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By Scott Mullen
MOST ARENAS HAVE TYPICALLY stayed away from getting into the
promotion business and for good reason; it’s risky business. However,
competition and the pressure to maintain acceptable levels of content have
forced some venues to get into the game. Competition has also contributed to
higher talent costs making it even more difficult to get out without losing
money. Whether or not a building chooses to promote in-house is a decision
that requires careful consideration and buy-in from your board, municipality
or management company because although you may get more shows in your
building each year, it can be difficult to maintain support when you have to
explain why you just lost $90,000 on a show. So if you are going to roll the
dice, be sure the entity that you answer to is fully aware of the risks.
If you decide to get in the promoting game, here are
the basics:
1. Find Out Who is Touring
Contact agents to see which acts are going out on tour. You should also
network with other venues. Organizations such as Arena Network and Venue
Coalition are great resources or if your venue is represented by a private
management company like SMG, Global Spectrum, VenuWorks etc. you have access
to booking contacts at several other buildings within the organization. The
IAAM membership database is also there if you want to develop relationships
with peers at specific buildings.
2. Research Acts
It is important to determine the appropriate artist guarantee to put into
your offer to ensure that the figures quoted by agencies are realistic for
your market. Begin by checking tour histories for ticket sales and pricing
through Pollstar, Celebrity Access, Venues Today, Billboard and of course
your own venue’s event history. Keep in mind that just because an act
grossed a certain number in one market doesn’t necessarily mean it will do
the same in yours. Since artist careers can go up and down you need to check
into whether or not an act is currently in demand. Check with your local
radio station program directors, check local airplay, soundscan reports,
current charts, etc. You can also periodically survey your market. We send
out an annual survey locally which gives us terrific firsthand feedback.
3. Do the Math
When putting together an offer it is important to prepare an event estimate
based on a previous show of similar size and scope. Ask the agent for a
rider in advance so you have accurate parameters for catering, stagehand
calls and any additional requirements that might be applicable like hotel
rooms, transportation, backline, sound and lights, etc. Don’t forget to
include insurance, music licensing fees, furniture, advertising expenses,
etc. Once you have the estimate completed, you need to determine ticket
prices and scale the event. Check tour histories for pricing and factor that
in with what you think your market will bear.
4. Develop a Pro-Forma
Once you have all the numbers you can put together a detailed pro-forma for
the event. Our pro-formas include columns that show all expenses and
revenues that we can expect at different attendance levels (usually in
increments of 500 tickets). As the ticket sales increase, you obviously need
to increase staffing levels, variable charges along with ancillary revenues
and any other income streams. Factor in net per cap numbers based on similar
shows at your venue. Once your pro-forma is completed you can determine how
many tickets you will need to sell to break even and you can make
adjustments to your scaling if necessary.
5. Prepare the Offer
Plug in the numbers on the offer sheet based on a sellout and determine the
guarantee format for the proposal. You can offer a fixed fl at guarantee or
you can do a fl at plus a percentage of profit after expenses. Other things
to include in the offer are radius clauses, local sponsor requirements,
required building/promotional comps and offer expiration date.
6. The word “NO”
It is surprising how many buildings will go out and bid on acts without
taking the proper steps to make sure that the offer makes sense. They just
get a price from the agent and go for it. This creates a problem for them
when the show loses money and it creates a problem for all the other
entities that are bidding when prices get driven up. Don’t be afraid to say
“No” or pass on the event if it doesn’t make sense and remember if you give
a great deal to one agent, be prepared to live with it for all future shows
from that agency. Try to keep your expense numbers in line with what has
been seen in the past from your venue. Don’t forget to include rent and box
office fees. You may be the building but you are also the promoter so you
can justify it.
Summary
Once again, promoting is risky and it certainly isn’t getting any easier to
make a profit these days. Be careful not to compete with your regular
promoters. It’s almost always best to rent the building. Partnering with a
promoter can be a good option and one that is much safer than jumping right
in as a competing promoter. Promoting shows alone should be your last
option. But if you feel you need to do it, do it smart.
fm
Scott Mullen, CFE is executive director of the i
wireless Center in Moline, Illinois. Contact him at smullen@iwirelesscenter.com
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