SFX Entertainment is buying up the nation's concert industry. What will the
slide toward rock monopoly mean for those who play -- and go see -- live music?
by Ted Drozdowski
As the atomic bomb changed the world, so the explosive emergence of a new
concert-business conglomerate threatens to transform the $1.3 billion
live-music industry. A half-billion-dollar spending spree has made SFX
Entertainment a superpower -- the first nationwide concert promoter. And when
the mushroom cloud of its birth clears and the giant begins flexing its muscle,
the shock waves may affect everyone from booking agents to artists to competing
promoters and -- most important -- you.
The man behind SFX Entertainment is power broker Robert Sillerman, an
entertainment-biz wizard who amassed a fortune's worth of radio stations, sold
them off last year, and then began systematically buying a half-dozen of the
country's best-run, most powerful independent concert-promotion companies. When
those acquisitions were completed this month, SFX was suddenly in control of a
national web of 42 major concert venues and more than 100 clubs and small
Now SFX indisputably dominates the concert market. It has the clout to book a
major national tour for a star as big as Alanis Morissette -- who will hit the
road this summer -- with a single phone call. That's could bring a staggering
end to business as usual -- to a 30-year history of booking agents' haggling
with a series of regional promoters throughout the US to arrange such tours,
and to those agents' and promoters' getting their piece of the pie. And as a
publicly held company with a need to recover its huge recent investments and
drive up its stock price, SFX Entertainment is expected to be aggressive.
No wonder booking chieftain Tom Ross, director of the music division at
Creative Artists Agency, one of the world's biggest representatives of artistic
talent, recently delivered an alarmed and fiery denunciation of SFX. No wonder
some promoters who share borders with SFX in the turf-obsessed concert business
are fortifying their interests, while others are rumored to be angling for an
Even the powerful Don Law, New England's largest concert promoter, is, in the
words of one source, feeling "the hot breath of SFX on his neck." The Don Law
Company has aggressively dominated the New England market for years. His last
serious competitor was Rhode Island-based promoter Frank J. Russo, whom Law
bought out in 1992. Now, industry insiders speculate about SFX buying Law's
operation. SFX has purchased Connecticut's premier live-concert site, the
25,000-capacity Meadows amphitheater, in Hartford, and has an option to buy
downtown Boston's Opera House. The latter purchase would give SFX a valuable
site for rock concerts, theater, opera, and other productions in Law's own
backyard. So Law, who recently changed the name of his company to Blackstone
Entertainment, has raised the barricades. He has diversified his investments,
brought in the wealthy Boston-based entrepreneur David Mugar as a partner, and
made plans to increase the volume of his NEXT ticketing operation.
(See "Law of the Land," at right.)
Ticketing is another arena where a market-share battle with SFX will be
fought. That business -- worth hundreds of millions of dollars -- has been
dominated nationwide by TicketMaster for years. TicketMaster sells 60 million
tickets annually for everything from national park campsites to last summer's
Lilith Fair tour -- with lucrative service fees attached. You might recall that
in 1995, Pearl Jam went to war with TicketMaster, spearheading an antitrust
suit against the Goliath and attempting to play only those venues without
TicketMaster affiliations. The band lost on both counts when the feds dismissed
the suit as groundless and the tour fizzled out because promoters and locations
were unprepared to handle the magnitude of Pearl Jam's concerts.
SFX will prove a tougher adversary. One of its acquisitions, the St.
Louis-based Contemporary Group, operates its own highly successful regional
ticketing operation. In keeping with its aggressive, stock price-driven
strategies, SFX investor relations director Tim Klahs says, the conglomerate is
looking to use Contemporary's expertise to challenge TicketMaster.
What SFX Entertainment's clout and its potential economies of scale mean for
us concertgoers is unclear. But one troubling element of SFX's ascent is its
link to the Marquee Group. SFX-man Sillerman is also chairman of Marquee, a New
York- based agency that, among other activities, brokers corporate sponsorship
deals for arenas. Such big-dollar sponsorships, which Klahs says SFX is
ardently interested in expanding, typically deliver blocks of the best seats
into the arms of the companies that shell out dough for logo placement. That
leaves average ticket-buyers farther back in the stands.
A grand entrance
Last year was easily SFX's biggest one, but the company has been around
since 1992, when Sillerman established SFX Broadcasting to consolidate the
ownership of his nationwide roster of radio stations. During 20 years of
acquisitions, Sillerman had amassed 71 stations, which he sold in August 1997
to the Dallas-based investment company Hicks, Muse, Tate & Furst. The price
tag: $1.1 billion.
With his coffers filled, Sillerman went on a carefully orchestrated buying
spree. By the time the year was up, he'd spent $449 million on seven companies.
The largest purchase was Houston's PACE Entertainment, at $130 million.
Sillerman paid $65 million for the San Francisco-based promoter Bill Graham
Presents. He also acquired New York's Delsener/Slater; Fisher, Indiana's
Sunshine Promotions; Atlanta's Concert/Southern Promotions; and St. Louis's
Contemporary Group. And he bought the research/publishing/promotions company
SJS Entertainment/Network Magazine Group, of Los Angeles.
Sillerman's goal is to build SFX Entertainment into what biz-school types call
a "vertically integrated" company. Observers including Gary Bongiovanni, editor
in chief of the live-concert industry bible Pollstar, note that
Sillerman has been building up in-house expertise in virtually all aspects of
the concert business. Which means that SFX has within its vast grasp the
ability to promote and produce shows, book tours, manage and book artists, cut
deals on its purchases of concession goods and other supplies, and sell
Sillerman has been making alliances well beyond the concert-promotion business
that give SFX Entertainment even more horsepower. His Marquee Group is an
agency founded by former Madison Square Garden president Robert Gutkowski that
represents artists and broadcasters, and provides event management. In 1997
Marquee purchased QBQ Entertainment, a small but powerful booking company that
handles Billy Joel, Luther Vandross, and -- according to Bongiovanni -- the
entire Q-Prime Management roster, which includes Madonna, Metallica, and Courtney
Love. The Marquee Group is also a leader in developing corporate sponsorship
for arenas. (See "Let the ticket-buyer beware?" below.) Last year it
reportedly brokered a $100-million-plus, 20-year deal with the Staples retail
chain that allows the office products company to place its name on the new
sports arena being built in Los Angeles.
Law of the land
New England's top promoter defends his turf
For years, the Don Law Company has operated in the turf-conscious
major-concert promotion business with little competition in its New England
domain. But that's changed. SFX Entertainment is casting its Godzilla-size
shadow on Don Law's regional stronghold. It has purchased the 25,000-ticket
Meadows amphitheater, in Hartford, Connecticut, and has an option to buy
downtown Boston's Opera House.
It's considered a given among industry insiders that SFX would like to acquire
Don Law's operation, which is regarded as one of the best-run in the business.
Speculation is widespread that SFX made an offer to Law. And knowledgeable
sources estimate that such an offer could be worth $100 million. SFX
declined comment, and Don Law says that any speculation about a
$100 million sale -- or any sale, for that matter -- would be
"irresponsible." Law says he's never discussed a sale.
"My understanding is that the offer is still on the table," says an industry
insider with close ties to Don Law. "I don't think you can roll up these
markets in this business as SFX has without having a market as important as
Boston. The college market drives a lot of the concert business. SFX is going
public, and the people behind the company understand how to drive value and
stock price." Developing a reputation for aggressive expansion is one way to do
that. In other words, it's in SFX's interest to keep rumors like this in play.
Law says he's "sure that there are rumors like this floating around in Chicago
and Philadelphia," two cities with powerful independent promoters.
Several months ago, Law restructured his company, which is now known as
Blackstone Entertainment, and acquired a new partner, local businessman David
Mugar. Mugar referred all questions to Law. Nonetheless, the concert promoter
who once seemed omnipotent in this region has been working quietly (which, for
the record, has always been his way) to protect the interests that make his
corporation such a tempting target for the hungry new giant.
"SFX may want Don, but Don doesn't want them," says one local source, who adds
that Law is too competitive a character to sell out at this point in his
Law's Tea Party Concerts promotes shows in at least 13 major venues from
Providence, Rhode Island, to Augusta, Maine, including the FleetCenter, Great
Woods, the Worcester Centrum, the Worcester Aud, the Providence Civic Center,
and Harborlights Pavilion. It also books five Boston clubs and has ownership
interests in many of those venues.
Like SFX, Law has been building a vertically integrated organization to
marshal his interests. Although it's harder to eyeball the structure of Law's
company because the business is privately held, he appears to have nailed down
all the necessary components for self-sufficiency save for a major booking arm
and artist management. Law is even starting his own label, Blackstone Records,
which has hired singer/ songwriter Livingston Taylor as its talent scout but
has yet to sign any acts. Law is planning to work with the Winchester-based
organization of veteran record-promotions expert Jerry Brenner and his
associate, Jonathan Lev, to promote Blackstone releases.
As many concertgoers know, Law has ruled the New England live-music scene for
a long time. And smaller promoters doing business within his territory tell
stories of his aggressiveness as a competitor -- even at the club level. But
this year a national promoter shut him out of the Rolling Stones tour dates at
Foxboro Stadium. And SFX Entertainment itself made its first appearance in the
Boston market this month, producing cabaret comedienne Sandra Bernhard's
five-night stand at Avalon through its New York- based acquisition
Delsener/Slater Enterprises. However, Law had some involvement in the Bernhard
show; his Brattle Advertising arm bought ads for the performances and handled
on-site media relations, and Law's usual production subcontractors worked on
So Law has gone on the defensive, determined to remain an independent. That's
the idea behind his partnership with Mugar, a wealthy Boston-based entrepreneur
whose holdings include hotels and shopping centers. Mugar has very deep
pockets. He donates generously to charities and picks up the tab for Boston's
annual public Fourth of July celebration. Think of him as a cash-filled
sandbag, bolstering Law's line of defense against the SFX flood.
"I think Don felt the hot breath of SFX on his neck, and also saw an
opportunity to take some money out of his very successful business without
having to retire himself," one Law associate says of the Mugar/Law venture.
"I could understand why people might speculate about a possible acquisition
[by SFX] before I partnered with David Mugar," says Law. But now that Mugar is
on board, Law suggests, he and his partners have ample resources.
Mugar's fall 1997 alliance with Law and his other long-time business partner,
Sherman Wolf, also gives Don Law's company financing for its own assault on the
larger entertainment marketplace. This is something Law's been considering
since long before SFX became a player. But with Mugar on his team, the Don
Law's company has gone into action, purchasing cable TV systems in Idaho, Utah,
Wyoming, Oregon, California, Florida, and Georgia. The company recently
announced plans to build a $20 million water park adjacent to Great Woods, in
Mansfield. And Law's made no secret of his ambition to get into nationwide
concert promotion -- a trend fired by superstar stadium acts, such as the
Rolling Stones, that's now trickled down to the level of amphitheater tours
like the Lilith Fair, which was promoted nationally last year by Los
Angeles-based Universal Concerts.
Such arrangements can leave promoters like Law in the arctic chill. For
example, the national promoter of last fall's Rolling Stones tour was Toronto's
Michael Cohl, who hired five regional promoters for hands-on management of the
Stones' US dates. The promoter for the Foxboro Stadium concerts was New York's
Delsener/Slater -- and the Law company got no Eskimo Pie.
Sources say that Law has also been quietly investigating the purchase of
amphitheaters and the promotion of concerts in other parts of the country, and
that his company plans to announce that Law's NEXT ticketing operation will
quadruple its volume in April. NEXT is currently capable of selling 60,000
tickets in 40 minutes. Expansion of such already mammoth capacity raises all
sorts of conjecture about Law's plans. Will he try to gobble more of
TicketMaster's share of the northeastern market, moving to acquire the
contracts his rival holds with regional venues? Will he strike his own
alliances with independent regional promoters in other territories to take over
their ticketing? Or will Don Law's company use its new financial resources to
acquire another promoter outright?
"I have no inkling where Don's going with this," a long-time associate says.
"But I think Don is thinking big, whereas in the past he has always focused his
energies on dominating the Boston market. He's kind of stepping out."
Let the ticket buyer beware?
What does SFX Entertainment's big, bold move into the concert business mean for
you? Well, maybe nothing -- or maybe we'll be talking about it later in the
"I'm not sure there's going to be any discernible effect for the consumer,"
says Pollstar editor Gary Bongiovanni. "We're still in a market-driven
business. The prices people pay for tickets will be based on demand for the
artists. If someone tries pricing an Elton John concert at $60 a ticket and it
doesn't sell out -- well, then we'll know they can't charge $60 for an Elton
John ticket. But nobody's really sure what all this means."
What Bongiovanni calls "all this" is the mesh of business interests galvanized
by the stock price-driven pressure that a company as large and fully realized
as SFX brings to bear on the market.
According to SFX investor relations director Tim Klahs, there may actually be
some consumer benefits to SFX's octopus-like presence. "We want to maximize
concert attendance," he says. "One way of doing that is lowering ticket prices.
We're not in the business to do that to the extent that profits are damaged,
but we see economies of scale providing that opportunity."
What's in it for SFX? "A lowering of the ticket price would not only bring
additional concertgoers, but hopefully allow them to take advantage of the
other services our venues offer," such as food, drinks, and souvenirs.
Industry watchers, however, are skeptical that SFX will pass savings on to
consumers. "SFX could conceivably eliminate the booking agents, which would
only fatten their wallet," one local player says. "I'm sure they're not going
to pass that saving along to the consumer. As a publicly held company driven by
the bottom line and the stock price, that wouldn't fit their profile."
"I think what you're going to see is more sponsors," adds one observer. "When
you go to hockey games, you've got the box seats and the corporate luxury seats
-- and then the people on the floor. That's what's gonna happen with concerts;
more of the best seats are going to be bought by corporate sponsors."
Heads up, because SFX chairman Robert Sillerman's other company, the Marquee
Group, does aim to lure so-called corporate sponsors into arenas. Asked about
that subject, Klahs does a little card-shuffling. "Understand that the Marquee
Group is a different company with different management and a different board,
apart from the commonality of Bob Sillerman," he says.
However, Klahs continues, "clearly they share the same philosophy of
maximizing sponsorship dollars. We certainly think there's something to be
learned from the sports business in terms of taking advantage of those
opportunities. But will SFX and Marquee work hand-in-glove? No." Klahs allows
that SFX expects to see the purchase of blocks of seating by corporations to
continue at SFX-owned venues. "There's somewhat of a time lag between the music
business and the sports business in terms of the corporate world using these
venues for sponsorships," he says. "I believe we'll see the gap between the two
And that's not all. Houston's PACE, for example, is an industry leader in
coordinating national tours and festivals. PACE has assembled huge and
successful road packages since the arena heyday of ZZ Top. The promoter oversaw
last year's Fleetwood Mac reunion jaunt -- one of 1997's top arena-size draws,
with a gross take of more than $22 million. And right now PACE is launching the
George Strait Country Music Festival stadium tour, scheduled for March through
June, and structuring a Michael Bolton and Wynonna package for summer.
Just last month rumors began circulating that SFX was poised to acquire
heavy-hitting booking agency Monterey Peninsula Artists. Monterey's roster
includes such powerful draws as Aerosmith, Phish, Indigo Girls, Blues Traveler,
Live, Fiona Apple, and the Mighty Mighty Bosstones. Monterey's principals deny
an impending sale. However, Pollstar has reported that SFX's
Delsener/Slater operation and Monterey Peninsula have entered into a long-term
agreement with the H.O.R.D.E. Festival founders to produce and book the annual
There's also Contemporary's ticketing operation, plus the SJS/Network group's
services covering research and programming for the record and radio industries.
Not to mention Marquee and QBQ's management, booking, and sponsorship know-how.
Between its acquisitions and its relationships, SFX's possible command of the
marketplace is indeed staggering.
How big is big?
Why would SFX want to dominate a business as volatile as the
live-concert industry, which is dependent on such out-of-control factors as
record sales, airplay exposure, and artists' album-making and touring
schedules? The answer is obvious: big bucks.
Last year $1.3 billion worth of concert tickets were sold in North America, up
from 1996's $1.05 billion and 1995's $950 million. Pollstar magazine
reports the record-holding year is 1994, when $1.4 billion in tickets were
Top-dollar concert years usually reflect heavy stadium touring. In '95 and
'96, there were no major stadium tours. In 1997, the Rolling Stones and U2
packed the sports forums. Rising ticket prices at indoor arenas and
amphitheaters also contributed to the escalating grosses.
The year's top-grossing tour ($89.3 million) belonged to the Stones, who sold
1.5 million tickets in North America and managed to pull in $10.8 million for a
single four-night booking at Oakland Stadium. Although U2's stadium jaunt was
treated as a failure by the press, it was actually the fifth-highest-grossing
North American tour ever, drawing $79.9 million. The Stones' was
fourth-highest. In our own backyard, Fleetwood Mac's September 19 and 20 stand
at Great Woods, in Mansfield, reaped a $1,620,725 box-office gross, with
tickets priced from $30 to $75.
Promoters traditionally have made their money from the profits that remain
when artists' fees, advertising, production, and other costs have been paid out
of a concert's gross. But that's changed in the major-concert business over the
past decade; superstar artists have been able to demand a growing portion of
the box-office receipts, leaving promoters to rely on things like concession
sales, parking fees, a percentage of merchandising (the artist's sales of
T-shirts and souvenirs), and other income sources for their profits. That's
another reason why venue ownership and diversification into other aspects of
the concert business, such as ticketing, are so important to SFX.
Tim Klahs says SFX has no more major acquisitions scheduled at present. Yet
Sillerman has told the radio-industry news magazine The Gavin Report
that "I would be stunned if 1998 ended and we were the same company as we are
Wall Street moves in
The rise of SFX is only the most recent sign that the concert industry
is going corporate. "A lot of smaller promoters have become part of larger
companies -- whether a large promoter like Universal has acquired them, or
whether it's something like Don Law becoming a partner with David Mugar," says
Pollstar's Bongiovanni. "The capital threshold that's required to
compete in the industry today is immense."
There was a time when words like corporate and concerts were
never spoken in the same sentence. When the rock-concert industry was evolving
in the '60s, the typical promoter was a hippie entrepreneur, producing shows
out of the love of music and the drive to make a little cash. A few were
artist/impresarios like San Francisco's Bill Graham, who was a brass-knuckled
businessman but turned the process of presenting a concert into a performance
in itself. He sweated details -- like greeting the crowd outside, monitoring
sound-equipment quality, tutoring his staff on conduct -- to make sure the
overall experience of attending a show was a good value. Graham himself was one
of the legendary Fillmore's most interesting attractions.
SFX Entertainment now has all the major pieces it needs to rule the concert
Venue ownership. A network of 42 arena- and amphitheater-size venues and
100 clubs and theaters in 22 cities makes SFX the first concert promoter with a
Concessions, vending, parking fees. SFX controls or operates all the
sources of ancillary income at its venues. This is a huge source of revenue; a
single sellout show at an amphitheater can generate hundreds of thousands of
dollars from parking fees and food and souvenir purchases.
Ticketing. One of the most profitable areas of the concert business,
thanks to low overhead and high service fees. SFX is poised to use the
ticketing expertise of its Contemporary Group to go after TicketMaster's
60-million-tickets-a-year market share.
Corporate sponsorships. SFX and another Robert Sillerman-chaired
company, the Marquee Group, will be working together to secure lucrative
corporate sponsorships for SFX venues. Among Marquee's latest deals is one with
Staples, the office-products company, for a $100 million, 20-year sponsorship
of the new LA sports arena.
Concert promotion. The sexiest part of the business -- booking concerts
and marketing them to the public -- but not necessarily the most lucrative.
Superstar artists can demand virtually the entire box office take, leaving
promoters to depend on concessions, parking fees, and merchandising for
profits. However, SFX's PACE Entertainment is a leader in assembling entire
national tour packages -- a far more profitable promotion venture.
Booking. Agents fear SFX will use its expertise and clout to cut them
out of the touring business. SFX chairman Sillerman's other company, the
Marquee Group, owns QBQ Entertainment -- which books Billy Joel, Metallica,
Madonna, and others. SFX has also established a direct relationship with the
large Monterey Peninsula agency to book the annual H.O.R.D.E. tour.
Event production. SFX's six promotion companies do in-house concert
production. For artists, a national tour of SFX venues might mean a more
consistent realization of their stage shows. And the Marquee Group also
provides event management and consulting.
Research and marketing. SFX also owns the SJS Entertainment/Network
Magazine Group, which operates trade publications and provides research and
other services to the radio and record industries.
Artist management. QBQ Entertainment's relationship with Q-Prime gives
SFX potential access to two of the most brilliant managers in the music
business, Q-Prime founders Cliff Burnstein and Peter Mensch.
But as the stakes rose, the old-fashioned promoter was replaced by the
businessman in much the same way that colorful record-biz pioneers like
Atlantic's Ahmet Ertegun have been replaced by hard-nosed number crunchers like
Sony's Tommy Mottola. And because of mergers, acquisitions, and shakeouts,
today's record industry is dominated by a mere half-dozen major companies:
Sony, WEA, Polygram, EMI, BMG, and Universal. The era of music-industry
professionals "with vinyl running through their veins," as veteran
musician/producer Al Kooper recently put it, appears to be over.
Indeed, corporatization is pervasive today in the major fields of pop-culture
entertainment: the highly formatted world of radio from which SFX emerged; TV,
with its Big Four networks; the movie business, dominated by seven major
studios and a few national theater chains; even Hollywood and Broadway, where
production conglomerates put together megadeals.
In his quest for the corporate holy grail of high profits and strong investor
returns, Sillerman is a visionary who saw ripe, unplucked fruit in the
live-concert industry. "It was a very segmented business that had not taken
advantage of its full potential in terms of getting its message out to a highly
targeted audience due to capital constraints," explains SFX's Klahs.
A music-biz insider with considerable experience buying and selling businesses
offers this simple translation: "I'm sure they see the concert industry as a
sort of Neanderthal business that hasn't realized the opportunities inherent in
consolidation. They have a much larger view of things. They believe they can
roll up all the various parts of the business -- managers, agents, bookers,
venues -- and make a lot of money."
Booking agents are sweating
It's the thought of how SFX will make that money that scares even such
powerful industry players as the talent-booking organizations Creative Artists
Agency and International Creative Management. They're justifiably afraid that
SFX now has the clout to bypass booking agents -- to call artists' managers
directly and book national concerts for major bands with no agency
On the march
SFX Entertainment has been muscling in across the country
San Francisco. Bill Graham Presents. One of the country's founding
rock promoters. Graham died in 1991, and SFX purchased his company last year
for $65 million.
Indiana. Sunshine Promotions. A leading promoter in the Midwest.
Holdings include the 18,000-seat Market Square Arena, in Indianapolis, and the
$16 million Polaris Amphitheatre, in Columbus, Ohio.
Atlanta. Concert/Southern Promotions. Books 800-plus shows throughout
the Southeast every year. Holdings include Chastain Park Amphitheatre, in
Atlanta. Purchased for $15 million.
Houston. PACE. Purchased by SFX for $130 million. Produces concerts
nationwide -- 5000 events last year -- including ones at amphitheaters in
Pittsburgh, Phoenix, and Nashville.
New York. Delsener/Slater. A major concert promoter based in New York
City, it was the first to be bought out by SFX.
Boston. Blackstone Entertainment (Don Law). SFX has reportedly made an
offer on Don Law, New England's preeminent promoter, and has already acquired
the Meadows amphitheater, in Hartford. (See "Law of the Land," above.)
Consider this: with a single phone call to a manager, SFX could book a
national tour, cutting out regional promoters and denying them the commissions
of 10 to 15 percent or better that booking agencies deduct from artists' fees.
It's one-stop shopping, with a cash bonus for artists and their managers.
The music-biz truism is that relationships are everything. But even casual
industry watchers who've read books like Hit Men and The Mansion on
the Hill know that in this often cutthroat business, all a good
relationship will guarantee you is a cup of coffee -- provided there's a
buck-fifty in your pocket. And dealing direct with a megapromoter like SFX
would yield a hell of a lot more than chump change for artists and their
Let's keep the math simple, real, and small-scale. According to
Pollstar, rising stars Ben Folds Five sold out the Club Caprice, in
Redondo Beach, California, on November 29. That's 500 tickets at $15 each, for
a box office gross of $7500. Let's say the band's take was a modest $5000.
Fifteen percent of that -- the theoretical agent's fee -- is $750. Multiply
that by 100 dates and that's $75,000, which equals temptation with a capital
Now let's say bigger is better, and we do the same calculation for Fleetwood
Mac's $1,620,725 gross for two nights at Great Woods. Assuming the mighty Mac
pocketed the door, 15 percent of that is a little more than $243,000. (Granted,
major touring acts usually put a lower cap on agents' fees, but this example
illustrates the figures involved.) A mere 10 engagements on that scale, minus
an agent's fee, puts nearly $2.5 million in somebody's pocket. A manager's. An
act's. SFX's? And remember, SFX has 42 sites coast-to-coast that are capable of
hosting such a production.
Hence the blazing speech made by Creative Artists Agency music division chief
Tom Ross at the Concert Industry Consortium on January 30. "Corporations,
suits, Wall Street -- they're going to replace the lot of you," he thundered in
what's been the only real public vilification of SFX by anyone of import in the
music industry. Indeed, agents who were asked to comment on the record for this
story either refused or did not return calls, presumably fearing possible
reprisals from the fearsome new giant.
Ross railed against corporate sponsorships at arenas, complaining that "giving
a backstage pass to Wall Street" squeezes average-Joe fans out of sports events
like the Super Bowl and the best seating on major concert tours. He said he's
worried that the quest for bigger concert-industry profits has impeded touring
opportunities crucial to the development of new artists, pointing out that
fresh talent has always been the business's lifeblood. He gibed that "SFX may
stand for Send Funds Federal Express," and chided promoters -- people he's
worked with for much of his 30 years in the business -- for selling out.
He also summoned the specter of his own profession's obsolescence. "No one's
really sure what's going to happen," says Pollstar's Bongiovanni.
"Agents are most concerned because any time a company has the ability to bypass
their place within the industry infrastructure, well, there's reason for
But SFX's Klahs responds that the company has no plans to bypass booking
agencies. "We will serve different functions at different times," he states.
"Sometimes we are the promoters, sometimes we are the ones who book
. . . There's no intention to bypass the industry structure that's
already in place. We regard what we've created here as an easing of the
somewhat trying and often difficult process of having to book an act into a
number of locations. We regard our ability to provide one-stop shopping as a
plus to the industry as a whole."
Of course, if SFX were to acquire major-talent booking agencies the size of,
say, Monterey Peninsula to bolster the already strong roster they have with
Marquee and QBQ, the effect could be the same. Those SFX-affiliated companies
would have the power to influence talent pricing throughout the industry.
Instead of being bypassed, booking agents would be emasculated.
The artists' perspective
Bookers rightly fear SFX's "one-stop shopping" concept because it's not
entirely unappealing to managers. "The fewer people who make money off a tour,
the better it is for the artist," explains Janet Billig, who represents the
Breeders, Lisa Loeb, Cibo Matto, and Lemonheads and has also worked with
Nirvana. "Fewer cooks in the kitchen makes for an easier tour. The more people
involved, the more diluted the artist's directions about how a concert should
be promoted, advertised, and presented -- their more specific needs and
requests -- become. Everything gets further diluted with each level of people
However, Billig also sees big negatives. "It'll be harder to break bands. If
everything's bottom-line focused, everything will be influenced only by the
thought of selling tickets, not developing artists. With that much power,
you're a slave to their set of rules. They decide where they'll set a ticket
price and merchandising policies and parking prices -- all the things they make
extra revenue off of."
"Going over the booking agents' heads. . . . Well, that would
shake things up tremendously," says E.J. Devonale of Hard Head Management. "The
[SFX-owned] venues and promoters that have established relationships with
booking agents could be put in the position of having to go around some of
their friends. That's rough. With one company having so much control over so
many venues, some bands won't really be able to play. It'll be a yea or nay,
and the bands that are lucky will get the exposure, and the company could tack
on any service charges [for tickets] they want to."
That's an especially important concern for Hard Head, which handles the
developing acts Gov't Mule and Vitapup. Gov't Mule, in particular, are at a
point in their career where live-concert exposure is crucial. They've just
released their first album on Capricorn, a label with distribution through
Polygram, and are being considered for opening slots on several important
"The alternative is to try to do it on your own, and we saw what happened when
Pearl Jam did that," Devonale says. Indeed, Pearl Jam's '95 tour has to many
become emblematic of what happens when a strong-willed music-biz giant gets
crossed. The Seattle group's attempt to avoid places affiliated with
TicketMaster, to liberate their fans from the tyranny of high service fees,
proved so disastrous that it threatened to destroy the band. Pearl Jam's
exhausting tour through off-the-path sites resulted in cancellations, unfilled
houses, bad production, and the eventual collapse of singer Eddie Vedder from
the heat of the battle.
Agents aren't the only ones who refuse to buy SFX's promises to play by
established rules. The strong regional independent promoters that remain,
including Don Law's Blackstone Entertainment, are pulling their wagons in a
circle and awaiting SFX's next move. These companies include Universal
Concerts, Nederlander, and Avalon Attractions, all in Los Angeles; Larry Magid,
in Philadelphia; Arnie Granat's Jam, in Chicago; Bill Silva Presents, in San
Diego; and Tom Moffatt, in Honolulu.
Nonetheless, SFX chief Sillerman insists that national touring artists will
not be shackled in pacts that require them to play only SFX spaces. "I don't
think there will ever be a tour that just plays SFX venues exclusively," he
recently told radio watchdog The Gavin Report.
"Certainly, important markets like Boston mandate that artists make
appearances in venues we do not control," says SFX's Klahs. "It's going to be
business as usual."
Turning tickets into gold
At least that's what Klahs says about the promotion of concerts. The
ticket business is another matter. When asked if TicketMaster should be
concerned about SFX's interests, an up-front yes is his response.
"Clearly the Contemporary Group's ticketing system is an active enterprise.
There is overhead here that can be spread across an expanded business. We've
invested quite a bit of capital development in that ticketing business."
He continues: "You've got to remember that TicketMaster has had the benefit of
relatively sparse competition over the past few years. We look at ourselves as
a service organization, and this is an opportunity for expansion."
The stakes here are also sky-high. Let's say there's an average service charge
of $2 -- a very conservative estimate -- on every one of those 60 million
tickets TicketMaster sells. That's $120 million generated in service charges
alone. And TicketMaster's very public battle with Pearl Jam has left the
company with a tarnished image that even its pending purchase by USA Networks,
for $400 million, isn't likely to shine up.
For concertgoers, this rumble in the music-industry jungle will remain largely
behind the scenes. It will probably take a year of operations at the new SFX
before any economies of scale or other savings -- including the possible
elimination of agents' fees -- could trickle down to the consumer, if that's
going to happen at all. And it may take at least that long to see whether SFX
makes artist development part of its game plan -- allowing unproven acts to
test their mettle in SFX locations -- or shuts them out in favor of guaranteed
Here in New England, we could have one of the best ringside seats in the
concert-promotion territory battles. If SFX aggressively goes after Don Law's
turf, the signs of their competition are likely to be a proliferation of
concerts, more local advertising for SFX events at places like the Meadows and
the Hartford Civic Center, additional SFX purchases of New England concert
venues, and possibly bargain ticket prices as Don Law and SFX compete for your
What's certain is that more lines will be drawn in the shifting sands of the
concert industry as SFX continues to test its brawn. There will be casualties.
Don't look for Don Law's well-fortified Blackstone Entertainment to be among
them. But it seems inevitable that bodies will fall somewhere as this new
corporate monster claims its own. And maybe more.
Ted Drozdowski is a freelance journalist and former associate arts editor
at the Phoenix.