Live Nation’s reported internal battle over signing big names like Madonna and Jay-Z to all-encompassing 360 deals, and whether the concert-promotion company should keep doling out money to more aging superstars or wait and see whether or not at least one of them actually pans out, has claimed a boardroom casualty; the Wall Street Journal is reporting that chairman Michael Cohl (pictured), who was pushing for as many as 15 more such deals to be signed in the coming months, is on his way out of the company, with a severance deal to be struck as early as next week. Let’s look back over Cohl’s short, yet very expensive, history with his soon-to-be-former corporate masters:
As founder, in 1973, of Toronto-based Concert Productions International Inc., Mr. Cohl has helped shape the financial landscape of the modern concert business, enlisting corporate sponsors to underwrite production costs and helping usher in the era of the $500 concert ticket.
Mr. Cohl joined Live Nation last year, becoming its chairman and largest individual shareholder, after Live Nation bought his company for $123 million in stock and $10 million cash.
When tensions with Mr. Rapino first surfaced, say people familiar with the matter, Mr. Cohl initially tried to buy his company back from Live Nation. But the parties couldn’t agree on a price.
In November, Mr. Cohl defended the rich valuations of the 360 deals to investors by saying $17.5 million per album for Madonna might sound excessive, but he said it wasn’t when factoring in the payout from touring or merchandise sales.
He said Live Nation expected to gross $1 billion from Madonna-related business during the 10-year contract. However, since the deal was unveiled in October, Live Nation’s stock has fallen 44%.
There’s certainly hubris in that calculation, given that Madonna will be 59 by the time her Live Nation Artists concert is up–and I don’t mean to sound ageist, but it’s worth pointing out since her shows, which are going to be the real moneymaker for this deal, don’t exactly allow her to just stand onstage and play a guitar and strut every so often. I wonder if the remaining Live Nation execs are looking for ways to alter these deals just a bit.
Live Nation Battle Is Likely To Result In Chairman’s Exit [WSJ]
@GhostOfDuane: I think they’ll still hold back. Did you read the Oregonian story I linked to the other day about gas prices?
I think given the increasing cost of touring, sliding ticket sales, the massive hit the stock has taken, the fact that this whole model is pretty much unproven on this scale, and the fact that the Stones ain’t getting any younger add up to very solid reasons why LYV wouldn’t plunge into another deal, even with an act which on the surface seems like a slam-dunk for revenue generation.
Too bad even this news isn’t helping the stock. It’s a shame the deals with Madonna and Jigga can’t be modified. The Stones would have been a better bet coming out of the gate. [[finance.google.com]]
@Maura Johnston: You may well be right, I just wouldn’t go so far as to say Cohl’s exit and the new save-our-ship (or, save-our-stock?) direction of LN precludes them from signing the Stones to bigger deal, whether it’s a 360 deal or simply buying their back catalog from EMI. For all we know this thing has been in the works for months and months.
The Stones just might get a deal, not that they need it or likely care. Considering global economic issues, Rapino would have to become Edgar Bronfman to sign the Stones to a bigger deal than those that have already been signed.
LOS ANGELES, June 20 /PRNewswire-FirstCall/ — Live Nation (NYSE: LYV)
announced today that Michael Cohl has transitioned to a consultant role
from his post as Chief Executive Officer of the company’s Live Nation
Artists division, effective immediately. Mr. Cohl has also resigned as a
member of Live Nation’s Board of Directors…
Um, Flom has a great relationship with artists…he’s up on deck…he just shouldn’t agree to any meetings at LAX.
…except for the stones…
[blog.wired.com]
@GhostOfDuane: That’s an old story, and given that (as I wrote earlier this week) the Stones have longtime ties to Cohl I’m going to guess the deal is dead. (If it was anything beyond a PR attempt by Cohl to get the public/shareholders on his 360-happy side in the first place.)
[idolator.com]
@Maura Johnston: I’m not sold. Safe to say Cohl’s Stones ties have been all but severed since he threatened to take them with him and was told in no uncertain terms that can’t happen. 8 years of waiting for Michael Cohl is probably 6 or 7 more years than the Stones have left. I imagine we’ll find out soon enough though.
@GhostOfDuane: Right but the point is Cohl was the one pushing to make these deals at all, while Rapino — and, presumably, the people who are left — wanted to hold off.
@Maura Johnston: True. But I think you have to differentiate between a 360 deal for Shakira and one for the Stones - one is sure to bring in nine figures from a single tour and sell t shirts and merch for centuries to come, while the other will surely shake her hips spasmodically but not necessarily be able to generate major revenue in the process. My understanding of the article wasn’t that the LN board and Rapino wanted to stop bringing in artists, but that they wanted to scale back from Cohl’s plan to bring in 15 or 20 more this year.