Poland’s Fest Festival files for bankruptcy
Fest Festival, one of the fastest-growing music festivals in eastern Europe, has filed for bankruptcy after selling only 50% of its tickets for the 2023 edition.
The fourth edition of the Follow The Step-promoted event was due to take place this weekend (9–13 August) at Silesia Park in Chorzów, near Katowice, with acts including The Chemical Brothers, Peggy Gou and Kasabian.
Today’s announcement comes two months after the Polish promoter cancelled the second edition of its Warsaw festival, On Air.
In a statement published on Fest Festival‘s website, organisers said today is “the most painful day in the history of Fest Festival”.
“Our festival was in a phase of dynamic growth, with attendance increasing by over 30% each year,” reads the statement. “Such dynamic development led us to believe that this year would be just as successful. However, despite the tremendous support from many of our partners and sponsors, this year’s crisis in the event and entertainment industry significantly reduced ticket sales, making our projections incorrect.
“Despite tremendous support, this year’s crisis in the industry significantly reduced sales, making our projections incorrect”
“In the last few weeks, we have done everything in our power to cope with this new situation. We used all available funds for event organisation and the necessary preparations. Over the past months, we held discussions with public institutions, sponsors, and funds to secure additional funding for this year’s edition. We reduced costs and diversified promotional channels. Unfortunately, none of these actions yielded the expected results or secured the finances for the upcoming event. We fought with all our might until the last moment. ”
The first edition of Fest Festival took place in 2019 and drew 16,000 people each day, placing the festival among the largest music events in Poland. Organisers called it “the most challenging period in our country’s history to launch a new festival initiative”.
“Any new project of this kind requires several years to reach profitability,” continues the statement. “In our case, the previous editions of the festival were funded from ongoing operations, contributions from the owners, and loans from external companies. Despite four years of efforts, the project did not receive sufficient support from public entities, which significantly complicated its organisation.”
In 2020, Follow The Step was forced to cancel the second edition due to the Covid-19 pandemic. In 2021, Fest Festival was permitted to go ahead at full capacity but under strict Covid-19 rules. With 35,000 festivalgoers over four days, it was the biggest event in Poland in 2021.
The following year was just as challenging due to Russia’s invasion of Ukraine, Poland’s neighbouring country, which saw “a massive hike in inflation and a twofold increase in costs, putting the festival in an exceptionally challenging situation”.
“We are forced to initiate bankruptcy proceedings, which prevents the company from making any payments at the moment”
“We managed to overcome last year’s problems, but 2023 painfully verified our plans – in mid-June, the 30% sales growth trend of tickets reversed, resulting in lower sales compared to the previous edition of Fest. Other issues did not help either – a further significant increase in event organisation costs due to inflation, exceptionally strict “upfront” payment conditions for subcontractors and artists, the international crisis, lack of expected support from the province, and a delay of 5 days in handing over the event site.”
Warsaw-based Follow The Step says Fest Festival 2023 ticketholders will be contacted about the refund process but adds that “in the current situation, we are forced to initiate bankruptcy proceedings, which prevents the company from making any payments at the moment. This is the only way for us to settle the organisation of the festival.”
Other festivals that will not take place in 2023 include Falls Festival (Australia), Rolling Loud (US), Summerburst (Sweden), Hills of Rock (Bulgaria), InMusic (Croatia), Wireless Germany, Hear Hear (Belgium) and Tempelhof Sounds and Tempelhof Sounds Presents (Germany).
Follow The Step was launched in 2015 by Maciej Korczak and Marcin Szymanowski. The agency owns two music venues (Smolna and Praga Centrum) and seven festivals (World Wide Warsaw, Made in WWA, Summer Contrast, FEST Festival, On Air Festival, and Undercity) and organises over 100 international headline shows per year.
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Longstanding Danish festival goes bankrupt
Langelandsfestival, one of Denmark’s largest and longest-standing festivals, has filed for bankruptcy after wracking up debt in the millions.
Launched in 1991, the annual event typically takes place over four days in late July on Langeland island in south Denmark, with 35,000 people.
Earth, Wind and Fire, Santana, The Corrs, Boyzone, The Doors, East 17, Thin Lizzy, Craig David, Sugarbabes and Rick Astley are among the artists that have performed at the festival over the years.
In December 2022, it was announced that Langelandsfestival would not take place in 2023 due to a financial hangover from that year’s 30th-anniversary edition.
In a statement, organisers explained that they made a more significant investment in talent for the landmark 2022 edition, despite the festival reeling financially from the Covid-19 pandemic and the state of the economy.
“After all the bills for 2022 are paid, the result is a large deficit in the millions”
On top of that, the festival was unable to “sell the number of festival tickets that was crucial to ensure an acceptable festival economy” for that edition.
“After all the bills for 2022 are paid, the result is a large deficit in the millions,” read a statement. “Therefore, the conclusion is now that Langelandsfestival will not take place in 2023 under the auspices of AKP Group.”
AKP Group’s Allan K. Pedersen, who has owned the festival since 2006, said at the time: “It has always been a great joy for me to do the Langelands Festival, and even though the economy has fluctuated, I have always believed in the concept. However, the challenges of recent years, the market and future prospects as such have challenged me in that way of thinking.”
The company officially closed on 14 June “after an extensive search of the market for alternative solutions and several meetings with potential partners and stakeholders”.
The company says that there are no eligible invoices that are unpaid at this time.
“Although Langelandsfestival closes down, the memories and moments from the festival will always be part of our shared history,” read a recent statement. “Thank you for 30 years – we hope you will all support other festivals and cultural events in the future.”
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Iconic Danish venue files for bankruptcy
One of Denmark’s largest indoor music venues, Tobakken, has filed for bankruptcy after a turbulent few years.
The former tobacco factory in Esbjerg, southwest Denmark, began hosting concerts in 1993 for up to 1,200 visitors.
It was announced on Monday (27 March) that the Tobakken board filed for bankruptcy as the Esbjerg Municipality decided not to grant the historic venue an additional DKK 5.8 million (€778,606) requested to make it through 2023.
Esbjerg mayor Jesper Frost Rasmussen stated in a press release: “We had all hoped that Tobakken would overcome its challenges, but now we have reached a turning point where we, from a political standpoint, agree that the best solution is not to provide Tobakken with more money. It hurts us to make this decision, as we believe in a future for a rhythmic music venue in Esbjerg, but it must be in an economically sustainable model, and it opens up a new and fresh start.”
“The losses have simply been too great to financially and morally sustain Tobakken”
Chairman of the culture and leisure committee Jakob Lose added: “We still have great confidence in the music scene in Esbjerg, and of course, we must also have a strong rhythmic music venue in the future, which will host both established artists and the entire growth layer. The way forward is to create a new strong organisation that can safely lead a new rhythmic music venue into the future. We now need to take the time to figure out how to do this best.”
Peter Amstrup, chairman of the board for Tobakken, said he understands why the municipality has pulled the plug: “It is a sad day, and one could hope that someone would see the potential in Tobakken and start a new music venue. But now it is the trustee who takes over. The losses have simply been too great to financially and morally sustain Tobakken.”
Tobakken has had negative equity since 2016 and negative annual results in five out of the past six years, according to a statement on the venue’s website.
The statement goes on to say that “costs had been cut significantly over the past six months by reducing the number of employees and focusing intensively on optimising operations, it has unfortunately not been enough to offset the extensive deficit that has been accrued… Tobakken’s debt is primarily to the bank, the municipality and a few major suppliers.”
The venue closed immediately but the appointed curator will decide whether an attempt will be made to carry out some of the upcoming concerts and events.
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Promoter TADC Sweden files for bankruptcy
Promoter TADC Sweden has cancelled its remaining 2022 events and filed for bankruptcy, citing “lingering effects from the pandemic”, increased costs and reduced ticket sales.
The Gothenburg-headquartered company typically staged more than 300 concerts a year in Scandinavia, as well as festivals such as Gefle Metal Festival and Atlas Rock in Gävle and the summer series Rock På Skansen in Stockholm.
Formed in 2015 by the merger of Edward Janson’s Triffid Productions and Chris Rotenius’ Danger Music & Media, the firm was known as Triffid and Danger Concerts before rebranding to TADC and opening offices in Norway and Denmark last year.
“We are very sorry to have to announce that TADC Sweden AB will be declared bankrupt,” says a statement on its website. “The last few days have been very tough both for us and other players in the concert industry. Due to lingering effects from the pandemic and sharply increased costs in combination with reduced ticket sales, the situation has finally become unsustainable.
“For that reason, unfortunately, the remaining events in 2022 will be cancelled. We are trying to find solutions for the events in the next year and will return with information about it and about possible repurchases of tickets.”
“TADC has for many years worked hard to be able to deliver concerts to the Nordic audience and our visitors have always been important to us”
Chaoszine reports TADC had upcoming Scandinavian concerts planned by acts including Trivium, Alestorm, Lamb Of God, W.A.S.P., Helloween and Accept.
“This is a situation that we really would have preferred not to find ourselves in,” adds the promoter. “TADC has for many years worked hard to be able to deliver concerts to the Nordic audience and our visitors have always been important to us.
“We understand that many people are affected and that this causes problems for those of you who planned to attend one of the concerts. We apologise profusely for this. As soon as there is more information, we will get back to you.”
IQ has reached out to the company for clarification on the status of its TADC’s Norway and Denmark businesses. Tickets remain on sale for shows promoted by both firms. The Norwegian office was initially run alongside Live Wire Concerts’ Jon Enger, who later resigned as CEO and was replaced by Rotenius.
Coronavirus hits French event giant Comexposium
One of the world’s largest events organisers has filed for bankruptcy protection after being unable to secure government-backed financing.
Paris-based Comexposium, which organises trade shows and exhibitions globally, has placed three of its holding companies in financial protection in France, citing restrictions on mass gatherings both in France and internationally.
The company – which Conference & Meetings World notes was sold to Credit Agricole for over US$700 million last year – is France’s biggest event organiser and the third-largest in the world, with a portfolio of more than 130 B2B and B2C events. In normal times, it welcomes more than 3.5 million visitors to its shows, which include events for the food, agriculture, fashion, security, transport and construction industries.
In a statement, the group says coronavirus restrictions have “prevented Comexposium from being able to play its role, organising events, for over six months. For many months the events sector has seen very little activity, and, as of now, there is uncertainty around when events will fully restart in France and abroad. Therefore, it has become necessary for Comexposium to adapt its financing.”
“I strongly believe in the importance of face-to-face events, and I am confident events will come back”
According to Les Echos, the company has now filed for bankruptcy protection with the commercial court in Nanterre, a suburb of Paris.
The paper notes that the bankruptcy process, valid for six months (and renewable twice), gives the three businesses freedom from creditors and freezes their debts while Comexposium restructures its business. Comexposium, it adds, had applied for a state-guaranteed loan earlier in the year, but its application was rejected.
Despite the extraordinary measures, Comexposium chairman Renaud Hamaide is confident in the company’s future. “Meeting in person is the quickest and strongest way to build relationships. I strongly believe in the importance of face-to-face events, and I am confident events will come back,” he comments.
“Further, it is clear that digital and multi-channelled approaches to creating connection are necessary, and we will continue to develop in this area. The future is being written now, and when this crisis is over, we want to be at the forefront of our industry in bringing people together.”
Eventim: Barracuda safe amid Austrian banking crisis
Germany’s CTS Eventim, the parent company of Austrian promoter Barracuda Music, has announced that Barracuda’s business is protected against the bankruptcy of Commerzialbank Mattersburg, despite the company holding deposits of some €34 million with the soon-to-be-liquidated bank.
After finding inconsistencies in its accounting, Austria’s Financial Market Authority prohibited Commerzialbank – headquartered in Mattersburg, near the Hungarian border – from trading effective 14 July, and the bank is now in the process of being wound up. It is reportedly over-leveraged to the tune of €528m, with creditors expected to receive up to €490m under Austria’s deposit protection scheme.
According to Eventim, which announced its acquisition of Barracuda in December 2019, adding it to its Eventim Live promoter network, it has put in place a “comprehensive financing plan” that ensures the “activities of the Barracuda Group are well protected, particularly its two flagship festivals, Nova Rock and Frequency.”
Klaus-Peter Schulenberg, CEO of the live entertainment giant, explains: “Even in times of coronavirus, we are pursuing a long-term corporate strategy and are fully aware of Barracuda’s enormous potential. We are therefore pleased that Barracuda, one of most creative concert promoters in Europe, has been a member of our corporate family since early 2020, which also means a significant investment in Austria, a market that is so important to us.
“We are delighted for hundreds of thousands of music fans from Austria and abroad that we are able to carry on our successful work”
“The team around Ewald Tatar, Barracuda’s managing director, can rely on us totally, even in these turbulent times.”
“We are immensely struck by the fast and uncomplicated way that CTS Eventim jumped to our side, and are really very glad to have such a strong and flexible company as our parent,” says Tatar.
“We are delighted for hundreds of thousands of music fans from Austria and abroad that we are able to carry on our successful work and that the future of Nova Rock, Frequency and hundreds of concerts a year is secure.”
Schulenberg adds that Eventim and Barracuda “will take any steps that are necessary to protect our rights in respect of the current situation at Commerzialbank Mattersburg.”
Cirque du Soleil files for bankruptcy protection
Cirque du Soleil Entertainment Group, the world’s largest producer of contemporary circus and other touring entertainment shows, has filed for bankruptcy protection in Canada after more than three months of “zero revenues” as a result of the Covid-19 pandemic.
Montreal-based Cirque du Soleil announced yesterday (29 June) it has applied to restructure its business under Canada’s CCCA (Companies’ Creditors Arrangement Act – a process that shields it from creditors, similar to administration in the UK or chapter-11 bankruptcy in the US). Its application will heard today by the Superior Court of Quebec.
The announcement follows a particularly torrid quarter for Cirque, which announced thousands of temporary lay-offs in the early days of the pandemic.
Cirque says it has entered into a court-supervised purchase agreement with shareholders, including Texas-based TPG Capital and China’s Fosun Capital Group, to establish two funds, worth US$20 million, to provide relief to laid-off employees and contractors. (Some 3,480 of the more than 4,500 employees furloughed in March are expected to lose their jobs permanently.)
The ‘sponsors’, which also include state-owned investment company Quebec Deposit and Investment Fund (CDPQ), will additionally inject $300m worth of liquidity in order to restart the restructured business.
“I look forward to rebuilding our operations and coming together once again”
“For the past 36 years, Cirque du Soleil has been a highly successful and profitable organisation. However, with zero revenues since the forced closure of all of our shows due to Covid-19, management had to act decisively to protect the company’s future,” comments Daniel Lamarre, president and CEO of Cirque du Soleil Entertainment Group.
Subject to the Superior Court’s approval, the sponsors will also serve as the “stalking horse”, or reserve bidders, in a sale and investment solicitation process (‘SISP’) of Cirque’s assets.
“The purchase agreement and SISP provide a path for Cirque to emerge from CCAA protection as a stronger company. The robust commitment from the sponsors – which includes additional funds to support our impacted employees, contractors and critical partners, all of whom are important to Cirque’s return – reflects our mutual belief in the power and long-term potential of our brand,” continues Lamarre.
“I look forward to rebuilding our operations and coming together to once again create the magical spectacle that is Cirque du Soleil for our millions of fans worldwide.”
Stubagogo: One of the worst-timed acquisitions in history?
“As we sit here today, [coronavirus] has not [affected ticket sales], because most of the live events where we’ve seen cancellations have really been in China, and a few in Taiwan and Singapore. Most important for everyone, we hope that they get it under control, and solve the health crisis – but right now it’s been isolated to Asia specifically, and mostly China.”
(Eric Baker, interview with Squawk Alley, CNBC, 21 February 2020)
Viagogo started last month in typically bullish mood.
In the slipstream of their $4.05bn acquisition of StubHub in mid-February, on March 7th the UK’s Daily Telegraph ran a news story suggesting Covid-19 was proving a boon for the secondary ticketing market. While the rest of the live events sector faced impending crisis, listings on Viagogo had apparently risen 45% in the previous week.
According to the report, this was due to “nervous concertgoers and sports fans frantically trying to resell tickets for major events amid the panic around the spread of coronavirus.”
As someone with an interest in this area, I quickly checked viagogo.co.uk.
There was no noticeable surge. As per usual, 80–90% of ticket listings were accompanied by star-shaped icons – denoting that the seller is a ‘trader’ rather than a consumer. I contacted the journalist, asking for the evidence to substantiate these claims. (They are yet to return my emails.)
In the month since, events have moved fast.
Despite closing the StubHub acquisition on 13 February – in his CNBC interview, Baker claimed to have paid $2bn in cash and a further $2bn in debt financing – further integration between the two platforms (dubbed ‘Stubagogo’) is being prevented because of an initial enforcement order from the UK’s Competition and Markets Authority, with the possibility of additional investigation.
Viagogo’s ownership of StubHub doesn’t bring much to the party, aside from a highly toxic reputation
Effectively, this has left StubHub in a state of limbo.
Speaking to Billboard, a StubHub spokesperson stated they are “currently operating as an independent company, no longer under the support of eBay but not yet operated by Viagogo.” Albeit if you search eBay for event tickets, the site still defaults to StubHub and describes StubHub as “an eBay company”.
Again, all quite strange.
And then the full impacts of live music shutdown started to unfold.
On March 25th, StubHub announced it was furloughing two thirds of its workforce, swiftly followed by a change in company policy on refunds. Buyers of tickets to cancelled events in North America would now be offered vouchers in lieu of cash.
Predictably, this has already attracted a $5m class-action lawsuit, on the basis that StubHub brought the crisis on itself as a result of their publicly stated policy of paying out their largest suppliers (such as ‘super tout’ Julien Lavallee) in advance of events.
It sounds like rough times ahead.
But if the future looks bleak for StubHub, it’s arguably bleaker for Viagogo.
Moody’s has downgraded Viagogo’s corporate outlook from “stable” to “negative”
Even before Covid-19, the acquisition of StubHub looked wildly overpriced. $4.05bn is reportedly 25 x StubHub’s EBITDA – an astonishing amount for a relatively mature business operating predominantly in the highly congested US market and facing substantial commercial and regulatory challenges.
Viagogo, meanwhile, is a relative minnow in the US. Its ownership of StubHub doesn’t really bring much to the party, aside from a highly toxic reputation. The acquisition has essentially resulted in a change of ownership – no more, no less – whereas a merger between, say, StubHub and Vivid Seats, would have been genuinely transformative and created a much larger market-dominant platform.
Added to this, outside the US, Viagogo’s long-term viability looks far less secure than it did 2–3 years ago. In the UK, the recent sentencing of Peter Hunter and David Smith, who sold substantial volumes of tickets through Viagogo, has imperilled the business model of large-scale resellers on whom the secondary platforms rely. With more trials to come, Viagogo’s supply chain looks to be under threat.
Meanwhile, the company still faces legal actions in several other territories, all of which are likely to probe and cross-examine Viagogo’s less-than-transparent business practices.
An insight into these can be found on the Federal Trade Commission website, in an illuminating exchange of emails between the CMA, Viagogo’s lawyers at CMS, and the FTC – all of which indicate an almost pathological reluctance by Viagogo to disclose information about key staff, key shareholders, its turnover or its byzantine corporate structures including companies such as Basset Capital LLC, Grover Street Holdings, FJ Labs LLC, Andro Capital Management, IFOT Services Ltd and VGL Services.
This could well be one the most poorly timed acquisitions in recent corporate history
Earlier this year, the Moody’s rating agency downgraded the corporate family rating of Pugnacious Endeavors (Viagogo’s parent company) to B2, before changing the company’s outlook from “stable” to “negative” – citing both a “lack of public financial disclosure” and “the absence of board independence” for its changed credit profile.
While we wait for the CMA to make further announcements on the merger, the weeks and months ahead will likely be of some consequence.
Viagogo has already put staff at its customer service centre on 30 days’ “protective notice”. Their purchase of Google advertising appears to have stopped dead.
Listings are dormant, not surging.
But above that is the fact that Eric Baker and his investors appear to have paid out $4.05bn for a crippled business that lies, according to some reports, on the verge of bankruptcy.
In the context of the unprecedented crisis being played out in all our lives, this could well be one the most poorly timed acquisitions in recent corporate history.
Adam Webb is campaign manager for FanFair Alliance.
Report: PledgeMusic funds do not belong to artists
The artists that are owed money by bankrupted direct-to-fan marketplace PledgeMusic are “unlikely” to receive the funds they raised through the platform, a report obtained by Variety has revealed.
PledgeMusic was wound up in August, after suspending operations due to financial difficulties. The company entered liquidation with £7.4 million in debt and under £20,000 in assets.
Following its demise, industry organisations including UK Music, Music Managers’ Forum and the Association of Independent Musicians acted to assess and prevent financial damage to musicians.
However, a document from the official receiver working on the PledgeMusic liquidation has cast further doubt over the likelihood of artists seeing return of the money raised through the site.
“I do not anticipate that I will need to contact you again because there is unlikely to be a payment to creditors in this case,” concludes the report.
“I can’t believe that the artists are left without what is owed to them”
The report also reveals that legal advisors to the PledgeMusic board have indicated that money paid by fans on the platform “were not trust monies”, and that all belongs to PledgeMusic, rather than to the artists.
PledgeMusic co-founder and CEO, Benji Rogers, who returned to the company as an unpaid advisor early this year to try and resurrect it via a partnership or acquisition, told Hypebot the outcome was “devastating for every artist affected”.
“I can’t believe that they are left without what is owed to them. I am so sorry I was not able to do more,” said Rogers.
Enquiries into PledgeMusic’s “failing” are ongoing, states the report, with board members attributing the collapse to “the commission charged being insufficient to meet its expenditure”.
Rogers founded PledgeMusic along with Jayce Varden in 2009. The platform served as a direct-to-fan marketplace for merchandise, tickets, vinyl and CDs. Fans also donated money to cover artists’ recording and release costs via a crowdfunding platform.
Roxodus promoter MF Live files for bankruptcy
MF Live, the company behind cancelled Canadian rock festival Roxodus, has filed for bankruptcy.
The company, whose “sole purpose was to organise the Roxodus Music Fest”, owes over CA$18 million (US$13.8m) to around 200 creditors, including $5m ($3.8m) to ticketing provider Eventbrite and $11.1m ($8.5m) to contractors Taurus Site Services. MF Live’s assets equate to $154,000 ($118,000) in cash.
According to liquidator Grant Thornton Limited, “the event did not generate sufficient ticket sales to cover the expected costs, leaving MF Live Inc. insolvent.”
“We also understand that earlier wet weather posed certain challenges in preparing the site for the event and prevented MF Live Inc. from being able to host a safe event,” reads the document.
“The event did not generate sufficient ticket sales to cover the expected costs, leaving MF Live insolvent”
A statement on the festival’s website blames “rainy weather” for the cancellation of the festival, which was to feature performances from Nickelback, Blondie, Aerosmith and Kid Rock.
Last week, Eventbrite announced it would provide all ticketholders with a refund, while continuing “to aggressively pursue the return of funds from the festival’s creators.”
At the same time, MF Live co-founder Mike Dunphy denied all responsibility for issuing refunds. Dunphy also refuted rumours that he had “stolen monies”.
Dunphy and fellow MF Live founder Fab Loranger parted ways ten days before the festival’s cancellation and are no longer on speaking terms, according to an interview with CTV News.
The first meeting of the creditors is scheduled to take place at 10 a.m. on 30 July at the Grant Thornton offices in Toronto.