Subsidiaries of Live Nation, the world’s largest live-entertainment company, received some $19 million in “Save Our Stages” funding from the Small Business Administration, even though the act was intended to benefit small venues and not multinational corporations, according to an extensive report published by the Washington Post.

While Live Nation does not wholly own those businesses, sources told the Post that the company urged Democrats and Republicans in Congress to let it be directly eligible for the $15 billion emergency relief program, even though it is a publicly traded company that hardly qualifies as an independent venue. Ultimately, the law was written to exclude public companies, as well as firms they own or control, however, subsidiaries “in which Live Nation has a substantial, though not majority, ownership stake” received nearly $19 million, according to the Post’s review of Securities and Exchange Commission filings, state corporate documents and SBA data, as well as interviews with executives at companies that received grants.

It lists several of the companies listed as Live Nation subsidiaries in February SEC filings that received funds from the grant program, according to SBA data: Wisconsin company Frank Productions Concerts LLC, which received $10 million; artist management firm Gellman Management LLC, which received nearly $407,000; and Missouri firm Delmar Hall LLC, which received $1.75 million. Corporate documents filed in Wisconsin and California list Live Nation executives or subsidiaries having roles at Frank Productions Concerts and Gellman Management. Frank Productions Concerts, Gellman Management and Delmar Hall are all included on a list of hundreds of subsidiaries filed as part of Live Nation’s annual report covering 2021. A fourth company, The Pageant LLC, received $6.7 million from the program. It, along with Delmar Hall LLC, is 50 percent owned by Live Nation, said Patrick Hagin, who co-owns both businesses.

The report notes that the grants do not appear to have violated the law or any rules set by the SBA, however, it states, “The revelation demonstrates how a large company with stakes in hundreds of smaller businesses could, while following the rules, reap a benefit that some legislators didn’t want. And it shows that how agencies implement a law can be just as important as the way it is written by Congress.”

Sen. Amy Klobuchar (D-Minn.), an author of “Save Our Stages” act, told Pollstar that lawmakers did not think Live Nation should qualify for the funds. “It’s true it [the legislation] doesn’t include Live Nation venues, because they have such a vast empire with [Ticketmaster, which Live Nation wholly owns] and things,” she said.

Rep. Peter Welch (D-Vt.) a co-sponsor of the SOS legislation, wrote: “When we wrote this, we specifically didn’t want these publicly traded companies — Live Nation foremost among them — to get their hands on this money. I did not want Live Nation getting a nickel.”

While $19 million is not a substantial amount for Live Nation, which posted a record first quarter in 2022 with $209 million in adjusted operating income, “the government relief to its subsidiaries still protected its investments and improved its long-term outlook,” the report states. “The earnings of its subsidiaries provide Live Nation with crucial cash flow and enable it to service its debt, it said in securities filings. The aid enabled the companies to pay staff and recover more quickly from the disruption, their executives said in interviews and emailed statements.” In some cases, the subsidiaries had borrowed money from Live Nation in the early months of the pandemic; in others the SOS funds allowed them to avoid borrowing money from the parent company.

In a statement to the Post, Live Nation said that it does not have majority ownership or a controlling stake in any of the entities that received funds. It was also noted some $2 billion in Save Our Stages funding has not been used, so it appears that, at least by SBA standards, no qualifying venues that applied for funding were passed over in favor of Live Nation subsidiaries.

“Therefore we don’t have the ability to tell these partners that they can’t get access to these funds, especially considering the SBA reviewed and approved their applications before any funds were given out,” the company’s statement said. “These entities control their own day to day operations, and the folks running these small businesses used every resource legally available to them to support their employees through this crisis, which was not only their right but also an entirely understandable and human thing to do.”

“As the largest employer in the live music industry of course we advocated for support to be available to all live music workers no matter where they work,” the company’s statement continued. “Ultimately Live Nation wasn’t eligible and that’s ok, we still supported the bill for the good of the industry.”

But although Congress wrote the rules of the program, its implementation and qualifications were determined by the SBA. The report notes that majority ownership is relatively straightforward to determine, but corporate experts said determining “control” of a company can require more nuance and case-by-case analysis. In this case, the SBA defined “control” as “both the strategic policy setting exercised by boards of directors or similar organizational governance bodies and the day-to-day management and administration of business operations as overseen by principals,” according to an agency document on the program cited by the Post, noting that a firm could be the largest single shareholder of a subsidiary but not technically “control” it. The SEC’s definition of “subsidiary” is “an affiliate controlled by such person directly, or indirectly through one or more intermediaries.”

In a statement to the Post, an SBA official defended the awards as proper and said that Live Nation does not “directly own” any entity that received grants through the program. “SBA is also aware of and monitoring all applicants and awardees in which Live Nation Entertainment, Inc. has disclosed to the SEC in its annual filings as being ‘subsidiaries,’” the SBA statement said. “Through a robust grant monitoring process, SBA reviews and investigates, as necessary, to ensure the law is being followed and vice versa, that businesses are not penalized for having non-controlling, silent investors or completely typical legal and tax structures.”

While “Save Our Stages” — officially known as the Shuttered Venue Operators Grant program — was passed by Congress in December of 2020 and offered relief awards of up to $10 million to performance venues, museums, producers and talent managers, the SBA took nearly six months to begin distributing the funds.

Within days of lockdown beginning, independent venues had formed the National Independent Venues Association trade organization, which played a major role in the months-long effort to get “Save Our Stages” passed.

“The thousands of independent venues that came together to form NIVA could not have survived the pandemic shutdowns had it not been for the emergency relief provided by the Save Our Stages Act,” said NIVA executive director and co-founder Rev. Moose. “Our members are small business people that don’t have access to Wall Street financial instruments to survive a historic crisis not of their making.”