In the Q&A session at the end of the Live Nation third quarter earnings report on Thursday, the company’s CEO Michael Rapino had some strong words for former WME music chief Marc Geiger’s recently announced “SaveLive” plan to bail out struggling independent concert venues via a joint-venture that would see Geiger and investors taking 51% equity in the venues.
Rapino called the plan, for which Geiger has amassed $75 million from investors, a “fire sale” for venues and says he does not see it as being attractive to venues, even if they are struggling.
Asked what impact, “if any,” the plan can have on the industry, Rapino audibly sighed and said, “Probably the same one he had at William Morris,” before continuing. “I think there’s a lot of talk about independent venues, ‘Save Our Stages,’ et cetera, and there’s no doubt everyone in live, service providers and companies, is having a rough year. We’ve been very focused on making sure the 12 million employees in live, from hairdressers to lighting crews to security guards, are getting some stimulus and help, we think they’re in the most need.
“When it get to the venues in general,” he continued, “the thesis out there with Marc Geiger and some others is that is that these independent venues are so distressed that they’re going to throw someone the keys at a very cheap price, and you can roll up some of these cheaply and have some scale.
“Well, the thesis is basically broken. At the first point, any great live club is not throwing anybody the keys cheaply; there’s a lot of capital out there. So if you own the Troubadour in Los Angeles, a legendary business, and you’re having a tough year, you’re not selling to Marc Geiger at a one- or two-time multiple. Your access to capital, to PPE loans — there are a lot of ways you can weather the storm, so we don’t think there’s a fire sale. We have a consolidation of clubs on our business, and clubs on their own a tough business — they’re not really a fruitful business on their own, but we like them as part of our overall ecosystem.
“But we don’t believe that clubs, whether you own ten or twenty on their own, provide you with much global synergy. We hope all of these clubs find their way through this and the government stimulus programs can help them survive it, but we don’t see a fire sale to anybody, because there’s too many good options available to them.”
Like all businesses based in live entertainment, Live Nation, the world’s largest company of its kind, has suffered crushing losses due to the pandemic, with $319 million in losses in the third quarter alone. However, its outlook on the business remains positive and focused on a reopening it sees beginning in earnest next summer and on a larger scale in 2022.
Geiger did not immediately respond to Variety‘s request for comment, but in announcing the plan via the New York Times last month, he insisted it was not a predatory move to snap up distressed assets.
“One of my favorite things in the world is to go to a club, be treated well and see an incredible band,” he said. “So I thought, ‘OK, I’m going to raise a bunch of money and I’m going to backstop all these clubs. I’m going to be a bailout solution for them, and I’m going to call the company SaveLive.’”
Geiger insisted to the Times that his venue deals would be partnerships and that he would not seek to flip assets. His primary backer, Jordan Moelis of Deep Field Asset Management, added, “We don’t see this as a distressed-asset play. We see this as a business-building play, a play to be a long-term partner and to be around for a long time.”
Reactions on social media covered the entire spectrum, from “It is good to have an independent music fan tied to this venture” to “I’d rather venue staff have jobs than not, but putting ownership into consolidation is not good long term as we’ve seen with other parts of the industry” to “This is a distressed-asset play” and This could have a disastrous impact that turns independent venues into franchises. “
The National Independent Venues Association executive director, Rev. Moose, responded to the plan by deferring the decision to the venues. “Every one of our nearly 3,000 members makes their own decisions based on what’s best for their business, which was the case before the pandemic, now, and in the future,” he told Variety. “This is the very independence we’re fighting to preserve.”
While the $10 billion Save Our Stages Act is part of the larger Heroes Act, Congress and the president have been playing politics with it for weeks and it seems unlikely to pass any time soon. The Save Our Stages Festival — which featured unique performances from Foo Fighters, Miley Cyrus, Phoebe Bridgers and many more and was produced by YouTube Music and NIVA — raised nearly $2 million, the situation remains dire.