Live music is coming back, and concert giant Live Nation has the balance sheet to prove it.
Following five straight quarters of revenue decline – starting in Q1 2020, and followed by Q2 2020, Q3 2020, Q4 2020 and Q1 of this year – the company has finally been able to break free of the pandemic’s grip on its core business of live, in-person events.
According to Live Nation’s newly-published financial results for Q2 2021 (the three months to end of June), strong ticket sales and sponsorship commitments for 2022 drove revenue growth of over half a billion dollars ($501.9m), or 677%, year-on-year, to $575.9 million in Q2 2021.
Citing the reopening of communities following Covid lockdowns, Live Nation President and CEO Michael Rapino wrote in a letter to shareholders this week that “we’re seeing the pent-up demand for live events play out as artists and fans are eager to re-connect in person”.
Rapino noted the company is seeing strong ticket sales in the US and the UK in particular, “highlighted over the past weekends by Lollapalooza and Rolling Loud in the US and Latitude in the UK hosting a combined three quarters of a million fans”.
He added: “With vaccine rollouts increasing throughout Canada and Europe, we expect additional markets to open more broadly in the coming months.
“The momentum for the return to live events has been building every month, with ticket sales and concert attendance pacing faster than expected, underscoring the strength and resiliency of the concert business and live events in general.”
Other bright spots from Live Nation’s Q2 results included concert revenue growth of around $145m or 102% year-on-year, reaching $287m, up from $141.8m in Q2 2020.
Meanwhile, Live Nation’s ticketing revenue for Q2 increased by $331m, to $244m in Q2 2021, from a loss of $87m in Q2 2020.
The company sold 30 million tickets in the Q2 2020 (excluding refunds) compared with 2m tickets in Q2 last year, driven almost entirely by sales in the US, largely for concert and sporting events.
Live Nation CEO Michael Rapino and President and Chief Financial Officer Joe Berchtold spoke to analysts about Live Nation’s Q2 results on an earnings call this week. We listened in, and here’s what we found out…
Michael Rapino says we’ll be entering a “roaring era” for concerts over the next few years…
Throughout the many months of the live music business’s pandemic-fuelled uncertainty, Live Nation CEO Michael Rapino has been striking a positive tone about the future of his company and the live sector on each quarterly earnings call since the start of quarantine in 2020.
Back in May 2020, during Live Nation’s Q1 earnings call, for example, he noted that 90% of fans to rescheduled Live Nation concerts had held on to their tickets instead of taking refunds, and predicted that 2021 “can return to show volume and fan attendance at levels consistent with what we’ve seen in recent years”.
We’re now half way through 2021, with vaccination programs in full swing in the likes of the UK and the US and full-capacity shows are taking place as a result. Now, following Live Nation’s bumper Q2 in which it saw 677% YoY revenue growth, Rapino’s positivity has turned into bullishness.
“Looking forward to 2022 and that 2023, all our leading indicators continue to point to a roaring era for concerts and other live events,” he said in his opening remarks to analysts this week.
“Looking forward to 2022 and that 2023, all our leading indicators continue to point to a roaring era for concerts and other live events,” he said in his opening remarks to analysts this week.”
He added: “Starting with our Concerts division, every major venue type arenas, amphitheaters, and stadiums, our pipeline indicating double-digit growth in our show count and ticket sales relative to 2019 levels.
Live Nation’s “pipeline is so strong” in some cases he added, that the concert giant is now extending its planning into 2023 and is “beginning to discuss tours” that extend into to 2024.
Most of Live Nation’s major festivals have “sold out in record time”, says Rapino, even though “average ticket prices have been 10% higher than 2019”. Plus, Fans are spending more at events…
As leading markets have vaccinated their way out of Covid-19 lockdowns, and full-scale events have been given the green light by lawmakers, fans have been snapping up concert tickets in record time.
As far back as February, for example, following a Government announcement suggesting large-scale UK events would be able to re-open in June (this was later delayed to mid July), two Live Nation festivals – Reading & Leeds and Creamfields – jointly sold 170,000 tickets in just three days.
In Michael Rapino’s opening remarks to analysts this week, he noted that “most of our major festivals sold out in record time,” in spite of the fact, according to Rapino, that “average ticket prices have been 10% higher than 2019”.
In other words, live music is back, but it costs more and fans are happy to pay.
Not only that, but at Live Nation’s amphitheater shows over the past few weeks, says Rapino, the company “delivered strong double-digit increase in average per fan revenue and onsite spending versus 2019”.
“We think that the product is still underpriced, given all of the secondary business.”
Asked by an analyst during the call about whether or not fan demand is higher or lower than pre-pandemic levels, Rapino stated that “from the data we’re seeing so far, everything we seem to be putting on sale is doing better than pre-pandemic [levels]”.
He then added: “We like to always point out, we think that the product is still underpriced, given all of the secondary business.
“This is still an attractive night out for a fan. And now that artists traveling more around the world, the fan base has grown for live as a functional — entertainment item.
“So, we think global demand will continue, have double-digit growth as an industry for many years to come as the global landscape continues to grow.”
Live Nation will be “ensuring all our employees are vaccinated” against Covid-19, says RApino
Quizzed about “the issue of human resources and labor” in the events sector, the Live Nation execs were asked if there have been any constraints in “getting people to come back to work”.
Joe Berchtold stated that Live Nation has brought back over 90% of its furloughed staff, or more specifically, “of those we’ve called back, over 90% have returned [from] furlough”.
“We had a fairly low turnover rate,” he added. “We feel very good about how we’ve been able to retain staff. It’s a testimony to people’s commitment to our industry and the culture that we’ve built here.”
He also said that, as Live Nation has been pulling festivals and amphitheater shows together recently, the company has had to “work a bit harder at times to find the people, but it has not impacted our ability to put on the shows”.
The other staffing concern, according to Michael Rapino, is one of health.
Live Nation’s own Lollapolooza says that 90% of fans on the first day showed proof of being vaxxed against Covid-19, a stat that was repeated by Joe Berchtold on the company’s earnings call.
In terms of staff vaccinations, according to Michael Rapino, Live Nation, is “going to move forward and be very progressive on ensuring all our employees are vaccinated”.
“We’re going to move forward and be very progressive on ensuring all our employees are vaccinated.”
He added: “And we’re going to move lower with artists and managers, where we’re seeing the likes of these artists that are going to want fully vaccinated and tested shows as ways to continue to keep the show moving forward.
“I think that the biggest challenge we’ve had is just scrambling on a day-to-day basis with part-time employees back, and abiding by different local COVID laws.
“That’s been our only real challenge from an HR and communication [perspective]. So, hats off to my frontline. They’re doing an incredible job, running, hard, trying to adjust, and we’re going to move to more central protocols now on mandating the backseat and helping them out [and] make sure they’re all safe, too.”Music Business Worldwide