The Ledger: What Does Wall Street Think of Concert No-Shows?

The Ledger is a weekly newsletter about the economics of the music business sent to Billboard Pro subscribers. An abbreviated version of the newsletter is published online.

By all accounts, the concert business is roaring back to life in 2022. Artists are on the road after sitting at home for up to two years. Fans are eager to experience live music again — many of them still hold tickets to concerts postponed last year.

Optimism was high when Live Nation last released earnings on Nov 4. Management said it expected a record for transacted, fee-bearing gross ticket value. Confirmed show count through Oct. 2022 for amphitheaters, arenas and stadiums was up double digits from the same periods in 2019 and 2020. The confirmed pipeline for sponsorship and advertising was also up by double digits. The outlook hasn’t changed in three months. There were some concert cancellations in January and February, but tours are pushing forward as planned, and new national and international tours are being announced daily.

But as Billboard has reported numerous times, some venues are finding that abnormally high numbers of ticket buyers are not showing up for concerts.

In January, a representative for the National Independent Venue Association told the House Small Business Committee that a lack of consumer confidence was leading to no-show rates as high as 50%. The owner of Crystal Ballroom and Edgefield in Portland, OR, told Billboard the venues are averaging 30% no-show rates, which equals a 42% drop in revenue for the venues. The Rebel Lounge in Phoenix said it’s seeing no-show rates as high as 50% for some events.

As touring picks up, that’s a potentially troubling trend for artists, promoters and especially venues. Artists typically take 85% of ticket proceeds; the promoter gets the remainder. Artists also earn money from sales of T-shirts, vinyl records and other merchandise at the show. Venues make most of their income from sales of food and drink, a share of artists’ merchandise share, and in some cases — namely amphitheaters — parking. Lower attendance means lower ancillary revenue and less money on the bottom line.

As a promoter and ticketing provider, Live Nation misses out on revenue when people don’t buy tickets for its shows. But as the owner of 28 venues — which includes 10 amphitheaters (5,000 to 30,000 capacity) and one arena — and operator of another 54 of them — including 33 amphitheaters, 10 arenas and one stadium – Live Nation loses money even when ticket holders stay home (those figures are from the company’s 2021 annual report).

We’ll find out Wall Street’s impressions of the 2022 concert season next week when Live Nation announces earnings for the fourth quarter of 2021 on Wednesday (Feb. 25). The earnings call will be an opportunity to find out what Live Nation management believes will happen after COVID-19 restrictions are lifted and people start going to concerts again.

Live Nation’s share price had risen and fallen in sync with the broader market through January but recently diverged from the S&P 500 and New York Stock Exchange composite. Since Feb. 3, Live Nation shares rose about 11% while the S&P 500 and NYSE fell 2.9% and 1.7%, respectively.

Now, the stock is at $117.41 — about $10 from its all-time high and up 11.5% year to date. Chalk it up to post-pandemic optimism. No analysts upgraded the stock or raised price targets in recent weeks. Investors appear to have shaken off any fears about settlements with victims and their families of the Astroworld festival in Houston on Nov. 5. Earlier that day, Live Nation shares jumped 15.1% following encouraging third-quarter earnings on Nov. 4 and promises of a full pipeline of large tours in 2022 and 2023.

Currently, the median of 12 analysts’ price targets for Live Nation’s stock is $118.50 — about $1 above the current price — with a high of $130 and a lot of $85, according to Refinitiv. Concert attendance was not a concern when investors pushed the stock to an all-time high of $127.75 on Nov. 5. If they’re a concern now, there’s little evidence baked into the current share price.

Fears of lingering no-shows rates could be unfounded and the problem could go away by the time touring picks up in spring. Already, there are signs people see the Omicron wave subsiding and want a return of public gatherings. School districts nationwide are dropping mask mandates. States are dropping COVID-19 restrictions. On Tuesday, California announced a plan to transition from a pandemic strategy to an endemic one. Around the world, governments and businesses will focus on containing the disease rather than preventing its spread. The summer and fall are filled with concerts at outdoor amphitheaters, stadiums and festivals, not the kind of indoor venues people have avoided for nearly two years.

Still, promoters and venues may continue to deal with a lack of consumer confidence about public events well into 2022. After two years of lockdowns, mandates, restrictions and non-stop media coverage, some people remain hesitant about the likes of concerts, movie theaters and indoor dining. A NielsenIQ survey in December found that 22% of Americans expect to remain cautious and avoid certain settings if COVID-19 continues to impact their market in 2022. That number rose to 41% in Mexico, 37% in France and 28% in Spain (but was only 21% of U.K. respondents). What’s more, 31% of respondents in the 16 countries surveyed expect to spend less on out-of-home entertainment in 2022.

It may not help that consumer’s economic confidence slipped in January and is about a third below pre-pandemic levels, according to the University of Michigan, or that U.S. consumer credit card debt had its largest quarterly increase in 22 years in the fourth quarter. Fortunately, except for the summer of 2009 after the housing bubble burst, the concert business has lived up to its recession-proof reputation. We’ll soon find out if concerts are endemic-proof, too.

STOCKS
Through Feb. 18, the % change over last five trading days and year to date.

Spotify: -12.7%, -49.5% YTD
Universal Music Group: -6.5%, -20.3% YTD
Warner Music Group: -4.4%, -15.2% YTD
Live Nation: +1.4%, +11.5% YTD
MSG Entertainment: 5.1%, 11.4% YTD
Anghami: +26.3%, +60.0% YTD
NYSE Composite: -1.6%, -4.5% YTD
Nasdaq: -1.8%, -13.4% YTD