The government pot will allow organisers to plan events for Q3 and Q4 2021 without the financial risk posed by a potential Covid outbreak
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The BDKV chief, who has been acting as a consultant to the government, explains the logistical challenges of implementing the insurance pot
By Lisa Henderson on 28 Jan 2021
In December 2020, the German federal government set a precedent for the European live music industry with the announcement of the biggest event cancellation fund yet.
The €2.5 billion government-backed insurance pot, which will allow event organisers to plan for Q3 and Q4 2021 without the financial risk posed by a potential Covid outbreak, was the second of its kind after Austria unveiled a €300m ‘protective umbrella’ in October, in what was believed to be a world first.
Similar guarantee funds have been set up in Switzerland and the Netherlands, while other nations including the UK and Denmark are lobbying for the same, especially with the European festival season round the corner.
While Germany is one step closer to a financially viable return to live, there is still a myriad of logistically challenging decisions to be made in a relatively short amount of time, Jens Michow tells IQ.
The managing president of Germany’s live association, the Federal Association of the Concert and Event Industry (BDKV), has been acting as a consultant to the German government on the implementation of the insurance fund. Here, he tells IQ about the considerations, logistics and hurdles to overcome in setting up an insurance fund for one of Europe’s largest live music markets.
The German government initially said it would like to reimburse all costs associated with cancellations in the second half of 2021. Is that still the plan?
JM: Although details are not secure yet, the government plans to reimburse the major share of all costs for future cultural events cancelled due to the pandemic. Additionally, they plan to cover the disadvantage organisers have if the government impose a capacity limit on venues.
So, for example, if you sold out a show with 1,000 people but later on you’re only allowed to get 250 people in the venue, the government will make up the difference. However, this “economic bonus”, as it will be called, will be limited to smaller events only. And, as I was informed today, it will only occur to events which are planned after this program has been announced.
Will there be a minimum capacity requirement for events to be covered by insurance?
As it looks now: no. Though, the ‘economic bonus’ shall be reserved for smaller events up to 1,000 people. The cancellation coverage is planned for all events, however with a certain limit, which has to be decided upon now.
“If all the events that have already shifted twice have to be cancelled again, then we might need the full €2.5bn”
How did the government estimate €2.5bn for the fund?
They made an admirable lot of investigation. As the fund is reserved only for cultural events which take place till the end of the year, it should be sufficient in my point of view. We are hoping that after such a long time, events finally will take place as they are planned. Maybe when the weather gets hotter in July, even some festivals may take place. We just hope that the British variant of Covid doesn’t arrive in Germany and that we don’t have the same situation as in Britain over here. If all the events that have already shifted twice – from last spring to this spring and then to this autumn – have to be cancelled again, then we might need the full €2.5bn but who knows.
Who will be responsible for granting and distributing any pay-outs?
Obviously, the necessary administration still will have to be established. We require that the system is planned as a common security coverage. We propose that a promoter announces his show in advance in order to be secured. Should the security event happen, the promoter must prove his costs. We also want to make sure that he is obliged to pay the fees to all of the service companies he charged so that everybody who suffers a damage due to the cancellation finally gets reimbursed.
“We’re very proud of our federal system but for the event industry it’s actually a big problem”
In Switzerland, each canton is responsible for distributing funds to its own region. Would the German gov consider doing the same thing with its federal states?
I think the same will happen here; there will be no central office and the federal states will be tasked with taking care of the administration and distributing. If that’s the case, I hope the states are informed as soon as possible so they can prepare themselves.
Would varying levels of restrictions in the federal states complicate this?
That’s a general issue since the beginning of the pandemic: every state does its own thing and has different regulations. One state might say, ‘we have loose regulations and a low Covid incidence rate so shows can happen’. And a couple of kilometres away, another state is saying ‘our Covid rate is high, we have to shut everything down’. We’re very proud of our federal system but for the event industry it’s actually a big problem. As long as we don’t have the same regulations all over the country, it will be impossible to organise tours.
“As long as we don’t have the same regulations all over the country, it will be impossible to organise tours”
If you plan a tour, where would you apply for the coverage – in every single town?
No. It must be possible to apply for the coverage in the town where you are based. If you have to apply in 14 different states, that would be a nightmare. If you don’t have the chance to apply in the first state the tour is taking place and then you have to apply in all the other states…that would be impossible.
What do you think the market will look like in Q3 and Q4?
The fact is that, besides the festivals, more or less 100% of that which could take place till the end of the year is already planned. If you try to get a venue in this country for September/October, you won’t get it because they’re already booked up by promoters who shifted their date from spring to autumn in order to give the people who have already bought a ticket the show they paid for. The time to offer ticket buyers the show they’re owed is getting shorter and shorter because we are not allowed to do it at the moment… Another big question is: when will international artists be allowed to enter Germany without a quarantine period of 14 days?
“Germany should be proud to have politicians who care about the event industry”
Is it likely there’ll be an extension to the scheme?
We have to have something that lasts longer because organisers are planning now for 2022 and 2023 and nobody knows whether the pandemic will be gone by then. And if not, nobody will take the risk that their show will be cancelled.
When do you expect the government to make all of these decisions?
Germany should be proud to have politicians who care about the event industry. For months, I’ve participated day after day in Zoom discussions and other talks with politicians. They are really trying to help us as best as they can and we already achieved a lot.
Regarding the security scheme… they know we needed it yesterday. At the moment, all help was needed yesterday. But the politicians are totally aware of the pressure, which we are under due to the fact, that under the actual circumstances we are unable to prepare anything. They know that we must decide whether we’ll have to shift dates again. It’s the same thing for the festival organisers because you can’t decide in May that you’re going to do a festival in June.
Hopefully we’ll have something concrete within the next few weeks. The ministries are really focused on this. I mean, let’s face it, politicians are not promoters. They’re trying to understand our business. They’re trying to get adapted to all these bits and pieces, before they say ‘okay, let’s go’ – that’s difficult enough.
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