In New York Music Scene, Two Behemoths Vie for the Top
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Version 0 of 1. The idea of the New York City rock club may conjure images of graffiti-covered dives where business amounts to little more than beer sales. But in the increasingly consolidated concert business, the reality is that corporate dollars are taking over, even in the clubs that for decades seemed to embody rock music’s anti-establishment ethos. Competition has been escalating between the industry’s two corporate giants, Live Nation Entertainment, the sector leader, and No. 2 AEG Live, which owns the Staples Center in Los Angeles and controls the Coachella festival. In the latest sign, AEG has acquired half of the Bowery Presents, the indie promoter behind New York clubs like Terminal 5 and the Music Hall of Williamsburg, the leaders of the partner companies said last week in their first public comments about the deal. The deal, completed in late December, is estimated at $40 million, according to three people briefed on the deal who were not authorized to speak about it publicly. That amount includes investments and advances by AEG Live in addition to its purchase of equity, two of those people said. Both companies declined to comment on the price. The Bowery deal gives AEG one of the most influential promoters in the country, and also represents its latest chess move against Live Nation. In addition to bidding against each other for big tours — AEG’s roster includes Taylor Swift and Justin Bieber; Live Nation works with U2 and Beyoncé — the two companies look to taste-making entrepreneurs to develop festivals and spot talent. Their rivalry has quickly heightened in New York. Last year Live Nation bought the young company behind the Governors Ball, and AEG backed a new event, Panorama, put on by its division called Goldenvoice, the hipster-approved promoter behind Coachella. AEG’s talks for Bowery, meanwhile, were carried on for more than a year as perhaps the industry’s worst-kept secret. In an interview, Jay Marciano, the chairman of AEG Live, said that the Bowery Presents was now a crucial part of the company’s expansion plans. Bowery will book AEG’s local venues like the PlayStation Theater in Times Square and will also have a role at Panorama. AEG is also looking to secure more venues in the region for Bowery to operate, he added. “The Bowery represents a perfect complement to Goldenvoice and the market position we are looking to build or partner up with on the East Coast,” Mr. Marciano said. AEG has long played second fiddle to Live Nation in the concert world, booking fewer tours while concentrating on major real-estate assets like the L.A. Live complex, which houses the Staples Center, and O2 Arena in London. The company, which is controlled by the billionaire investor Philip F. Anschutz, does not disclose its finances, but executives have long said it is profitable; Live Nation posts repeated net losses. AEG’s future was briefly thrown into doubt in 2012 when Mr. Anschutz put AEG up for sale but then abruptly canceled the auction and replaced management. In recent years, however, AEG has quietly filled out its portfolio of venues. It now operates or books 75 clubs and theaters around the country, including more than 20 associated with the Bowery Presents, and has interests in more than 40 festivals; the most recent, Desert Trip, with the Rolling Stones, Paul McCartney and other boomer-era superstars, had a record-breaking $160 million in ticket sales. Live Nation has more than 80 festivals and operates more than 160 venues, according to company reports. As these two giants have grown, they have squeezed out or subsumed smaller competitors. In New York, for instance, the Bowery deal means that nearly a dozen of the most prominent clubs in New York will now be tied to two multibillion-dollar companies based in greater Los Angeles. “It’s getting harder and harder for an independent to survive in a major market,” said Steve Martin, a longtime talent agent at the APA agency in New York. Mr. Marciano noted that since AEG is under the private ownership of a single wealthy investor, it is able to support its partners like the Bowery Presents. “As an independent company, funding is always difficult to come by,” he said. “We have virtually unlimited capital for good projects.” For the Bowery, which puts on about 140 shows a month in the New York area, and has branches and partnerships throughout the Northeast and dotted across the South, it is business as usual despite the AEG deal, said Jim Glancy and John Moore, the company’s two principal partners. Indeed, part of AEG’s pitch to the company was its continued autonomy. In the fall of 2015, Mr. Marciano convened a dinner in SoHo where he let Mr. Glancy and Mr. Moore be wooed by some of the promoters AEG has partnerships with, including Paul Tollett of Goldenvoice and Louis Messina, who presents tours by Kenny Chesney and Ms. Swift. They each testified to the company’s hands-off management style. “When you’re an indie company like Bowery, you want to feel you can make your own decisions,” Mr. Tollett said in an interview. “I told them that we run it the Goldenvoice way out here, and AEG is cool with it.” The negotiations with Bowery were drawn out by its complex ownership structure, involving numerous partnerships. The deal does not include what are perhaps the company’s two most famous clubs, the Mercury Lounge and its namesake, the Bowery Ballroom. Those are owned by Michael Swier, who founded the company and left the partnership. Mr. Marciano said that he and Mr. Swier had not yet discussed a deal. For Mr. Glancy and Mr. Moore, the deal offers a way to better manage what they called the less glamorous side of running the business, like technology and finance. In the spring they will leave their longtime offices on a gentrified block of the Lower East Side for more spacious quarters uptown. But they both said that the deal was their choice. “If we hadn’t done this deal, we could have continued for years and years as we did,” Mr. Glancy said. “We didn’t have to,” Mr. Moore added. “We wanted to.” |