# Live Nation Says 86% of Fans Declined a Refund. Here's What That Number Really Tells Us

## The figure cited by the concert promoter is more complicated than it initially appears.

Will fans return to concert venues once the coronavirus crisis ends? No one can accurately predict consumer behavior in the aftermath of an unprecedented pandemic, but a statistic showing that approximately 86% of fans are opting to hold onto their Live Nation tickets instead of asking for a refund has concert industry executives feeling optimistic about a recovery.

Live Nation chief executive Michael Rapino calls the stat “our strongest indicator of demand” — while other promoters, including AEG, have reported similar numbers for its tours. But what does the number 86% number really tell us? What data is included in the calculation, and what is being left out? Below, Billboard attempts to answer some of the questions posed to our touring desk about this oft-cited stat.

How is the 86% number calculated?

It’s a fairly straightforward equation. Looking at all Live Nation touring shows during the second quarter that were rescheduled to a later date, the company would simply divide the total number of tickets it refunded to fans by the total number of sold tickets. In this case, that calculation apparently showed a result of approximately .14. If you remember back to elementary school math, that would mean that out of the total number of tickets sold for rescheduled shows, 14 percent on average were refunded.

Were canceled events included in calculating the refund rate?

No. Tickets to cancelled events were automatically refunded to fans. Only Live Nation-promoted concerts that were rescheduled with new dates or dates soon to be announced are included in the refund stat.

No, festivals are not included in the calculation either. Because most festivals happen on an annual basis and because there are no festivals taking place in 2020, the company is recording festivals as cancelled events. Ticket holders can either keep their 2020 ticket and use it at the same festival property in 2021, or they can submit for a refund during the event's refund window. During yesterday’s call, Rapino said two-thirds of festival fans kept their tickets instead of asking for a refund.

Were any shows or tours cancelled because of a high number of refund requests?

Company officials say no, although thousands of events were never rescheduled because of poor ticket sales prior to the pandemic. Concert promoters took advantage of the once-in-a-lifetime opportunity to clear their books of weak shows and invoke force majeure language to cancel tours without penalty (but still face billions in losses this year from the pandemic). Eliminating the poorly performing tours probably did improve the overall average, but it’s not especially significant.

What does the low refund rate mean for Live Nation’s balance sheet?

Kathy Willard, Live Nation’s chief financial officer, explained during the call that Live Nation had a total cash balance of \$3.3 billion, including a free cash balance of \$1.8 billion. About \$1.3 billion of that is from revenue for tickets for rescheduled shows that haven’t been refunded. The fact that fans have mostly opted out of refunds (which were offered during a 30-day window) provides Live Nation with a fair amount of certainty about their liquidity through the end of the year.

Why does Live Nation think 2021 will be a strong year?

Part of the company's optimism assumes significant progress in the fight against the virus, which will likely come in the form of a vaccine. Once significant medical progress is made, fans have indicated they are ready to go see shows.

“Between the tickets held by fans for the rescheduled shows and these festival onsales, we have already sold 19 million tickets to more than 4,000 concerts and festivals scheduled for 2021,” Rapino said on the call. “At the same time, surveys continue to show that concerts remain fans' highest priority social event when it is safe to gather, with almost 90% of fans globally planning on attending concerts again.”

When is Live Nation planning to resume concerts?

Again, assuming progress is made against the virus, president Joe Berchtold said the company is assuming a return to normal beginning next summer with its amphitheaters and festivals business, while the arena business gets pushed deeper into the year because of the later NBA schedule. If Live Nation can resume concerts in the summer, tickets would likely go on sale in the late winter and early spring.

How can Live Nation have negative ticket revenue but a low refund rate?

A number of people have been conflating Live Nation’s ticketing loss of \$267 million (which the Wall Street Journal’s Ethan Smith called “negative revenue”) with its low refund rate. The short answer is that the two are not directly related.  Ticketmaster had to issue refunds to all of its sports team clients, theaters, non-Live Nation promoters and their own touring shows. Because none of those sales (or any others for that matter) took place during the second quarter, the company was issuing refunds without any actual sales to offset them, leading to significant losses. Finally, many of the refunds weren't for postponed shows, they were for shows that were cancelled, prompting automatic refunds. That's a completely different bucket from tickets to postponed shows where fans could opt in for a refund if they wanted.

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October 21, 2020