With global concert grosses up an estimated 38 percent in five years, venue companies are developing or reviving new facilities for music fans.
When Live Nation Entertainment executive Tom See walked into a 111-year-old former opera house in Philadelphia last December to watch Bob Dylan rechristen the hall as The Met Philadelphia, he saw a building he later described as “iconic and forever lasting.”
The event was the culmination of a $56 million renovation -- executed by developer Eric Blumenfeld and Live Nation Philadelphia regional president Geoff Gordon -- that refurbished everything in the venue, from the lobby and mezzanine to its 3,400-seat auditorium, ringed with ornate box seats.
The Met Philadelphia is “one of those ‘churches of live’ that you would never want to go away,” says See, Live Nation Entertainment president of venues for U.S. concerts.
With the renovation of historic halls in markets large and small, and new arenas under discussion or construction everywhere from the New York suburbs to San Francisco, a building boom is reshaping the live-music landscape. The total investment is difficult to estimate, but individual projects in North America tracked by Billboard, like The Met Philadelphia, have cost millions -- and, collectively, billions.
What’s driving and guiding all this spending? Executives from four of the live-music industry’s top firms involved with venue operation and development -- AEG Worldwide, Oak View Group, Live Nation and SMG Worldwide -- say that their expanding sector is fueling aggressive strategies among venue owners.
Frank Remesch of SMG, which operates arenas, stadiums and exhibition centers worldwide, has a ground-level view of a relatively modest project for the company: a $4 million-plus renovation of the 4,200-capacity MECU Pavilion on the waterfront of Baltimore’s Inner Harbor, which SMG operates jointly with Live Nation. A veteran of a previous renovation of Baltimore’s Royal Farms Arena, where he is GM, Remesch brings hands-on experience to his latest upgrade project: He began his arena career four decades ago, as an electrician.
His renovation priorities? “Safety, and what makes you money or saves you money,” says Remesch, describing the need at MECU Pavilion for electrical upgrades onstage and “for catering, for [parked] tour buses ... We put our new LED lighting in. Everybody knew [the outdoor amphitheater] needed a new tent, and that [the existing] tent was iconic.”
Sound baffling was added to reduce the overflow of loud music to condominiums built nearby after the pavilion opened, in 1982. New HVAC units are capable of cooling and warming the venue, extending its season for outdoor shows. Backstage upgrades and new concession areas raised expenses -- as well as the potential payoff from additional bookings and greater attendance, says Remesch.
At Live Nation venues, See also keeps an eye on food and beverage concession stands -- and the length of lines at the bathrooms. “You start to understand where your friction points are,” says See, noting that Live Nation surveys all of its venue patrons and gets feedback from some 10 percent of event attendees. “Is someone telling you that it’s way too long to wait to get a restroom? Then let’s invest in restrooms. Am I waiting in too long of a line to get food and beverage? Then we’ll add more points-of-sale.
“We’re in the hospitality business,” continues See, who joined Live Nation in 2015 after working for Universal Studios Hollywood and, before that, Adventures by Disney, a subsidiary of Walt Disney Parks. “Our objective is to ensure the fan has an amazing experience -- make sure that they’re taken care of, and they’ll reward you [with repeat business].”
Yet it’s quite a leap from a shorter beer line to the multimillion-dollar renovation of a century-old opera house. Such major investments are driven by competition for artist bookings, says See. “What city is the artist going to play in? What venue in the city is the artist going to play in? We work for the artists, and artists want to play in interesting places. If you can create them and run them properly so their fans have a great time, it’s a big win.”
The competitive stakes in the live-music business have never been higher. According to ticket grosses provided by promoters and venues to Billboard Boxscore (which tracks a portion of overall global activity), the industry has grown an estimated 38 percent over the past five years. Global gross ticket sales reported to Boxscore for 2018 exceeded $6.4 billion, while attendance topped 80.8 million fans.
“We’re seeing a real increase in the appeal and demand for that live event experience,” says Bob Newman, president of AEG Facilities, which joined SMG in announcing a merger on Feb. 7. “That live-event experience is something that can’t be replicated over the internet.”
At the arena level, AEG has developed some of the world’s top-grossing venues, including T-Mobile Arena in Las Vegas (with MGM), Staples Center in Los Angeles, O2 Arena in London and Mercedes-Benz Arena in Berlin. AEG has aggressively opened new buildings abroad, from the Cadillac Arena in Beijing to the Antel Arena in Montevideo, Uruguay.
When weighing a venue investment, says Newman, “you’re evaluating the opportunity on several metrics. But it really comes down to this: Does the market have a passion for sport and entertainment, is the project you’re contemplating in the right location, and are you building or renovating in the right manner?”
The “right manner,” for AEG and other arena developers in recent years, has often involved constructing a concert/sports arena as the centerpiece of a wider mixed-use district that may include restaurants, hotels, retailers, other entertainment options and perhaps offices or residences. (L.A. Live, which is adjacent to the 20,000-capacity Staples Center, is one of the best-known such districts in the nation.)
“What we have found,” says Newman, “whether it’s in Los Angeles, London, Berlin or other locations, is that arena- or event-driven districts can be created, with the center of the doughnut being that entertainment and sports venue.”
The importance of professional sports (and NCAA Division I college sports) to venue development decisions is clear from several major arena projects coast to coast.
The Golden State Warriors, the NBA’s reigning champions, are financing the construction of the 18,000-seat, cutting-edge Chase Center in San Francisco, due to open in September as the team’s new home court and the anchor of a mixed-use entertainment district on the city’s waterfront.
“We’re involved in three brand-new [sports and concert] arenas,” reports Tim Leiweke, CEO of Oak View Group, which teamed up with manager Irving Azoff in 2015 to found OVG as an advisory, development and investment company for the sports/live entertainment business.
OVG is in the early stages of developing the 20,000-seat Belmont Arena on suburban Long Island, just east of the New York city line, as a new home for the New York Islanders NHL hockey team, and as a fifth concert arena in the competitive New York region, vying for bookings with Madison Square Garden, Prudential Center, Barclays Center and NYCB Live: Home of the Nassau Veterans Memorial Coliseum.
The company has partnered with the University of Texas to build an arena in Austin by 2021 for the Texas Longhorns, UT’s Division I basketball team, which also will seat 15,000 for concerts in one of the most music-centric cities in the world -- “an amazing music marketplace,” says Leiweke.
And OVG is redeveloping Seattle’s KeyArena, due to host a new NHL expansion team in 2021 (and a possible new NBA franchise). The building originally debuted in 1962, and beneath its beloved Space Age-era roof “we’re gutting everything and building a brand-new arena,” says Leiweke.
Due to the white-hot construction market in Seattle, the project’s cost has risen to an estimated $850 million. But Leiweke doesn’t flinch at that level of investment. “We’re going to have to spend more than we originally thought,” he says, but in a regional market of 15 million, “everyone gravitates to Seattle for big events, big concerts, big sports. We knew the pent-up demand in that marketplace. That building is going to be one of the 10 best arenas in the world... and will reward us for our economic risk.”
Less than four years after it launched, OVG is just getting started in the venue boom. But the company’s confidence bodes well for the entire live music industry. Describing its “international vision,” Lieweke says that it will be “leading the charge on the largest single development of arenas at one time in the history of the industry -- because we think the industry and the opportunities are both that good.”