Inside the bidding war to sponsor the hottest tour of the summer.
This article first appeard in the May 17th issue of Billboard Magazine.
Jay Z and Beyoncé's On the Run tour is already one of the summer concert season's hottest engagements. Tickets sold out in minutes. Overnight, the average price on the secondary market soared to $342.67 -- an 82.3% increase from Jay Z's last summer stadium outing with Justin Timberlake, according to ticket aggregator TiqIQ. But fans aren't the only ones scrambling for a piece of the action. The lucrative tour sparked competition among top brands in financial services, which jockeyed with other bidders for sponsorship rights.
JP Morgan Chase emerged victorious -- touting its size, partnerships and pocketbook -- with an 11th-hour negotiation, according to four sources familiar with the deal. And though it's a rare tour sponsorship for the bank, the deal establishes Chase as a formidable player in what had previously been a two-way rivalry between Citi and American Express for such deals.
With 50 million customers in the United States, Chase is one of the country's largest bank and credit card companies. (AmEx, for its part, has 53.5 million U.S. cards in force as of March 31, while Citi has a reported 55 million members stateside.) Chase has had few music or concert sponsorships in the past, beyond a 10-year, $300 million pact with Madison Square Garden and a 2013 deal with Clear Channel's Jingle Ball tour. "We are picky with respect to the events we align our brand against," says Steve Pamon, head of sports and entertainment marketing at Chase.
But the bank has a deep relationship with CAA Sports, a partner in Jay Z's Roc Nation Sports, which helped drive the decision to bid roughly $4 million in cash, according to sources. That was enough to secure the come-from-behind win.
Pamon disputes the rumored price tag. "The economics of this tour are greatly exaggerated. It's not just rights fees, but the activation," he says, referring to the VIP areas and other exclusive card member experiences on-site at the shows.
Citi, for its part, does a lot more tour sponsorships -- multimillion-dollar deals for the likes of Billy Joel, The Rolling Stones and Katy Perry in the last 12 months alone. Citi had a 22% increase in overall ticket sales in 2013 through its partnership with Live Nation, which included more than 60 of the year's top 100 tours.
"With marquee tours there is always competition," says a Citi representative. "We have enjoyed working with Jay Z and Beyonce on multiple tours and have great respect for them." AmEx, which sells fewer tickets than Citi, still had a record year in 2013, with over 1.8 million tickets sold to card members, including seven of last year's top 20 tours. An AmEx representative declined comment, as did a Roc Nation spokesperson.