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1/ Who loses when a concert is cancelled/postponed due to COVID-19?
(Spoiler alert - you do)
4 key stakeholders to consider:
Artists
Arenas
Promoters (Live Nation/AEG)
Cities
(Spoiler alert - you do)
4 key stakeholders to consider:
Artists Arenas Promoters (Live Nation/AEG) Cities
2/ Example: Celine Dion was scheduled to perform at Gila River Arena in Glendale, Arizona on 3/29. The concert was promoted by AEG .
How does the money flow if the concert went on as planned? Here’s a very simplified explanation:
Celine Dion was scheduled to perform at Gila River Arena in Glendale, Arizona on 3/29. The concert was promoted by AEG . How does the money flow if the concert went on as planned? Here’s a very simplified explanation:
3/ AEG agrees to rent the arena on 3/29 and pay Celine Dion to perform. Then they sell tickets for the show.
They’ll typically pay her 85% of what they earn from the show (tickets/food/etc.) Celine splits her 85% with her crew, mgmt, etc.
What happens after it gets postponed?
They’ll typically pay her 85% of what they earn from the show (tickets/food/etc.) Celine splits her 85% with her crew, mgmt, etc.
What happens after it gets postponed?
4/ AEG reschedules for a future date and delays all of their payments (to the arena and to Celine) since they haven’t earned any revenue yet from the show.
The arena now sits empty on 3/29. Sucks but no big deal since they’re not incurring any costs on that date right?
Wrong.
The arena now sits empty on 3/29. Sucks but no big deal since they’re not incurring any costs on that date right?
Wrong.
5/ The arena is owned by the city of Glendale. It was built with funds generated from the sale of municipal bonds to investors. Glendale still has to pay interest on those bonds even if it’s not earning any revenue from events in the arena.
How will they pay the interest?
How will they pay the interest?
6/ Per the Glendale city budget, in addition to arena revenue - bond interest can also be paid with excise taxes (sales, tourism, income).
As you might expect during COVID, there’s less sales and tourism occurring.
You, my friendly taxpayer, get to make up the shortfall.
As you might expect during COVID, there’s less sales and tourism occurring.
You, my friendly taxpayer, get to make up the shortfall.
7/ Instead of your state and local income taxes going to roads, schools, and bettering the community. You’re now offsetting the lost revenue from every event that has been impacted by COVID-19.
