Does Brexit Mean An Eight Percent Pay Cut For U.S. Acts Touring Britain? Yes And No …

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Today, the touring industry is taking stock of the potential impact that the U.K.’s exit from the European Union may have, as major world tours from Bruce Springsteen, Beyonce and Rihanna storm through the British and European stadiums this summer.

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Veteran music business accountant Bill Zysblat, partner in RZO Productions (and David Bowie’s longtime business manager), says reports that acts touring the U.K. could be looking at as much as an eight percent pay cut -- due to the Brexit-inspired crash of the British pound to its lowest exchange rate in 30 years -- do have some basis in reality, but the impact will be to some degree offset by other factors.

"First of all, it’s not just the income, but the net,” Zysblat explains. “Sure, your gross in [revenue] has gone down, but so has the cost of everything, [such as] hotels, travel, etc. So, it’s really just the net that gets hit, which is important, but a fraction of the gross."

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Zysblat points out that wages for crew and touring personnel for U.S. acts are paid in U.S. dollars, "so not all expenses are in local currency.” Additionally, those booking the date can “hedge” the guarantee, lessening the impact of currency devaluation. "Deals are never re-structured,” Zysblat notes. "Either or both of the promoter and the artist can hedge the currency when the date is booked.” 

And at the moment, “hedges are all over the place,” Zysblat says. "We did some with [pounds] Sterling last week that we knew had to be used in U.S. dollars later this year. It’s not a hard thing to do, but not for the faint of heart.”

John Reid, who oversees Live Nation’s U.K./Europe operations, predicts Brexit “won't affect overall business” for the world’s largest promoter, at least in the short term.  "We just have to pay continual and close attention to currency swings, both long and short term,” Reid says. “The bigger picture is I hope it doesn't tip the EU into deeper economic recession.”

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Indeed, touring Europe profitably is considered a “problem” now by one global promoter, who tells Billboard that the decline of the euro over the past two years has been -- and remains -- much more of a concern than the pound. This has raised real challenges in touring Europe, where arena-level acts often play stadiums but ticket prices are generally lower across the board. Not tied to the euro, the pound is expected to recover quickly, and today it is still quite profitable for acts to perform live in the U.K.

The U.K.’s exit from the EU could also impact immigration and visas, and “bringing gear into and out of the U.K. will get harder,” Zysblat predicts. “But, in the end, it all comes down to currency exchange. In the short term, it’s bad for U.S. acts overseas, and good for overseas acts in the U.S. The rest is just noise and hassles."