Torn This Way: Losses From Lady Gaga's Hip Injury-Prompted Canceled Tour Could Top $25 Million

 

What began as a postponement soon turned into an all-out cancelation as Lady Gaga announced that she will be unable to perform any of the remaining dates on her Born This Way Ball tour.

On Feb. 12, Gaga revealed via Twitter, “I've been hiding a show injury and chronic pain for sometime now, over the past month it has worsened.” As a result, she put her upcoming four gigs on hold, only to announce a day later that the whole tour would be scrapped due to a labral tear of the right hip that will require surgery.

Lady Gaga’s Born This Way Ball had reaffirmed her status as a global presence after kicking off in South Korea last April. Billboard reported 2012 gross ticket sales at just under $125 million from 65 dates, which included stadium gigs in many cities, including London, Paris, Buenos Aires and Melbourne.

Gaga had eschewed the U.S. altogether last year before finally making amends last month. Tickets for those shows went on sale in late September and early October and ranged from $50-$200, with the opening U.S. date at the Tacoma Dome in Washington generating more than $1.2 million in sales. The remaining 21 shows likely would have accounted for gross sales in excess of $25 million dollars, with two apiece set for New York City’s Madison Square Garden and Brooklyn’s Barclays Center, facilities where capacity approaches 20,000.

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Much of this lost revenue likely will accrue to Gaga herself. Top-tier artists such as Lady Gaga command high percentages of gross ticket sales often approaching 100 percent (and on rare occasions even exceeding that number) and sometimes demand payment up front, complicating the accounting process when a trek is called off. Also feeling the brunt of the cancelation on their bottom lines: the various venues and their vendors, who will see revenues evaporate from concessions, merchandise, service fees and other ancillary sources. This comes at a time when few artists are touring arenas. (For instance, the Bryce Jordan Center in University Park, Pa., site of a canceled Gaga show on March 2, has no other concert slated for next month.)

Typically, insurance covers most concert cancelations that are precipitated due to a physical injury. Says New York City-based Adam Siegel, who specializes in entertainment insurance underwriting and event talent management: "The policy would normally pay out to whomever stands to lose revenue, such as a venue in hard cost expenses that have already been paid out to put on the concert, as well as revenues in the form of income and profit. Additionally, coverage may typically include the amount guaranteed to an artist such as Lady Gaga. In this case, losses would certainly be expected to be in the millions."

The process of determining those liabilities, says Siegel, involves extensive medical reports after which the insurers "will carefully analyze whether or not to pay the artist's claim or adjust the amount for a barrage of arguments as to why the the cancelation is not covered under the policy." For example. drug abuse is not usually covered, as it is considered "self-inflicted." An artist also is expected to disclose any medications they're taking while on tour to avoid coverage issues.

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Case in point: Britney Spears' 2005 Onyx Hotel tour, which was canceled due to a knee injury that required surgery. Insurers discovered that the injury was incurred during a 1999 music video shoot. Another example is the 2010 Linkin Park tour, which canceled six shows due to a band member's back injury. In both cases, Siegel explains, "Insurers denied coverage based on the assertion that the injuries stemmed from pre-existing conditions; which were not disclosed on the medical affidavit as part of the insurance application process."

Speaking with Billboard.biz, Live Nation Global Touring chairman Arthur Fogel describes the situation as one where “the entertainment business intersects with the realities of life, and the glamorous perception of what touring is like is replaced by the reality that it’s tough.” And while the pain of the called-off trek is a bitter pill to swallow, Fogel adds, "It’s just one of those things that can’t be controlled, and we just deal with what we have to deal with.”

Still, another often-overlooked side of the industry that will take a hit is the secondary market. Tours with ticket demands such as Born This Way Ball are increasingly rare, and thousands of tickets to the canceled shows had been purchased online. The comparison-shopping site FanSnap identified over 9,000 seats available for resale at the two Madison Square Garden shows, and 8,000 more over two evenings at Philadelphia’s Wells Fargo Center. These seats were priced at well over face value, and sites like StubHub, which reimburses buyers for cancelations, otherwise would receive 25 percent from each sale (10 percent from the buyer and 15 percent from the seller).

Of course, things get much cloudier away from established platforms like StubHub, as it is the ticket holders themselves who may have bought their seats at inflated prices via Craiglist or otherwise through less-savory scalpers that will feel the burn of the cancelations.

Ultimately, it’s misery for Monster Mites everywhere, outside of the 11 U.S. cities where shows took place. The opportunity to watch a meat-clad pop star place herself into a grinder or emerge from her own oversized womb in concert is an incomparable one, indeed -- at any price.

Twitter: @THRMusic

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