Some of those on council believe that all of Jobing.com’s problems regarding increasing its revenue can be solved by finding a management company that will book a ton of non-hockey events, especially major concerts. I thought it would be interesting to take an Internet walk through the entertainment promotion industry. I don’t pretend to be an expert on this issue and I am sure somebody will correct me on something!
The gorilla in the room is LiveNation. In 2005 (last year for which I could find numbers) earned $1.3 billion dollars world-wide. It has relationships (contracts) with 135 venue sites world-wide and 92 of those are in the United States. It has relationships with Desert Sky Pavilion, Talking Stick, Comerica and Celebrity Theater (as of 2005) in the Phoenix Metropolitan area. It, like other promoters, also has a roster of national, well known artists that perform exclusively at LiveNation venues.
The second largest is Anschutz Entertainment Live (AEG). In 2005 it earned $417 million dollars—only 20% to 30% of LiveNation’s income. In September, 2012 AEG announced it was selling off its Entertainment Live subsidiary only to reverse that action in March, 2013. AEG is the company that currently manages Glendale’s Jobing.com Arena. The third largest company is the House of Blues Entertainment. In 2005 it earned $245 million dollars—about 10% of LiveNation’s income. But wait…the following year, 2006, LiveNation acquired the House of Blues and picked up Casino Arizona as another contract in the Phoenix area. There are many small firms (less than a handful in the Phoenix area) whose annual income is less than $20 million dollars a year.
Let’s look at the two most comparable venue sites to Jobing.com Arena. One is US Airways, home to the Phoenix Suns. It is run and events are booked by Phoenix Arena Development (one of the two bidders to be considered by Glendale). It is also the home of the Arizona Rattlers and Phoenix Mercury. In essence, it has 3 anchor tenants. Between June and December, 2013 there are 10 major concerts booked. The other comparable site is Chase Field, home to the Arizona Diamondbacks, its only major anchor tenant. SMG World manages this venue (and is also a finalist in Glendale’s bidding process) and uses Select Artists Associates of Scottsdale as its event promoter. It has 3 major concerts booked between June and December, 2013. It will be very interesting to see what each of these companies want in terms of an annual management contract. Will there be penalties in the contracts if a named minimum number of events is not achieved? Will there be an incentive if the company exceeds a mutually agreed upon goal?
As you can see, the Phoenix Metro area is a highly competitive market. There many venues from which to choose and LiveNation have contracts with many of them. You can be sure LiveNation, with a virtual monopoly in this country, dictates the terms and fees for the major events it books.
Just to give you an idea of how competitive our market is, here are just some of the sites that can and do host major concerts: ASU Gammage, Desert Sky Pavilion, Celebrity Theater, Chandler Center for the Arts, Chase Field, Comerica Theatre, Fort McDowell Casino, Herberger Theatre, Grand Canyon University Arena, Jobing.com Arena, Mesa Arts Center, Scottsdale Center for the Performing Arts, Orpheum Theatre, Talking Stick Resort, Tempe Center for the Arts, US Airways Center and University of Phoenix Stadium. This list is by no means complete and does not include dozens of smaller venues. This market is not an easy one. Steve Ellman, when he controlled Jobing.com Arena was highly successful in booking major concerts. When Jerry Moyes and the NHL took control of the arena that was not their focus and so we saw fewer and fewer major events at Jobing. This year the number of major events booked was so few that it is embarrassing.
What can a venue manager do in this highly competitive market of at least 17 major venue sites if there is no relationship with LiveNation or AEG? They host smaller, less lucrative events such as rodeos, religious groups and family events. That works well if your venue is small but large ones like Jobing.com Arena need large events to offset the costs associated with hosting. Note than even the UofP Stadium hosts RV and car sales nearly every weekend in addition to gun shows in an attempt to shore up its bottom line. I suppose a venue manager could undercut the big boys and offer the venue for rock bottom rental fees and hope to cover all or part of the loss with concession and parking revenue but that is risky on so many levels.
Hiring a non hockey arena manager has never been in the best interests of the arena or Glendale. A permanent team owner hired to manage the arena guarantees 41 nights of hockey with “butts in seats.” It will be in the owner’s best interest to mount a strong marketing campaign for the Coyotes and put even more butts in seats as well as to work to acquire as many non-hockey events as possible to increase the bottom line of profitability. This is not a difficult concept to understand and yet there are those on Glendale’s city council who refuse to acknowledge this concept—out of sheer stubbornness or because of another agenda?