Concert promoter Live Nation has signed a 12-year deal with U2 to exclusively promote the band’s concerts, sell merchandise, and operate the group’s website. In return the band gets a heap of cash, likely more than $100 million.
This deal sounds vaguely like the high-profile deal Live Nation (LYV) made last year to sign Madonna, but it’s not. In that case, Live Nation was also grabbing the rights to release new Madonna albums, but here Universal Music Group will continue to release U2’s new songs. Basically, the WSJ notes, it’s pretty much a case of U2 converting Live Nation’s weakness into a large check:
For U2, the arrangement represents a windfall that results ultimately from Live Nation’s newly embattled position and its resulting need for loyal allies. The promoter is effectively paying the band to lock in the status quo: Live Nation or its predecessors have produced and promoted every world-wide U2 tour since 1997, and a Live Nation subsidiary already manages the band’s Web site and fan club.
And Live Nation is having problems: The market has thoroughly rejected its “we’re not just a concert promoter” strategy it announced last fall with the Madonna deal. LYV is now trading at about $11.80, less than half where it was pre-Madge.
Meanwhile the problem with writing big checks to big concert draws is that they just get bigger next time around. That’s what Live Nation’s predecessors did back when the company was part of Clear Channel, and prior to that as part of Bob Sillerman’s SFX. That helped drive ticket prices sky-high, but it didn’t make the concert promotion business any better (see: Clear Channel jettisoning Live Nation).
The only difference: In the old days, concert promoters were only on the hook for once concert tour at a time. Now Live Nation’s locked in for 12 years.