Israel Conflict Turns a Promising Touring Summer Grim, to the Tune of $20 Million

Getty Images; WireImages
Topline: Israel's Live Event Business Takes $20 Million Hit

The conflict in Gaza and insurance challenges have made for a cruel summer for promoters. Neil Young and Backstreet Boys have postponed shows -- are Gaga and Lana next?

“This looked like it was going to be one of the best summers in Israel’s history when it came to international acts, but now it’s quite grim,” says Carmi D. Wurtman, the CEO of 2b Vibes, a hybrid music company that has produced more than 100 festivals and concerts in the last 10 years.

He is talking about the wave of postponements and cancellations -- due to security concerns -- that have dealt a heavy blow to the live event business in the Holy Land since the latest Israeli-Palestinian conflict flared in Gaza in mid-June. With violence escalating again on July 28 after a cease-fire, Live Nation chairman of global touring Arthur Fogel, who is producing Lady Gaga’s tour, says he is “watching the situation” to determine if Gaga, who is slated to perform Sept. 13 at Hayarkon Park in Tel Aviv, will join Backstreet Boys, Neil Young & Crazy Horse, America, Kansas, Cirque du Soleil and other acts that have postponed or canceled shows in Israel. (The Hives and The Pixies did play Tel Aviv, albeit on June 17 before rocket attacks began in July.)

Other acts undoubtedly monitoring the conflict include Megadeth and Lana Del Rey, who are scheduled to play Tel Aviv on Aug. 6 and 20, respectively; CeeLo Green is booked for Aug. 19 in Jerusalem.

Wurtman, whose company is producing Green’s show, says the aborted America concert, which was to take place Aug. 7 in Tel Aviv,  was also a 2b Vibes production that he had worked on for three years to make happen. “We sold 4,000 of the 5,000 available tickets a month before the show, which suggested it would sell out.”

“I can’t blame them at all,” says Wurtman of the band’s decision to cancel, although he laments that 2b Vibes has lost “hundreds of thousands of dollars” due to the conflict.

He says the last time Israel’s concert business suffered a setback like this was during the 2008-2009 Gaza War, and he estimates that, presently, $10 million has been lost due to cancellations by international acts -- “much, much more if you factor in the local live event business.”

Related

Summer is the high season for large-scale outdoor concerts and festivals -- “a city like Jerusalem has festivals practically every week,” he says. And though local performers are inured to the threat of attacks, local police are refusing to grant permits for outdoor gatherings. The result, says Wurtman, is that hotels, restaurants and bands take a financial hit. “Suddenly, they’re stuck in Europe for two days. If they’ve got a large entourage and crew, putting them up can be quite expensive.”

Eran Arielli, CEO of indie-centric concert producer and promoter Naranjah, says he has only had one band, The Brian Jonestown Massacre, cancel a show, but he estimates that, all told, industry losses between mid-July and mid-August will be $20 million. He notes, however, that a portion of that amount “is recoverable for shows that have been postponed.” (Backstreet Boys, for instance, plan to reschedule for spring 2015.)

Complicating matters, say both promoters, is the difficulty in buying insurance in Israel that covers cancellations. “Lloyd’s of London will sell it to you, but it’s so expensive it’s not worthwhile,” says Wurtman. “There’s always a Russian roulette element to concert promotion, but this is like playing with two bullets.”

Peter A. Tempkins, managing director of the music and touring division for GNW-Evergreen, a live entertainment insurance firm says that, “Typically, artists cover their guarantees, their revenue. Ticket refunds would be [covered] from the promoter side."

Tempkins says he tells clients -- whether it’s a festival or band -- considering playing the area that, given the conflict, “there are certain coverages they’re not going to be able to get, like cancellation insurance. As we refer to it in the insurance industry, 'No, I can't insure your burning house.'" He also points out that, as a hedge against late-developing crises, a lot of summer festivals “are buying coverage in January and February. It's the same price, and they don't have to deal with last minute issues.

“This is not the first time this is coming up,” he adds. “I had bands calling us the day after the Ukraine/Russia thing hit wanting to get coverage.

Wurtman predicts the current conflict will have a chilling effect on major acts playing Israel through 2016. Arielli is more optimistic, although he attributes his attitude to his specialization in smaller indoor shows, the bulk of which don’t take place in summer. Then, noting the ever -- fragile state of the Middle East, he says, “Everything we say right now might not be relevant tomorrow.”  

Additional reporting by David Caspi.

A version of this article first appeared in the Aug. 9 issue of Billboard.