Live Nation CEO to Forego Salary as Company Taps Cost-Cutting Measures
With the live events industry facing an uncertain future, Live Nation president/CEO Michael Rapino will forego his salary, part of a variety of cost-cutting measures the events promoter is…
With the live events industry facing an uncertain future, Live Nation president/CEO Michael Rapino will forego his salary, part of a variety of cost-cutting measures the events promoter is implementing to save $500 million by the end of 2020.
Live Nation will cut salaries for senior executives by up to 50%. Rapino’s pay will go from $3 million to zero, president Joe Berchtold‘s from $1.3 million to $650,000; chief accounting officer Brian Capo‘s from $363,500 to $272,625; general counsel Michael Rowles‘ from $800,000 to $400,000; and CFO Kathy Willard‘s from $950,000 to $475,000, according to the company’s 8K filing with the Securities and Exchange Commission today (April 13).
The concerts giant will also reduce its use of contractors and implement hiring freezes, rent re-negotiations, furloughs, and reduce or eliminate other discretionary spending on things like travel, entertainment, repairs and maintenance and marketing. Finally, it will reduce advances in both its ticketing and concert businesses, and re-assess all capital expenditure projects.
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The company expects to receive payroll support from the recently-passed CARES Act stimulus bill in the U.S., and will make use of government support programs globally.
As a result of all the above, Live Nation hopes to save $500 million in 2020, and eliminate or defer into 2021 another $800 million in cash outflows.
“The live entertainment industry has delivered incredible global growth for over 20 years, which speaks to the great passion and resilience of fan demand,” Rapino said in a press release announcing the measures. “With this additional liquidity, the flexibility in our debt covenants, and cost-cutting efforts, we believe that Live Nation has the financial strength to weather this difficult time. We will be ready to ramp back up quickly and once again connect audiences to artists at the concerts they are looking forward to.”
The company also amended its credit agreement to access an additional revolving credit facility of $120 million, giving it about $940 million in available debt capacity. As of Feb. 29, Live Nation’s total cash and cash equivalents balance was $3.3 billion, which included $914 million of free cash and $2 billion of event-related deferred revenue. The new arrangement gives the company a total liquidity position of $3.8 billion.
As a result of a moratorium on mass gatherings to stave off the spread of coronavirus, Live Nation halted all concert activity by mid-March. Now, it says it expects revenue for the first quarter of 2020 to be down by approximately 20% compared to the same period last year.
The company also shared information on the status of its 8,000 shows impacted by the pandemic, which had sold a total of 15 million tickets. Of that number, 7,000 shows with 14 million tickets total were postponed, accounting for 90% of tickets impacted. The remaining 10% of tickets, or 1.6 million, were for shows that have now been canceled.
The company has issued refunds for tickets for all canceled shows, and expects to allow some refunds for postponed shows in the U.S. and select international markets as new dates are set, which may include vouchers in place of cash refunds or rescheduled shows in countries including Germany, Italy and Belgium.
Live Nation says that for rescheduled shows that have offered refunds over the past month, 5% to 20% of fans have requested refunds, while the vast majority have chosen to hold on to their tickets for the future date. Based on these trends, “the company does not expect material declines in its event-related deferred revenue balances,” a press release reads.
As of March 31, the company says it has sold more than 45 million tickets to shows scheduled for 2020, down 2% from the same time last year (not counting the tickets for canceled shows or the 1.5 million tickets for shows rescheduled into 2021).
Meanwhile, on March 31, it launched Crew Nation, a $10 million relief fund to support concert crews affected by the pandemic.
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