TJ Chambers
It is a requirement that all publicly traded companies must periodically provide certain information. Usually within a standardized format that investors and other interested parties are then able to compare/contrast and analyse operating results, the financial condition of the business, and any liquidity risks.
The aim of these quarterly reports is to keep shareholders, the markets and regulators informed in a transparent manner, whilst inspiring continued investor confidence. So, typically a curated and polished message.
All too often market analysts and any interested media that then cover these reports typically cut n’paste the pre-formatted communiques, and as has been noted by many commentators, (including Richard Kramer and Will Page in their ‘Bubble Trouble’ podcast – https://www.bubbletroublepodcast.com/sycophants-and-stenographers/), analysts are more typically ‘sycophants and stenographers’ or cheerleaders of the companies they review, rather than offer any crucial insight or objective analysis.
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So, the following post should be understood with the associated waiver:
Disclaimer: Not a registered investment, legal or tax advisor or broker. Do not rely upon any opinion or analysis offered at this site. Always undertake your own research and/or seek independent financial advice from a professional. Past behaviour is not necessarily a guide to future performance. A fool and his money is easily parted.
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Recent quarterly reports from live entertainment ticketing-related companies include Eventbrite, Vivid Seats, Live Nation, and Sphere Entertainment.
Eventbrite
(7th Nov. 2024) Their Q3 2024 results (https://investor.eventbrite.com/press-releases/press-releases-details/2024/Eventbrite-Reports-Third-Quarter-2024-Financial-Results/default.aspx) revealed that revenues were down 5% Y-O-Y, delivering a $3.8M net loss, despite increasing the net revenue per ticket to $3.94, up 9.8% Y-O-Y for the 19.7M paid tickets sold by the company (down from the 23M in Q3 2023). So, squeezing more from fewer tickets.
Their Shareholder letter (https://s22.q4cdn.com/238770421/files/doc_financials/2024/q3/Shareholder-Letter-Q3-2024-FINAL.pdf) identifies that the return to growth is a key focus of the company, whilst accepting ‘that it will take time to return to our desired growth trajectory’ and also trumpeted their recent launch of a timed-entry admissions module as part of their strategy to expand their addressable market.
Unfortunately, the company performance since their IPO in 2018 has somewhat disappointed the market.
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Vivid Seats
(7th Nov. 2024) The secondary marketplace reported (https://investors.vividseats.com/news-releases/news-release-details/vivid-seats-reports-third-quarter-2024-results) a 13% decline in Marketplace GOV (Gross Order value) Y-O-Y, but revenues only fell by 1% Y-O-Y and Adjusted EBITDA grew 2% due to generating ‘synergies’ and fiscal ‘discipline’. So, extracting more from less.
Within their Q3 2024 Earnings Report Presentation (https://investors.vividseats.com/static-files/4ff3e84b-ee5d-4b46-a71c-3f1fd98466a2) the company identified that whilst secondary ticketing demand remains robust within the sports and theatre categories, within music they faced difficulties due to less stadium tours in comparison to 2023.
Some analysts have suggested that the growth of resale and/or ticket exchange facilities within the primary market has impacted the pure-play secondary operators, especially within the North American market. So, the identified future growth opportunities for Vivid Seats include international expansion; entry into primary ticketing; and development of loyalty programmes to enhance customer retention and drive repeat business.
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Live Nation Entertainment
(11th Nov. 2024) The ‘world’s leading live entertainment company comprised of global market leaders: Ticketmaster, Live Nation Concerts, and Live Nation Media & Sponsorship’ reported its Q3 2024 results (https://d1io3yog0oux5.cloudfront.net/_a07a2751338cb0bd4708e89d35d8c410/livenationentertainment/db/670/6326/earnings_release_pdf/LYV+3Q24+ER_FINAL.pdf) and announced that ‘concerts continue booming’ with ‘our most active summer concert season ever’.
However, revenues were down 6% Y-O-Y to $7.6Bn but Adjusted Operating Income (AOI) was up 13% Y-O-Y with its highest ever concerts profitability (squeezing the margins on talent, event production, venue rentals and marketing etc.), 13% more shows in the quarter Y-O-Y, fans spending more on-site (9% up at LN amphitheatres and double-digits growth at major festivals), and a double-digit growth in sponsorship revenues.
Less positively, the report detailed the quarterly performance by Ticketmaster – revenues down 17% Y-O-Y, driving a 33% loss of AOI Y-O-Y.
Within the LNE Form 10-Q (https://investors.livenationentertainment.com/sec-filings/all-sec-filings/content/0001335258-24-000156/0001335258-24-000156.pdf) it was further revealed that the number of fee-bearing tickets fell 7% to 83.2M whilst the number of non-fee-bearing tickets rose 4.6% to 69.1M.
It also confirmed that ticketing revenues for the nine months ending September 30, 2024, fell in part due to a change in event-mix i.e. a reduction in stadium shows, only partially offset by higher arena and amphitheatre sales. Despite this, Q3 2024 was the fourth highest ever in terms of sales volume and the third highest ever with respect to GTV (Gross Transactional Value).
During the LNE Earnings Call (https://d1io3yog0oux5.cloudfront.net/_a07a2751338cb0bd4708e89d35d8c410/livenationentertainment/db/670/6326/transcript/3Q%2724+Transcript_FINAL.pdf), Michael Rapino (CEO) and Joe Berchtold (CFO) discussed the disparity between the pricing of sports and concert ticketing. How within sports it’s a ‘kind of a badge of honor, how expensive those tickets go for’, but music receives a more negative ‘emotion reaction’.
And they suggested that it was secondary driving those high prices ‘you know, America seems to be, you know, a market where secondary is free to run’
There’s always been this hope, between different legislators, we’d get better regulation around secondary … at a minimum, at least bots and spec selling and some of the other practices around secondary that we’d like to clean up.’ – Michale Rapino.
So, some Government intervention is good.
Alternately, when questioned about the ongoing DoJ antitrust lawsuit, and the imminent change of US Government to a Donald Trump regime, Joe Berchtold commented ‘… I think it’s still very early in the transition process, so we’re hesitant to say too much. But absolutely we are hopeful that we’ll see a return to the more traditional antitrust approach, where the agencies have generally tried to find ways to solve problems that they see with targeted remedies that minimize government intervention in the marketplace. And without getting into specifics, at least some parts of the case we think, believe reflect a much more interventionist philosophy today then you’d expect of a Republican administration. Obviously, the request to break up Live Nation and Ticketmaster would be an example of that highly interventionist approach’
And some Government intervention, not so good.
There was also a comment that Ticketmaster for all of its perceived failings is a technology company and uniquely able to handle high-volume onsales. Which is presumably an example of a ‘the best of a bad bunch’ argument.
Additionally, LNE feels that ‘superfans’ could eventually reach 20% of the ticket-buying population and that this offers an opportunity to further monetise uber-engaged fans – again with the extracting of more from a sub-set of the audience rather than growing the live ecosystem.
Additional commentary offered on CNBC’s Mad Money (https://www.cnbc.com/2024/11/12/live-nation-ceo-says-live-music-is-a-very-scarce-commodity.html), also confirmed that ticketing is viewed as a ‘scarce commodity’ and thus should be priced accordingly, and stressed the continued robustness of consumer demand for concerts.
The LNE share price rose some 5% on the day following the quarterly report release.
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Sphere Entertainment Co.*
(*This aggregates the results of Las Vegas Sphere and MSG Networks, for the purposes of this review, the focus will be on the venue operations.)
(12th Nov. 2024) The Sphere reported its Q1 2025 results (https://investor.sphereentertainmentco.com/press-releases/news-details/2024/SPHERE-ENTERTAINMENT-CO.-REPORTS-FISCAL-2025-FIRST-QUARTER-RESULTS/default.aspx) which highlighted the recent agreement for Abu Dhabi to be the next Sphere location under a franchise model.
Additionally, it reported revenues of $127.1M, of which $71.5 million related to 207 performances of ‘Postcard from Earth’ and ‘V-U2 An Immersive Concert Film’ during the quarter. The balance of $40.9M relates to live events (including part of The Eagles residency), of which the most successful was the mixed martial arts ‘UFC 306’ (14.09.24).
Separately revenues from sponsorship, suite license fees, signage and ‘Exosphere Advertising’ also delivered $8.5M.
But overall, the Sphere still made losses of $125.1M.
So being flippant, some observers have commented that the venue (that cost $2.3Bn to construct) is little more than an oversized immersive cinema (albeit with a 18.6K-capacity) complete with a wraparound electronic billboard, that does occasional events, rather than a concert venue.
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In conclusion, Q3 2024 ticketing volumes were down across all companies, reflecting fewer stadium shows than in 2023, a lower average sell-through per event, and an increased (albeit largely under-reported) level of no-shows.
But all operators enacted various pricing strategies to maximise their revenues.
Which essentially meant, above-inflation price increases to tickets and associated service fees, an enhanced range of VIP bundles & packages and the widespread use of dynamic pricing.
So, more of the same, but with an extra squeeze on ticket-buyers.
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And in other news, Corinne Lefebvre (https://www.linkedin.com/in/corinne-lefebvre/) is publishing her book ‘La Billetterie’ (CNM Editions) on 28th November 2024 (https://boutique.cnm.fr/la-billetterie-commercialiser-et-promouvoir-une-offre-culturelle.html).
Distilling everything she’s learned in her twenty-years career in ticket retail for various venues and ticketing solutions, she provides concrete answers and solutions to improve the daily life of ticketing professionals.
‘This practical guide to ticketing, outlines the entry point for audiences in a cultural establishment and its artistic programming, deciphers this complex and transversal universe, between the management of an information system, marketing strategies and relations with the public’ – with apologies for the AI translation from the original French.
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Until next time.
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TJ_Chambers 