L.A. impresario Tim Leiweke: Live concert business is a "broken model"
It's hard to think of Tim Leiweke as an underdog.
He’s orchestrated concerts for the likes of Bon Jovi, Black Eyed Peas and Celine Dion. His company, Anschutz Entertainment Group, owns some of the world's biggest venues, including Staples Center, Target Center and The O2, a 20,000 seat arena in London, just to name a few. Leiweke also pulled the strings to develop the new $2.5 billion L.A. Live entertainment complex in downtown Los Angeles.
But when it comes to selling concert tickets, Leiweke stands in the shadows of Ticketmaster, whose $889 million deal to acquire Live Nation received the Justice Department's blessing last week. The merger of the nation's largest ticket seller with the No. 1 concert promoter would create a behemoth that would outsize all of its competitors combined, AEG included.
We recently spoke to Leiweke, whose company also owns the Los Angeles Kings hockey team, about his thoughts on the merger, why concert tickets are so expensive and the L.A. economy, among other topics. An edited transcript is below:
Do you really believe you can go up against a juggernaut like Ticketmaster/Live Nation?
Ticketmaster owns 85% of the music ticketing business. So, there are existing contracts we will all have to deal with. And Live Nation is twice as large as AEG Live, plus some. When an artist is making a decision of who they want to tour with, size matters. Their influence and leverage are pretty massive. We always worry that decisions will be based on fear. For artists who decide to go with us — Bon Jovi, Black Eyes Peas and Celine Dion — we’ve done a pretty good job. Ten years ago, we were zero percent of the market. Now we have $1 billion in revenue on the live concert side. It will be hard now to dismiss us as irrelevant.
Why are concert ticket prices so high?
The only way for ticket prices to go down is if artists charge less. Building owners and promoters don’t control pricing. That’s controlled by the artists and their managers. Those are the groups that have to make the conscientious decision to give the consumer a break on tickets and pricing.
That said, it’s not all their fault. It’s also the fault of the promoters who bid up the price. We’re our own worst enemies. Agents aren’t going to stop us, because they want to get as much money as they can for the artist. At some point, we need to deal with the mentality of winning the bid at all costs, because, in the end, the consumer ends up paying the price.
Just how abysmal is the outlook for the Los Angeles economy?
The L.A. economy overall is going to struggle. There may be some turnaround being experienced on Wall Street. But we haven’t seen it on Main Street. There are new challenges we face, in particular the amount of national debt and the deficits in our municipalities. That means we have to be wary of inflation, job creation and discretionary spending. We don’t see a magic wand or a quick fix. Until banks start pushing money back into the economy, we’re going to struggle.
Hopefully L.A. Live is doing better than the L.A. city budget.
We are very fortunate. We are close to hitting our numbers on retail. Foot traffic is on track to hit 20 million this year. Advertising revenue is above projection. The events we have created are above projections. Even our suites and premier seats are above projection. We’re doing well considering the recession.
But we have a small, little tower behind us [Leiweke gestures to the adjacent 54-story hotel]. If you were to choose to open a hotel, it would not be right now. We’re on time, and close to on-budget. But it may take us a year longer than we thought to get to the point where this hotel will be a good investment.
That said, this year, we’ll host close to 400,000 guests. We went from having eight major citywide conventions in L.A. last year to 20 this year. That’s going to benefit cabs, limos, restaurants, buses. People call it the trickle-down effect, but I like to say it has a pump up effect.
How are those 224 luxury condos selling? Will you lower prices to move them faster?
We’re not going backwards on pricing. We have the luxury of being patient. It’s a Ritz Carlton brand. These are the only Ritz condos on the market in L.A. More than half our condos are sold. Our buyers are unique. They’re music fans. They’re sports fans. They want the 24-hour room service that comes with the Ritz branding.
We just sold a $10 million penthouse last week. That said, had it not for the recession, we would be in a much better position. It will take until the end of next year to get everything sold. This is not a question of whether they will be sold, but when. But our values have held, and we won’t go backwards. We’re not in a rush.
What inspired the tower’s design?
No, your eyes aren’t fooling you. The building really is curved. [Leiweke chuckles.] Clearly, it is an iconic design that makes it stand out. That was important for this project. We wanted it to be Times Square West. L.A. is about entertainment, image and entrepreneurial spirit. This hotel reflects that. It’s a very sleek, modern look and yet clean.
So the Kings finally going to win the Stanley Cup?
Now we’re talking about something I love. We have 18,000 employees. The No. 1 music venue in The O2 in London. The new arena in Shanghai. This company has grown and accomplished great things. But we will only be great if the thing that helped us get there is also great. People know us by the Kings, and they judge us based on the Kings’ performance.
Five years ago, we made a decision to build from within. It was a painful five years. People hated me. But the result is that we now have a solid nucleus with Dustin Brown, Anze Kopitar and Drew Doughty. Not only are we going to have a kick at the cup this year, but we’ll have it for the next five years as well. This is the most fun I’ve had in years.
-- Alex Pham