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North Carolina’s Anti-LGBT ‘Bathroom Bill’ is Flushing the State’s Music Business Down the Drain

North Carolina runs the risk of losing millions of dollars in box office returns and ancillary revenues as spring turns into summer.

With Pearl Jam and Boston joining Bruce Springsteen in canceling their respective North Carolina shows in protest of the state’s controversial Public Facilities Privacy and Security Act (HB2) law — widely perceived as being anti-LGBT — North Carolina runs the risk of losing millions of dollars in box office returns and ancillary revenues as spring turns into summer.

Already the state has lost two major shows in Springsteen and Pearl Jam. Springsteen had been booked to bring The River tour to the Greensboro Coliseum on April 10 before being canceled two days before. On Monday, Pearl Jam pulled the plug on its April 20 show at the PNC Arena in Raleigh. Together, those two shows would have grossed an estimated $3 million, which would have been taxed by the state at a rate of 7.5 percent with a 4 percent withholding on nonresident artists’ rates. Attendance to those two shows would have topped 30,000, an audience that would have easily generated over $500,000 in concessions, parking, ticket rebates and other important revenue streams for the respective arenas. 

Also lost were profits for Live Nation, promoter for the Pearl Jam show in Raleigh and the Boston shows at the Charlotte Metro Credit Union on May 4 and the Red Hat Amphitheater in Raleigh on May 6; and AEG Live, promoter of the Springsteen show in Greensboro. And, of course, the acts do not get paid, nor do their respective agents and managers (Jon Landau Management and Creative Artists Agency for Springsteen, and Curtis Management and William Morris Endeavor Entertainment for Pearl Jam). Local labor loses an opportunity to work, though traveling production crew typically gets a paid day off in such a situation. 

Live Nation, the promoter of record on the canceled Pearl Jam show, is in full support of the artists and in fact is the only music industry company that has come out publicly against HB2. The company signed the Human Rights petition opposing the law and released a statement on the matter, which reads in part, “Live Nation supports our artists’ efforts to take a stand against these exclusionary and unfair laws.” Additionally, Live Nation CEO Michael Rapino has been openly supportive of Pearl Jam and Springsteen on Twitter, tweeting Monday, “@PearlJam also joins the fight against #HB2, cancelling North Carolina shows with the full support of @LiveNation

For the promoters and venues, most of the financial loss is not recoupable, as promoters are faced with not only lost profits from shows that don’t come off, but with lost marketing expenses and labor costs that can quickly add up. Beyond that, venues lose critical revenue from parking, concessions and its percentage of merchandise sales, not to mention dates that could have been booked with something else.

Insurance most likely won’t help. Performance agreements vary widely, with some dictating that cancelations for reasons other than the non-physical (weather, illness, death) aren’t excused under any circumstances. Others are written in such a way that the artist can cancel up to 30 days prior to a show for any reason. Typical language in a performance contract would be: “Neither Producer, Artist, nor Purchaser shall have the right to cancel or postpone the Performance, unless specifically stated in the Agreement.” In general, if an artist cancels within 30 days of the show, they are liable to make the promoter whole, so if the promoter chooses litigation to recoup losses, it would be on firm legal footing to do so.

But most promoters and venues, at least those interested in being perceived as “artist friendly,” would be very hesitant to take legal action against an artist, especially one taking a stand on an issue such as HB2, which has received widespread support in the artist community. “Is a promoter really going to sue Bruce Springsteen for marketing and expenses? I really highly doubt it,” observes Paul Bassman, owner of leading entertainment insurance firm Ascend Insurance Brokerage.

While the promoters will get their deposits back, and won’t be on the hook for the total guarantees, they still are probably faced with eating any money spent teeing up a show that doesn’t come off, in addition to losing whatever ancillary revenue that might have been generated. While the artist and promoter may work out a deal, cancelation insurance almost surely won’t cover the losses. 

Because these are voluntary cancelations by the artists involved, “There wouldn’t be a coverage trigger, it’s not a force majeure,” says Bassman. (A “force majeure event” means a cancelation due to any act beyond the reasonable control of producer, artist, or purchaser which makes any performance by artist impossible.)

“There are ‘political risk’ policies, but those are more about civil unrest, riots, that sort of thing,” Bassman continues. “The political stance of an artist would not be covered under those policies.”

As spring turns to summer, some big names are booked to head into North Carolina. The Greensboro Coliseum has R Kelly (June 10) and Justin Bieber (July 6) on the books. The Times Warner Cable Arena in Charlotte has Selena Gomez (June 7), Kelly (9), and Demi Lovato/Nick Jonas (30).

But the biggest loser of all could be Live Nation’s PNC Music Pavilion in Charlotte. The city’s amphitheater has a full season booked and on sale, including Hall & Oates (May 24), Dave Matthews Band (27), Journey (June 4), Dead & Co. (10) and Rascal Flatts (17).

Some artists are going ahead with their shows and using them as a platform to make a statement, while still performing for their Carolina fans and getting paid. That’s what Gregg Allman did for his April 13 show at the Cone Denim Entertainment Center in Greensboro. In his statement, Allman said, as the show approached, “I know that North Carolina is a state full of good folks and loyal fans, many of whom are angry about and feel misrepresented by [HB2]. My band and I will continue to play our show as scheduled there tomorrow, April 13, and hope that our music unites people in this challenging time.”

Allman went on to state that he stood “in solidarity with the LGBT community urging Gov. [Pat] McCrory to listen to the people and reverse this wrong,” which would indeed be a best-case scenario for Carolina music fans. Governor McCrory, who signed the Bathroom Bill in the first place, responded to the backlash on April 12 by signing an executive order which expands protection for gay and lesbian state workers. Still, the changes left the most highly criticized element of HB2 intact, specifically the provision that mandates that transgender people use bathrooms based on the gender on their birth certificates. Apparently, at least as far as Pearl Jam is concerned, Governor McCrory did not go nearly far enough. Now the question becomes: Who’s next?