How Live Nation allegedly terrorized the concert industry

SeatGeek was close to a deal that would take its ticketing business to the next level. The company had been in negotiations with the Dallas Cowboys, aiming to take over first-party sales at its stadium. But there was one sticking point: “the concert issue.” The team feared that if competitor SeatGeek dropped Ticketmaster, Ticketmaster’s parent company Live Nation could pull concerts from the team’s stadium, hurting an important revenue stream.

That’s how SeatGeek CEO Jack Grotzinger remembers things. The deal was ultimately successful, resulting in a basic ticket partnership Announced in 2018. But for a while, “the party issue was the one thing we couldn’t get over, and it seemed like it might derail the whole process,” Grotzinger said as he took the stand before a Manhattan jury on Friday.

During the first days of the government’s six weeks Antitrust Prosecution Vs Live Nation-Ticketmaster Retaliation — an accusation that Live Nation categorically denies — was an underlying theme. Many in the industry believe Live Nation’s promoters will ban concerts from venues that don’t use Ticketmaster, as several witnesses have testified. Witnesses claimed that the real or perceived threat created such fear that some major venues would refuse to switch to what they saw as a better ticket product, so as not to incur the wrath of Live Nation. together A settlement is reportedly imminentChanges may be on the way – but not the complete disintegration that the government put on the table during the trial. Meanwhile, dozens of countries involved in the case will have to decide whether to move forward.

SeatGeek didn’t necessarily know Live Nation would respond. Venues’ fear of losing their concerts was costing SeatGeek business, Grotzinger said. With the Cowboys’ deal appearing to fall through, one SeatGeek employee proposed a bold idea: What if they offered retaliation insurance? The company can promise venues that if Live Nation bypasses it for a concert, it will hand over enough money to cover the revenue it would have generated.

The idea made Grotzinger “really uncomfortable,” he testified. SeatGeek will have to set aside a significant amount of money for insurance. Even if they never have to pay, Grotzinger said, the company would need to recoup that money elsewhere in the contract — “the place gets a worse deal,” he said. But SeatGeek’s board of directors eventually approved the idea, and the Cowboys made the deal. From that point on, offering retaliation insurance became a last resort. “It’s really scary, but if we feel like we have no other choice, we will do it,” he said.

So far, two places that signed up for retaliation insurance have claimed the clause was triggered — one of them was the Cowboys. In 2022, the team told SeatGeek that they believed Live Nation passed over their stadium for a Coldplay concert. In favor of the relationship with SeatGeek, the Cowboys did not collect the claim at that time, Groetzinger said.

The risks are more pronounced in smaller arenas, where there are more options for artists and promoters to choose from, Grotzinger said.

early in the week, The jury heard from two witnesses Who were directly responsible for issuing tickets at the arenas: former CEO of Barclays Center owner BSE Global, John Abamondi, and Mitch Helgerson, chief revenue officer of the Minnesota Wild hockey team. The Wild considered SeatGeek’s offer, but Live Nation-Ticketmaster allegedly threatened to move its shows to the Target Center in nearby Minneapolis, a “near-disastrous” outcome (in Helgerson’s words) that even retaliation insurance wouldn’t fix. Barclays’ negotiations went better, and SeatGeek signed a seven-year contract in 2021. But quickly, it all fell apart.

SeatGeek made big sacrifices to acquire Barclays. BSE calculated that the arena could lose $20 million if Live Nation passed over the arena, a number SeatGeek couldn’t fully cover, so it offered the next best thing: $20 million of equity in its business. Grotzinger said the deal would be “one of the least profitable deals we’ve signed.” “But we thought it was worth doing because this would be a watershed moment for us.” In fact, a year after SeatGeek signed the deal, it was able to add three NFL stadiums and two arenas to its client list, he said.

But it soon became clear that the number of Barclays concerts was “far fewer than we expected,” Grotzinger recalls. Abamondi’s contract was not renewed, and the arena began “complaining about things that did not make sense or were very small.” Some of the issues were legitimate with the SeatGeek platform, which it worked to fix, but others were data entry issues created by BSE’s box office staff, which Abamondi also testified to. Groetzinger felt that Barclays was creating an excuse to return to Ticketmaster because he was frantic about losing Live Nation shows. The deal expired after 18 months. In cross-examination, Live Nation’s lawyers suggested that it was SeatGeek’s incompetence, not alleged retaliation by Live Nation, that caused the deal to unravel.

The more yards SeatGeek fails to win or loses, the harder it becomes to acquire new ones, Grotzinger said. SeatGeek has signed five total arenas for its core ticketing business. “A yard is worried about being overlooked when it feels like it’s on an island,” Grotzinger said.

It’s bigger than Ticketmaster

The issue is about more than just selling tickets. The government also alleges that Live Nation has monopoly power over the market for large amphitheaters in the United States — outdoor venues that are popular with touring performers in the summer months. The company allegedly conditions access to these places using its own promoters, making it nearly impossible for others to break into them.

A jury began hearing on this issue as well last week, including from Seth Horowitz, owner of It’s My Party (IMP), which operates major venues throughout the Washington, D.C., area like the 9:30 Club and the non-Live Nation-operated amphitheater Merriweather Post Pavilion. When it comes to subwoofers, it’s basically “me and Live Nation,” he said.

Another witness, former Irvine, California, City Manager Oliver Chee, described Live Nation’s aggressive tactics as the city considered replacement operators for the new amplifier it was building. A corporate lobbyist allegedly told Chi that “Live Nation would simply walk around” the speaker if the contract was rejected.

Live Nation has tried to prove that many of the practices it has been criticized for — such as signing exclusive contracts with venues and having vertically integrated businesses — are things its competitors also do. She tried to cast doubt on the alleged threats, suggesting, for example, that she was simply describing the risks neutrally.

If the settlement is not announced today, the jury will likely still hear this week from AEG, a similar concert promotion and ticketing company, as well as from a concert fan and some company executives. Finally, they are expected to hear from Mumford & Sons CEO and artists Kid Rock and Ben Lovett. If the government settles, at least some states may move forward, and the fate of one of the largest live events empires in the United States will be decided by the court.