Los Angeles Music Scene: Financial Tidbits

The Satellite

Rolling Stones (Oct 30) provides some financial details on how much it costs to keep a Los Angeles music venue open for even a short period of time:

As both the pandemic and its consequent lockdown restrictions grew more severe, owners like [Jeff Wolfram of The Satellite] tried to navigate unprecedented challenges. Wait staff were furloughed and later let go. Paperwork for loan and PPP applications took up the time previously reserved for booking bands. Bills and worries mounted as owners tried to placate, negotiate, and satiate landlords and vendors.

. . . He received a $10,000 government grant to help pay for rent but it was like a Band-Aid on a bullet wound. “I heard about other places that got $90,000 but that’s literally only two-and-a-half months [for some venues],” he says. 

I wonder who got $90,000? Of course, whoever got that amount of money only covered two-and-a-half months of expenses. Music venues in Los Angeles have been shut down for nearly 8 months. So that specific venue has five-and-a-half months of expenses that still needs to be covered (less any cash on hand they might have had in the bank that would adjust that months of expenses). Potentially, passage of Save Our Stages in 2021 (assuming any additional federal stimulus won't happen until 2021) would cover 6 additional months for that venue, but if the venue got no additional outside grants, it would just head back into debt immediately.

As independent venues shut down, many owners of smaller locations fear both an increased consolidation of power in the hands of behemoths like Live Nation and lack of the traditional feeder system that nurtures fledgling bands to rise up the ranks.

I actually disagree with the above comment in terms of Live Nation. Live Nation had to issue $1.2 billion in debt in May 2020. (They have a total of nearly $5 billion in debt.) Here is my reasoning for my disagreement: First, I'm not sure that they will have any cash available to make significant venue purchases. Yes, that debt issuance gave them a lot of cash, but they've been draining that cash since May. Second, in order to get their debt under control, they might need to sell off local venues to raise cash. I suppose, there is always the possibility that a YouTube (Google) or Spotify could get into the local music scene. Google getting involved in the music venue business doesn't seem like a fit, but perhaps it would fit with Spotify.      

Back in California, Saint Rocke’s [Allen Sanford] is already looking into a new music venue in Venice with his business partner, whenever that may be. “We’re hellbent on bringing music back to Venice and think it’s important to the community and we literally have a venue that’s built and completely done,” he says. “Now we’re just waiting for the day that we can bring music into there.” 

So wait, if I'm reading this correctly, they sold Saint Rocke and just bought another location in Venice? Probably a smaller venue, I suppose. Honestly, if I am reading this correctly, it seems like a waste of money to immediately buy a new location. Seems to me that the longer California stays shut down, the more commercial space opens up for lease or purchase (and the cheaper it gets to buy or rent).

NYS Music (Oct 30) has this interesting post:

After months of being shut down and struggling to make ends meet, small business music venues will, finally, get the help they’ve been asking for. Live Music Society, a new nonprofit organization, announced their launch of relief efforts for the industry.

The Live Music Society Grants will supply philanthropic aid to music venues that have been in operation for three years or more with a sellable capacity of 250 occupants or less, with maximum one-year individual grants ranging from $10,000 to $50,000.

The first phase of grants went to 20 music venues. One venue was in Los Angeles: The Hotel Cafe. Interesting, no grants were provided to venues in Austin, Nashville and Portland. These are cities I identify with local music. I suspect venues in those cities will be part of future grants. Unfortunately, it does not appear that the Bootleg Theater would qualify for this grant as the theater has a capacity of over 500. Even the Zebulon may not qualify as based on this article it has a capacity of 300. One venue that would likely qualify for a grant would be the Viper Room, which has a capacity of 250; however, the building the venue occupies was sold in 2018 with speculation that it will eventually be turned into apartments or a hotel. 

I am happy for The Hotel Café. If there is any venue that is going all out in an attempt to survive this pandemic, it is that venue. But let me do some speculation. They only got $50,000 at most. As Wolfman of The Satellite stated, that probably funds them for less than two-and-a-half months of fixed expenses.