Rapino to forgo salary as LN slashes costs by $500m
Live Nation, the world’s biggest live music business, has announced a US$500 million package of cost-cutting measures, as well as a new, liquidity boosting line of credit, as part of its efforts to weather the worst effects of the coronavirus.
The cost-reduction programme will see the company’s president and CEO, Michael Rapino, this year sacrifice his $3m salary altogether – with other execs taking pay cuts including president Joe Berchtold (from $1.3m to $650,000), chief accounting officer Brian Capo ($363,500 to $272,625), general counsel Michael Rowles ($800,000 to $400,000) and chief financial officer Kathy Willard ($950,000 to $475,000) – according to LN’s latest current report with the Securities and Exchange Commission.
Other cost-cutting measures include hiring freezes, reduction in the use of contractors, rent renegotiations, furloughs, and reduction or elimination of other discretionary spending (including, among other things, travel and entertainment, repairs and maintenance, and marketing), reads a Live Nation press release.
The company adds that it is “making full use of government support programs globally”, including initiatives in countries such as the UK, Germany, Italy, France, Spain and Australia, where the state will pay a significant proportion of furloughed employees’ wages. In its home market, meanwhile, LN expects to receive similar support under the “employee retention credit for employers program [sic] established as part of the 2020 CARES Act”.
In addition to targeting $500m in savings in 2020, Live Nation is seeking to eliminate, or defer into 2021, some $800m in “cash outflow”.
Operating in tandem with the cutbacks are new measures to boost cashflow, including a $120m revolving credit facility, extending Live Nation’s unused debt capacity to around $940m.
“With this additional liquidity, the flexibility in our debt covenants and cost-cutting efforts, we have financial strength to weather this difficult time”
The firm has additionally secured an amendment to its existing credit agreement which will see the second and third financial quarters of 2019 (as opposed to the corona-affected Qs 2–3 of 2020) to calculate its debt-to-earnings ratio, “allowing the company the flexibility to manage its business through the disruption it will experience in 2020”.
As of 29 February 2020, LN’s total cash (and equivalents) balance is $3.3 billion, according to the company.
“The company believes this aggressive cost and cash-management program, combined with a strong liquidity profile, positions Live Nation to manage through the Covid-19-related hold on show activity and provides the flexibility to scale up quickly when shows restart,” according to an LN statement.
The cutbacks at Live Nation follow similar spending reduction measures at other concert businesses, including ticketing companies Eventbrite and StubHub and most of the major booking agencies.
“The live entertainment industry has delivered incredible global growth for over 20 years, which speaks to the great passion and resilience of fan demand,” Michael Rapino comments.
“With this additional liquidity, the flexibility in our debt covenants and cost-cutting efforts, we believe that Live Nation has the financial strength to weather this difficult time. We will be ready to ramp back up quickly and once again connect audiences to artists at the concerts they are looking forward to.”
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