Tuesday, August 5, 2014

Ari-palooza: how much is Rahm's brother making off Lolla?

[via WBEZ]

The link between Chicago mayor Rahm Emanuel's brother, Ari, and Lollapalooza --- as well as their insider sweetheart deals with the city --- have been well-documented in the past.

But to my knowledge, no one has asked how much the infamous entertainment mogul actually rakes from the festival, now having passed its 10th anniversary in its Chicago incarnation.

As the co-CEO of of William Morris Endeavor, Ari's agency had at least 25 clients (by my count) on the 133-act Lollapalooza bill this year:

Calvin Harris
Iggy Azalea
Foster the People
Sebastian Ingrosso
Broken Bells
Fitz and the Tantrums
J. Roddy Walston & The Business
Trombone Shorty & Orleans Avenue
The Airborne Toxic Event
The Temper Trap
Royal Blood
Meg Myers
Bebe Rexha
Jon Batiste and Stay Human
Fly Golden Eagle
Crass Mamoth
Parquet Courts
(and there are probably more)

WME also co-operates the festival each year with C3 Presents, which sounds ripe for a conflict of interest in-of-itself, given that WME artists at Lollapalooza are effectively signing performance contracts with a WME festival brand.

But to even buy a ticket, concertgoers likely had to go through Ticketmaster/Live Nation, which Ari also sits on the board of.

So he's getting a cut from the Ticketmaster/Live Nation concert revenue itself, part of the WME percentages from each of his clients (who are getting probably paid anywhere from four to seven figures, depending on size of the act), plus a cut of whatever revenue gets generated from selling official Lolla merch and from the festival's various vendors.

Oh, and don't forget the prominent official promotion of Uber rides to and from Grant Park - which just so happened to co-sponsor the festival (and WME just so happened to invest in).

WME even represents several entertainment publications, such as PitchforkVice, and The Onion, that have posted a barrage of pre- and post-Lollapalooza content. This sort of mass coverage ensures its sustained cultural relevance to key target demographics of music fans for years to come, without any disclosure from these outlets that their business partner has a financial stake in how Lollapalooza is portrayed.

(to be fair, these outlets have been covering the less-than-flattering allegations that Lolla security assaulted Blood Orange mastermind Dev Hynes and his girlfriend).

In addition, Ari also sits on the board of investment bank Raine, which invests in Vice Media (one consequence of which I have written about here and here).

Worth noting from the Raine front page under the "Media & Entertainment" bullet point:
Live entertainment remains a valuable monetization engine and the sector has traditionally done little to monetize its online and social networking capabilities. These trends present significant opportunities for our firm.
So guess who bought an ad agency last year?
The tie-up with WME opens up to Droga5 an impressive network – global event promotion powerhouse Live Nation (Emanuel serves on Live Nation’s board of directors), venture capital firm Silver Lake (who via their investment in WME are now investors in Droga5), social media company theAudience, Vice Media (WME is involved via its Raine investment fund) and a huge pool of A-list talent – including the likes of Facebook chief operating officer Sheryl Sandberg, Oprah Winfrey, Lady Gaga, Family Guy creator Seth MacFarlane, Adele, Michael Bay and Quentin Tarantino. Not a bad list of people to have in your contacts file.
And guess who's expanding their festival portfolio?
Much of WME’s activity will be with Premier Global Production under the well-established Country Thunder brand, with Country Thunder events in Florence, Ariz., Twin Lakes, Wis., along with Texas Thunder in Midland, Texas, and the Craven (Sask.) Country Jamboree. WME is also partnering in the Willamette Country Music Festival in Brownsville, Ore., and the Cape Blanco Country Music Festival in Sixes, Ore., both sponsored by Bi-Mart.

“WME is looking for great opportunities to expand into other businesses, and forming a strategic alliance with festivals is a good business practice we want to continue to do,” Rob Beckham, co-head of WME’s Nashville office, tells Billboard.biz. Beckham declined to discuss financial details, but it is believed that WME has invested financially in the PGP brands, and purchased the Oregon festivals outright.
Not bad for the son of a former Chicago rock club owner.

But not exactly good for current Chicago club owners:
A part of every band's contract that reportedly bars festival performers from playing within 300 miles of Chicago for six months before the festival and three months after it. For the geographically disinclined, that's an area that stretches as far as Detroit, Milwaukee, Madison, St. Louis, Iowa City and Indianapolis. It's a clause that gives them a near-dictatorial control over music in America's midwest.
So will this vertically-integrated gravy train even last in coming years?
According to Billboard estimates, gross ticket revenue for festivals in the United States increased nearly 50 percent over the last five years. The reason: more festivals launched in the U.S. over the past five years than over the last 30 , crowding the market with competition for the ever-shrinking pool of marquee-name headliners. So promoters are being forced to come up with new ways to drive sales, or to create a unique identity, which may not necessarily rely on just the music.
With Lollapalooza's expansion into Europe, South America, and possibly Canada and Israel, the snowballing festival juggernaut is poised to take a hefty chunk of the market...and make a hefty chunk of change for the real-life Ari Gold.

At this point, he might as well just pick up a MacBook and pay himself to press play.

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