up to 100 people. Routing tours is complicated when each date remains uncertain until it plays because no one is quite sure where the next Covid-19 variant will appear and wreak havoc.
Live entertainment is a risk takers’ business. There is never a guarantee that an act will remain popular, that weather will cooperate for an outdoor event or that external factors will not come into play. We have seen terrorism, health issues, power interruptions, wind driven toppling of stages and glitches in travel impact events. The giants like AEG have teams to deal with everything, but these teams must answer to someone, and for AEG that ultimate someone is Dan Beckerman.
Here is how Dan sees the return of live music: First, we will see festivals in the summer with indoor arena and theater tours more likely to return in fall. This may vary based upon the region of the world where the events will play, as AEG is global. But already AEG has sold tickets for the All Points East festival in London which blew through tickets so quickly they added more dates. AEG is hoping to see this as a repeating pattern, that the rhythm of tickets will return, and the dominos will fall into place.
I asked Dan “How do you see this playing out?” His response was there would likely be limited capacity initially at events, while we sort out the ongoing issues related to the pandemic. That poses a problem for companies like AEG which promote events as well as house them in venues. It is hard to make an event pencil out at 25% of capacity. Also, live music typically benefits from the buzz and energy of a full house. That is why Dan expects to see outdoor events go first. To be able to successfully plan, he has had to learn some epidemiology, including the current idea that outdoors is safer than indoors because the ventilation is better. So, while there should be an evolution starting with festivals over the summer, indoor events will likely hold until the fall.
We also talked about the multi-generational appeal of live events. Once it was that “rock” concerts were for the young. Now, people forget they are older than they are supposed to be and still go to a rock and roll show. That hasn’t stopped them. More older attendees are going to events and bringing younger children and grandchildren along. Dan himself brought his 5-year-old daughter to Coachella. He believes you attend live events for one reason, but that is not the lasting reason you take away. Events such as music festivals are the exploratory unfolding of a weekend.
We also spent time talking about lessons learned on the business side from the pandemic, among them the newly omnipresent appreciation of risk. Prior to the pandemic, artists got a guarantee and a large advance to play a tour. They may participate in additional revenues if tickets sales exceed a certain threshold or receive a percentage of ancillary sales. Meanwhile the AEGs of the world often fronted money to mount the tour and did the work to route and sell the tour. When everything was cancelled or postponed, AEG’s work doubled and tripled. They had to reroute and reroute again tours. Their Coachella music festival was less than a month away, and construction had started on site for that event. Coachella was postponed from April 2020 to October 2020, then to April 2021 all of which were cancelled. Planning at scale is expensive and these expenses hurt. My expectation is that in the future risk will be more evenly shared between the venue operators, the promoters and the artist or team.
Our conversation is here, in both video and audio podcast format:
Because of the way in which the costs of this pandemic were loaded more onto the presenters than the performers, my advice to everyone in the ecosystem is that promoters and venue operators create more of a partnership with the performers in which the performer or team shares the possibility of a better payday in return for assuming some of the risks of future events cancelling or postponing. There is no rule which says pandemics only come once every century. We could easily get a different pandemic next year or the year after that. Dan’s take was that AEG would likely try to create some form of partnership with the performers but there would not be fundamental changes in the structure of how the business works. He noted this past year has been eye opening with respect to risk.
There’s little doubt that there will be pent up supply – the artists want to be with the fans. I have observed it has also been more than a year and for most will be closer to two years between when live entertainment shut down and their next paying gig. Nothing shakes your confidence like being idled for two years when you are used to being an idol. It must be hard to come off the stadium stage and go home to work in the yard while the world moves on and your prominence diminishes. The job for teams like Dan’s at AEG is to figure out how to get people back out of their houses, away from their streamed entertainment and willing to jump back in the mix of a crowded space where the energy emanating from the stage or field is equaled by that which is created by the fans in attendance.
Restarting the machine which moves teams and events to venues around the globe, making sure that each day, at each location, every fan leaves the event with their dopamine triggered, their adrenaline released and their wallet a little lighter is a massive undertaking. It seems almost miraculous that Dan Beckerman, ringmaster of the entire process, is both an efficient corporate leader and a benevolent cool Dad.