Concert Viability Report-3

CONCERT VIABILITY REPORT-3

1

CONCERT VIABILITY REPORT

To the Student Government Association

October 5, 2010

Objective: To provide the Student Senate, the Student Activities Board, and other interested parties with facts about large concerts and their pricing, and some options and recommendations for offering major concerts to University ofLouisvillestudents.

1. Report Objective
2. What are other schools doing?
3. Benchmark Institutions
4. Regional Institutions
5. How much are the acts?
6. Venue costs
7. What else do we need to purchase?
8. Production costs
9. Hospitality costs
10. Security costs
11. Profit Splits
12. Sample Bid Proposal / Cost Breakdown
13. What trends are affecting the entertainment industry?
14. Options to secure concerts
15. Self-promotions
16. Sponsorships
17. Partnerships
18. Buy-Ins
19. Recommendations

WHAT ARE OTHER SCHOOLS DOING?

A SAMPLE LIST OF ACTS & PRICES (AS OF SEPTEMBER 21, 2010)

1. JAY-Z[$750,000.]
2. LADY GAGA[$500,000. –notaccepting college dates]
3. GREEN DAY[$500,000. –not currently accepting college dates]
4. CARRIE UNDERWOOD[$250,000.]
5. FOO FIGHTERS[$350,000. –NO CURRENT TOURS PLANNED]
6. KINGS OF LEON[$250,000. –SELECT DATES]
7. MATCHBOX 20[$200,000.]
8. ALICIA KEYS[$125,000. –NO COLLEGE DATES]
9. JASON MIRAZ[$100,000.]
10. M6MT[$60,000.]
11. B.O.B.[$35,000. –FALL DATES ONLY]
12. OLD CROW MEDICINE SHOW[$25,000.]
13. TREY SONGZ[$35,000. - $50,000.]
14. KID CUDI[$30,000. - $50,000. FALL DATES ONLY]
15. CAGE THE ELEPHANT[$10,000.]
16. COREY SMITH[$12,500. / $20,000. FALL]

These costs are samples listed on a College Talent agency’s website and also provided by a local promoter. They represent single-night quotes for colleges. They are not price tags; agents are free to negotiate higher or lower prices and artists are free to turn down all offers. Prices provided to independent promoters are generally lower. Also, prices decrease for good tour routing.

Percentage of Net Profits: The artistwill also require a percentage of the net profits of a show, usually 50% beyond their flat fee. Some major acts are actually receiving 100% of the profits instead of a flat fee. leaving the promoter profit from sales of merchandise, drinks, and other inventive sales gimmicks. (See Industry Trends below.)

VENUE COSTS:

Less is more maybe

With no indoor on-campus facility of adequate capacity, the University of Louisville must rent one of several venues around town to host a large concert. Venue rentals do involve some percentage of a show’s profits and will vary according to the facility and the size and nature of the show. The following Louisville venues are large enough to handle mid-sized to large concerts.

Louisville Palace Theater (Union Hall / In-house production / Capacity: 2715)-

$2500. Base rental versus 10% of the gross box office receipts. Numerous additional fees and charges apply—bottom line costs will range between $6000.00 to $12,000.00.

KY Center for the Arts- Whitney Theater(Union Hall / In-house production / Capacity: 2400)–

$3000. Base rental versus 10% of the gross box office receipts. Additional fees and charges apply, in-house production starts at $3000.00—bottom line costs range between $8,000.00 to $15,000.00.

KFEC- Broadbent Arena-(Union Hall / NO In-house production / Capacity: 6,600)—

$4000. Base rental versus 12% of the gross box office receipts. Additional fees and charges apply, No in-house production substantially raises production contracts below. Bottom line costs will range between $7000.00 to $12,000.00 with substantial additional costs for production contracts.

KFEC- Freedom Hall (Union Hall / NO In-house production / Capacity: 15,055 - 19,169)—

$10,000. Base rental versus 12% of the gross box office receipts. Additional fees and charges apply, No in-house production substantially raises production contracts below. Bottom line costs will range between $15,000.00 and $20,000.00 with substantial additional costs for production contracts.

KFC Yum Center (Capacity: 17,500 - 22,000)—

Though the new arena has close ties to the University, performances will be contracted exclusively through AEG Live, a national concert promotions company. The company could be approached to negotiate partnerships for student shows.

RIDER PROVISIONS:

In addition to the talent fee, entertainment contracts have a contract rider that provides additional terms and condition for the artist and specifications for how the concert will be executed.

PRODUCTION COSTS: (Production costs are for the sounds and lights) Contracts for High-Ticket entertainment are explicit about their production requirements. Even at venues with in-house production, there will be additional production costs involved. Expect to pay $2000.00 additional for venues where production can be rented with the hall and up to $25,000.00 at venues where all production has to be contracted from outside the venue. For larger ticket shows, expect to pay even more.

HOSPITALITY COSTS:(Hospitality cost reflect items the artist and crew expect, such as meals since they are traveling on the road.) These increase with the price of the band. One contract rider included all the rooms on one floor of a four-star hotel for the band and their friends, as well as individual limos for each member of the band. Some are more reasonable. Expect to pay between $2,000.00 and $15,000.00.

SECURITY COSTS: (Artists have very clear expectation for their safety and the safety of the audience) Riders include provisions for backstage security. Promoters need additional security for “front of house" areas; these needs will depend on the capacity and the features of each venue. Expect to pay between $1500.00 and $5000.00.

[pick an act and provide a sample bottom line here]

CONCERT INDUSTRY FACTS & TRENDS (2010):

More specific information throughout

• Top-name entertainment is a seller’s market. They have the upper hand on contract terms. (Artist determine when they will tour and under what terms they will tour)

• Louisville is a secondary market, with limited appeal as a tour stop. Example of other secondary markets, other major markets)

• Major promotional corporations currently control top-name entertainment tour bids. (Who is this what are you talking about – what’s a promotional corporation? – is this a promoter Live Nation, AEG Live

• These companies (which companies) are currently providing top-name acts with 100% of gross receipts, attempting to recoup costs on peripheral sales.

• Artists used to make live music to support album sales. Because of proliferation of file-sharing, they are now dependent upon concert tours for financial support. This fact has resulted in highly inflationary entertainment costs.

• The 2010 summer tour season has featured the most expensive ticket costs ever and the most show cancellations as shows did not receive the minimum necessary break-even revenues.

OPTIONS for PROVIDING UNIVERSITY STUDENTS with BIG NAME CONCERTS

Option 1: In-house University productions

• To produce its own mid-level shows, SGA will need a concert reserve fund of $50,000.00 to $100,000.00. More money will be required for larger shows.
• There is no such thing as guaranteed revenue. Concert funds cannot be designated for any other purpose until concert revenue has been deposited.
• Provisions should be made with university administration to fund some of show’s later expenses with projected revenue, i.e. unsecured funds. Contracts for band and venue must be backed with secure funding for up to six months at a time. Ideally, a concert fund would have both carry-over and revenue capabilities.
• Existing on-campus facilities of sufficient capacity and security are all outdoor; most are controlled by athletics. Grounds maintenance during large shows is serious concern.
• Best indoor facilities and production options exist off-campus, requiring additional facility and production fees.
• SGA could consider lobbying administration for an on-campus venue, which will reduce cost of event production, but will require initial capital investment and ongoing maintenance costs.

Option 2: Corporate Sponsorships

• Many local corporate donors already provide all available financial support to Athletics and / or the University Foundation.
• Other non-profit organizations employ full-time corporate fundraisers, who build long-term relationships with potential corporate sponsors.
• Current downturn has minimized corporate contributions.
• Many corporations are reluctant to sponsor single-night events. They receive more name exposure over longer periods of time.

Option 3: University Partnerships with PromotionAgencies

• Work with experienced promoters who receive discount pricesand provide production promotion expertise.
• These promoters have existing relationships with booking agents, tour managers, and event production professionals.
• Promoters are familiar with tour schedules and venue requirements.
• As partners, funds would still be required to produce and promote shows.
• Partnerships limit student input on details of show and artist selection.

Option 4: Block Ticket Buys and Concert Buy-ins

• Requires least amount of front-end funding.
• Utilizes rather than competes with Louisville’s existing arts scene.
• Provides little opportunity for profit, small risk of loss.
• Artist selection is based on what’s already playing in area.
• Provides an opportunity to build a concert initiative over time.

RECOMMENDED COURSES OF ACTION:

We recommend:

• That an ad hoc committee be formed of SGA and SAB members with the following charges:
• Develop a plan for implementing ticket buys and concert buy-ins, while laying the groundwork for a partnership with a local promoter.

• That the SAB Campus Life committee works with SAB’s Leadership Team and advisors to implement ticket buys or concert buy-ins.

• That the SAB Campus Life committee works with the ad hoc committee to implement other initiatives as they develop.
• Work with administrators and the Student Senate to develop financing for a concert fund.
• Advocate for the development of an on-campus venue for mid-sized concerts (3500 – 5000 capacity),