Live Nation deal adds to tickets cache
Strategic alliance with SMG boosts third-party ticketingNASHVILLE -- Live Nation has cut a seven-year deal with leading facility operator SMG for venues across North America that will provide a big boost to the launch of its ticketing service at third-party venues.
Live Nation will enter into an exclusive agreement to sell tickets at North American facilities controlled by SMG. The first tickets will transition to Live Nation Ticketing in late 2009 and are expected to ramp up to an estimated 5 million annually by 2011 as SMG's current ticketing contracts, most of which are with Ticketmaster, expire.
Live Nation says the total tickets included in the deal amount to about 25 million over the term of the deal.
Live Nation shares rose 6.5% to $16.90 in trading Thursday, making it the top performer on The Hollywood Reporter Showbiz 50 index. Ticketmaster, newly independent after its recent spinout from IAC/Interactive, tumbled 18% to $15.45.
Live Nation Ticketing will launch in January as a full service, in-house ticketing company to manage Live Nation's ticketing gateway, LiveNation.com, and as a ticketing alternative for venues outside its own large venue network. The platform will allow Live Nation to control customer data, create enhanced ticket-based concert products and capitalize on expanded distribution channels and sponsorship opportunities.
When contracts allow, Live Nation will be the exclusive ticketer for all events at North American SMG buildings, not just Live Nation events.
"There are some venues where Philadelphia-based SMG does not control the ticketing ... and in those cases we'll be working really closely with the venues to demonstrate the overall proposition that is the foundation of this deal: We're a vertically integrated music company that brings great content plus great distribution plus great marketing as a single-source provider to venues," Live Nation Ticketing CEO Nathan Hubbard said.
"Only a small fraction of our agreements require competitive bidding," SMG executive vp sports and entertainment Mike Evans said. "The majority of our clients rely on us to manage their venues in a way that maximizes their financial returns, and that includes ticketing. But it's also booking, content and providing a high degree of service. The bottom line is we control the majority of what our ticketing agreements are."
SMG, owned by private-equity fund American Capital, operates 216 facilities, including 75 arenas and nine stadiums, including Soldier Field in Chicago and the Superdome in New Orleans.
The Ticketmaster model is primarily based on rebates on ticket sales that go back to the building, based on service charges.
In its first year of operation, Live Nation Ticketing expects to handle more than 10 million tickets for Live Nation venues alone. These numbers are expected to grow annually to about 13 million by 2010 as tickets from Live Nation's House of Blues venues become available to the company. The incremental tickets included in the SMG deal represent an estimated 25% annual increase in the 13 million tickets Live Nation Ticketing already expects to service from Live Nation venues across North America.
Live Nation also has multimillion-dollar "360 degree" deals with such big-name artists as Madonna and Jay-Z, covering their concerts, recording, merchandising and other areas.