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SXSW, Ultra... Coachella? Why Festivals Wait for Local Governments to Force Coronavirus Cancellations

Coachella Valley Music And Arts Festival
Christopher Polk/Getty Images for Coachella

Festivalgoers attend the 2018 Coachella Valley Music And Arts Festival at the Empire Polo Field on April 13, 2018 in Indio, Calif.

Most event insurance policies don’t cover pandemic diseases, meaning it's better for promoters to get shut down than do it themselves.

Since launching last week, a petition requesting that South by Southwest be canceled or rescheduled over concerns about the coronavirus garnered more than 55,000 signatures and spawned a slew of media coverage. But even under that kind of mounting public pressure, the annual music, tech and film conference resisted those calls until Friday (March 6), when Austin Mayor Steve Adler declared a local disaster and forced SXSW to shut down for the first time in its 34-year history.

From a financial perspective, SXSW organizers’ reluctance to cancel the annual festival is easy to understand. Most event insurance policies don’t cover pandemic diseases like many believe the coronavirus is poised to become (at least not without the purchase of an additional waiver), forcing promoters to exercise force majeure clauses in performance contracts that waive liability in cases of extreme weather and other unforeseen emergencies.

While a festival like SXSW may still be on the hook for many expenses, in such cases exercising force majeure offers them a way out from paying artists booked to perform.

Unfortunately for SXSW, many agents have reportedly demanded that no force majeure clauses be included this year, meaning artists would be owed their full performance fee even in the event of a cancelation by a government agency.

“For coronavirus -- if not specifically excluded and they do have the potential for a claim -- the fear that people might contract the coronavirus is not sufficient,” Roger Sandau, a managing principal at Integro Sports & Entertainment, told Billboard previously. “The threshold in the policy is the event is ‘necessarily’ cancelled, ‘necessarily’ implies that there is a benchmark of severity that leaves you no choice, or prevents you from doing the show -- as opposed to a voluntary decision to avoid exposure.”

With millions of dollars on the line, it’s no wonder that it also took an official directive from the city of Miami for the Ultra Music Festival to “postpone” this year’s edition to 2021 (presumably when next year’s event would have happened anyway). This year’s edition of the popular electronic music festival -- which would have featured sets by Flume, Gesaffelstein, Gryffin, Zedd and Sofi Tukker, among others -- had been slated to take place March 20-22.

Now that two major spring festivals have shut down this week, fans and other observers are eagerly awaiting a decision on Coachella, the Southern California behemoth that is widely seen as kicking off the official summer festival season. With an enormous amount of money on the line -- last year, the festival drew an estimated 99,000 people per day, and brings in upwards of $704 million in overall economic activity, according to a 2016 study -- it will likely take another local emergency declaration for Coachella’s AEG-owned promoter Goldenvoice to throw in the towel.

If Coachella 2020 -- slated to kick off April 10 with headliners Rage Against the Machine, Travis Scott and Frank Ocean -- does cancel, it would likely trigger a tussle over payments between artists’ teams and Goldenvoice. Along with Live Nation, Goldenvoice’s parent company AEG has already publicly signaled that no one will be paid if its festivals get canceled, given that tickets will have to be refunded and no revenue will be generated from food and drink sales, parking and merchandise.

Coronavirus cases in California -- which, along with Florida, hosts the majority of spring and early summer festivals -- have now topped 60. On Wednesday, Los Angeles County declared a state of emergency and Riverside County -- where Coachella is held -- decided to activate its emergency operations center. On Thursday California Governor Gavin Newsom followed suit with a state of emergency the entire state. If the coronavirus continues to spread over the next month, it seems increasingly likely Coachella -- and its sister festival Stagecoach scheduled for later in the month -- could become the latest major live event to fall victim to the rapidly-spreading disease under a local government directive.

If Coachella is shut down, it’s easy to foresee a domino effect of cancellations among other spring and early summer festivals. Those could include Las Vegas’s Electric Daisy Carnival (May 15 – May 17), Napa’s Bottlerock (May 22 – May 24), New York’s Governors Ball (June 5 – June 7) and Tennessee’s Bonnaroo (June 11 – June 14), among many others. As Kevin Lyman, founder of Van’s Warped Tour, previously told Billboard: “If Coachella gets canceled, there’s really no events that are probably safe.”