[This is the first in a series of editorials related to Covid-19’s impact on JKB Entertainment Group/Limelight Magazine.]
While no one knows with absolute certainty when the concert and event business will make a full scale return due to the Covid-19 pandemic, we’ve seen many posts from our readers, fans and friends on social media about artists playing rescheduled shows in venues with reduced capacities. Although this is a hopeful idea that could possibly work for newly announced shows, it would result in major losses for venues and promoters across the board for rescheduled shows.
JKB Entertainment Group/Limelight Magazine has been booking national touring acts at various venues throughout New England since 2009. So far, we have booked 95 shows (7 as Limelight Magazine and 88 as JKB Entertainment Group) with acts from all genres of music, including classic rock (e.g. The Zombies, Justin Hayward of The Moody Blues, Jon Anderson of Yes), ‘80s pop (Richard Marx, The Fixx, The English Beat), metal (Michael Schenker Group, Nita Strauss), alternative rock (Candlebox, Ed Kowalczyk of Live), boy bands (O-Town) and everything in between.
When a show is booked, there are several variables that factor into the ticket price, including artist fee, backline, hospitality (meals/lodging), security, sound tech, insurance, rent, and marketing costs. After developing the budget, the ticket price is set based on the capacity of the venue. In most cases, promoters need to sell between 70% and 80% of the house to break even. In some cases, it can be even higher, especially for superstar touring artists. Anything sold beyond that is your profit unless the artist is getting a backend or percentage on top of your breakeven point. [Federal and state taxes still need to be taken out of your profit].
So, if a venue has a capacity of 400 and it is reduced by 50% due to social distancing requirements, you would be taking a significant loss at selling 200 tickets because you needed to sell 300 (75% capacity) to break even. To keep the math simple, a ticket price of $35 would mean that a loss of $3,500 is automatically incurred (assuming you’ve sold all 200 tickets). Venues that have bars could make up some of that revenue, but in a reduced capacity house, alcohol sales will be much lower than before.
When a show is postponed to a new date (which we’ve already had a few), our contract with the artist is still for the original capacity of the venue. Reducing capacity to anything less than 75% would mean we have to enforce force majeure, which is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties (i.e. Covid-19 pandemic) prevents one or both parties from fulfilling their obligations under the contract.
There is also the notion that artists will lower their fees in order to still play. The likelihood of that is unlikely because of their touring expenses. Most artists lose 10% of their performance fee to their booking agent, between 10% and 20% to their manager, and, in some cases, a percentage or flat rate to their publicist. After these expenses are deducted, they need to pay their road crew, liability insurance, transportation costs, withholding taxes, other miscellaneous expenses, and finally themselves. Although it depends on each individual artist, most acts that play clubs or performing arts centers have told us they typically receive between 30% and 40% of the artist fee. Superstar acts may get a higher percentage depending on the production element of their tours. It should be noted that with reduced capacities and social distancing requirements, artists will be selling less merchandise on the road and meet and greets will likely be put on hold for the time being. On top of this, many smaller venues may not be able to properly self-distance, but that’s a whole other issue for another editorial.
Since none of us know what the future holds, we’ve only booked one show since the pandemic started. This show would easily be a sellout before the outbreak but we aren’t even announcing it for fear it will be postponed to sometimes in 2021. But one thing is certain, we will not be able to reschedule any shows in venues with reduced capacities and any artists we book in the future will have Covid-19 related language in their contracts. It’s the only way we can move forward in these challenging times.