But as the group began to line up a string of victories like uniting 3,000 concert promoters under the NIVA banner and aligning with Sens. Amy Klobuchar (D-Minn) and John Cornyn (R-Texas) on a $10 billion bipartisan bill, the longshot plan suddenly became the live music business’ best bet for securing aid for the badly battered industry.
When the text of the bill was released Monday morning, supporters learned that the relief package had been expanded from $10 billion to $15 billion to include a smaller coalition of arts and cultural groups that were added in the final days of negotiations.
“Usually you get negotiated down, but we increased funding and added more partners, including the theaters, the museums and the zoos,” Klobuchar tells Billboard in an interview Monday afternoon, just hours before a veto-proof 91–7 vote in the Senate and 359–53 vote in the House passed a $2.5 trillion spending plan. Within the 5,500-page Consolidated Appropriations Act of 2021 is the second largest aid package in U.S. history, the $900 billion Coronavirus Response and Relief Act Supplemental Appropriations Act, which includes Section 324: Grants For Shuttered Venue Operators, the first ever national grant program dedicated to indie music venues.
“The people at NIVA were complete rock stars and did an amazing job,” says Marc Geiger with SaveLive, an investment initiative to buy distressed venues affected by the pandemic. It’s unclear what the passage of the aid package means for the former WME co-head of music, who didn’t comment to Billboard on the specifics of the bill other than to congratulate NIVA on their success.
“I think they really ‘Saved Live,’” he tells Billboard.
Under the federal plan venue operators, promoters, music managers and talent agencies can apply for non-repayable, two-part grants that cover as much 45% of a venue’s 2019 revenue, capped at $10 million in the first round, followed by a supplemental grant in spring 2021 valued at 50% of the original grant. To qualify, applicants must have been in business on Feb. 29, 2020, and show 2020 revenues decreased by at least 25% on a quarterly basis compared to 2019. Venues will be able to begin applying for the funds in the coming days with priority given to venues that faced 70–90% revenue losses in 2020.
The text of the law creating the independent venue grant program was written in a way to exclude both corporate promoters and coffee shops that host open mic nights.
For a venue to qualify, it must have mixing equipment, a public address system and a lighting rig, and sell paid tickets or have a cover charge “to attend most performances and (ensure) artists are paid fairly and do not play for free or solely for tips except for fundraisers or similar charitable events,” the bill reads. Shows must be staffed by paid employees and marketed and advertised to the public and at least 70% of revenue has to be generated from ticketed live performances (food and drinks sold at a concert count toward the 70%).
To qualify, applicants must be independently owned, meaning they can’t be majority owned by a company listed on a stock exchange, eliminating Live Nation venues for aid. Applicants can’t have business units that operate in foreign countries -- eliminating most of the major agencies and AEG from consideration -- nor can they own or operate venues, cinemas, talent agencies in more than 10 states, or employ more than 500 people on a full time basis.
The decision to exclude Live Nation and other major live entertainment companies was one of both political expediency and need. Publicly traded companies like Live Nation have access to capital markets, while AEG officials have already announced that the company will borrow money from its billionaire owner Phil Anschutz to cover losses. Most of the major talent agencies also have access to capital through their majority ownership groups like Silver Lake, which owns a controlling stake in WME, and TPG, which controls CAA.
The massive infusion of cash into the independent venue space will provide many venues with the short term boost needed to reopen after pandemic ends, but the capital infusion won't likely provide any long term advantage in the concert business. After two decades of constant consolidation, with Live Nation acquiring 10 companies a year on average, the cost-intensive touring industry gives a clear advantage to multi-national companies that can operate at scale.
There’s also stringent guidelines on how NIVA can flex its new financial muscle. Grants can only be spent on business expenses like payroll, rent and mortgages, worker safety, independent contractors (capped at $100,000) and “ordinary and necessary” business expenses including insurance, taxes and marketing. Grants can not be used for corporate acquisitions, real estate purchases or to make mortgage payments in advance.
Applicants who accept the grant funds will be required to maintain four years of employment records after receiving the funds and three years of all business records. Each applicant can apply for five grants covering five “business entities,” including multiple music venues, and a minimum of $2 billion must be allocated to venues with less than 50 full time employees. Operators of venues that offer performances of “prurient sexual nature” -- like strip clubs or sex shows -- are not eligible for the program.
The program will be overseen by a yet-to-be-appointed administrator, who will submit monthly reports to committees in both the house and the senate detailing which business entities received funding and which groups, if any, are currently being audited.
Klobuchar said she believed the bill enjoyed widespread support with over 57 co-sponsors because of the urgency many of her colleagues felt around protecting live music.
“In the middle of this pandemic, when everything is so depressing and people are so alone, music and entertainment have really gotten people through difficult times,” Klobuchar said. “People long for being back together and sharing a sense of community, and when coupled with the economic argument that these venues are critical to downtowns and cities, it became something everyone got behind.”