Small venues face a longer road to recovery – The Hollywood Reporter

Heading into the summer, entertainment giants Live Nation and MSG Entertainment painted rosy pictures of the live events business with forecasts of record years of growth. As bookings rise at concert halls across the US, smaller venues are recovering from the impact of the Omicron variant, and owners say audiences appear wary of returning. Add to that the strain of staff shortages and rising costs of goods and labor, and the ongoing question of whether acts will show up.

At First Avenue, which owns and operates several music clubs in Minneapolis, there is excitement about the “incredible” number of artists on the road due to postponed concerts and the delayed return of live events, says CEO Dayna Frank. It’s the prime time for concert-goers, but compared to the flood of customers who returned to venues in July 2021 after COVID-19 vaccines became available, it’s been a trickle of late.

“It’s a tough time because on the one hand we’re all happy and celebrating and we’re excited,” says Frank, who is also the executive chairman of the National Independent Venue Association, “but on the other hand there’s so much more work to be done and the pain is great real. It has not been restored, we are far from it.”

Consumer confidence took a hit at venues following the fall and winter COVID surges, with First Avenue calling January its worst month in company history due to the number of show cancellations. It’s looking better now. But while many shows are technically sold out, venue owners say no-show rates, where a customer buys a ticket but doesn’t attend, remain higher than in 2019.

At Troubadour in West Hollywood, owner Christine Karayan estimates attendance is still down 15 to 30 percent due to absenteeism. The venue is about 50 to 60 percent recovered from the pandemic in terms of revenue and staff retention, she says. No shows impact small venues as fewer people buy drinks, food or merchandise.

Revolution Hall and Mississippi Studios, concert venues in Portland, Oregon, are seeing no-show rates of 10 percent, which owner Jim Brunberg describes as a “thrill” compared to rates in previous months. Reasons for non-attendance vary from customer to customer, but Brunberg suspects some of these are due to customers testing positive for COVID or being reluctant to attend a crowded venue. Demand to play the venues is high, with an average of about seven performances or requests from bands per night, Brunberg says.

But venues are also regularly seeing band cancellations as members of touring crews contract COVID. Even a canceled or rescheduled concert means there are no staff working that night and the venue can’t make money. “A lot of things make it difficult to run a small business in this country right now, but especially a small business that requires people to be close together and enjoy each other’s company,” notes Brunberg.

Overall, Revolution Hall and Mississippi Studios are operating at about 60 percent of 2019 levels in terms of gross monthly revenue.

To get to that point, many indie venues have relied on Shuttered Venue Operators grants of up to $10 million from the federal government. That money helped venues reopen, rehired staff, made building safety upgrades and even weathered some of the recent COVID waves. But the grant money, which must be used by June 30, cannot help businesses through the unexpected length of the pandemic, says Rev. Moose, executive director of NIVA. Without the grants, the business’ low profit margins leave indie venues vulnerable to new variants that could lead to canceled shows.

Several venue owners mentioned the stress of now being at the center of political debates about vaccination and mask requirements – these vary by state and venue, but can also be set by the performing act. “It’s so difficult to compare what’s happening now to what happened before the closure because the pieces are just moving differently,” Moose adds.

Compared to independent venues, corporate venues have reported less lasting impact from COVID. MSG Entertainment, home of Madison Square Garden, Radio City Music Hall, and the Chicago Theater, among others, called the impact of omicron “short-lived” in its latest earnings report, stating that the number of ticket buyers quickly returned to pre-omicron levels . Live Nation executives said no-show rates at venues have improved or returned to pre-pandemic levels. “All leading indicators are pointing to double-digit growth in fan attendance at our concerts this year compared to 2019,” wrote Michael Rapino, Live Nation’s president and CEO, in the results release.

These companies have better margins and more diverse offerings than the cash-strapped independent venue companies. Still, overall attendance isn’t back to normal, as Live Nation reported about 11 million fans in the first quarter, compared to 15 million in the first quarter of 2019, which executives attributed to a lower scheduled number of concerts.

Some indie venues are also seeing signs of hope. City Winery, a music and comedy venue in Manhattan, is making about 80 percent of its pre-pandemic revenue, says program director and NIVA member Grace Blake. Relying on an SVOG grant to get through the pandemic, the venue was able to fill slots with local acts and comedians when tour groups were canceled due to COVID in December and January.

The older demographic has also been slower to return here, and the no-show rate has settled at 10 to 15 percent. But Blake is heartened by the fact that the rate hasn’t increased and customers are continuing to turn up, even during New York’s current COVID wave. “Our waste isn’t what we expected,” says Blake. “I think people are just willing to hear live music.”

This story first appeared in the June 1 issue of The Hollywood Reporter magazine. Click here to login.

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