Author: Dave Brooks
Date: March 05,2008

Ticketmaster's potential investment into AEG Live has set off
the latest round of head-scratching in the live events industry,
with building managers and executives trying to figure out what the
announcement means for their business.

News that Ticketmaster was joining with Cablevision of New York,
owners of Madison Square Garden Entertainment, to purchase a 49
percent in AEG Live has been widely circulating the Internet,
although no representatives from any of the involved companies
would comment or confirm the rumors for this article. Ticketmaster
still hasn't announced how it will integrate the Paciolan platform,
or how it plans to leverage the recently acquired TicketsNow (VT
Pulse, Jan. 23) secondary marketplace into its own

The latest AEG deal follows Live Nation's announcement that it
was abandoning its Ticketmaster contact and launching a CTS
Eventim-powered platform. “The past decade, everyone has been
dancing with each other and now everyone is lying together in the
sand,” joked noted Peter Luukko, president and COO of

What the deal means for building managers could vary, said Brad
Mayne of the American Airlines Center in Dallas, which currently
uses a Ticketmaster platform, but books concerts with both AEG Live
and Live Nation.

“We're a must-play building in a big market and it will affect
us a lot differently than a building in a tertiary market,” he

That could mean that smaller buildings might find themselves
leveraging ticketing agreements to get bookings from either
promoter. By combining ticketing demands with sought-after
bookings, promoters could now have greater leverage to play off
competing tertiary buildings, said Michael Marion, general manager
of the Alltel Arena in North Little Rock, Ark.

“That's certainly the hazard we look at. Does it put an
independent building in the position to choose what team they're
on?” Marion said. “I won't be surprised if Live Nation comes by
when our Ticketmaster contract expires and pitches us on their
system.”If they decided to stick with Ticketmaster, does that mean
less Live Nation shows?

“That's a scary scenario,” he said.

On the opposite end of the spectrum, there's always the
possibility that strong arenas, especially those in big markets,
can somehow leverage their ticketing contract or booking agreement
to negotiate a better agreement for either.

“We do a lot of business with AEG, we do a lot of business with
Live Nation and we hope to continue to do business in the future,”
said General Manager Jim Goddard of the H.P. Pavilion in San Jose,
Calif., another must-play market that is sometimes competitive with
the nearby Oracle Arena in Oakland. Both are Ticketmaster
facilities and both are neutral buildings. Can either facility
leverage the new partnerships to give their facility a competitive
advantage over the other?

“Bottom line, both Live Nation and AEG will still need arenas,”
said Roger Newton at the Bi-Lo Center in Greenville, S.C. “I'm
optimistic that arenas will have to choose a ticketing system, and
if the promoter is successful in that building already, they will
continue to do shows there. No one is against making money.”

The deal is said to include a buy-in to AEG Live, the
promotional arm of AEG, that handles a number of tours including
Celine Dion, Justin Timberlake, Prince, Usher and the Dixie Chicks,
as well as management of the Nokia Theatre at L.A. Live and Grand
Prairie, Texas and Times Square, N.Y. The deal apparently does not
include a buy-in to AEG's facilities division.

The deal would also put Ticketmaster in bed with Madison Square
Garden Entertainment, owner of the world's top grossing arena,
which grossed $199 million from reported ticket sales in 2007 from
its arena, Radio City Music Hall, WaMu Theater and Beacon

Madison Square Garden's parent company Cablevision hasn't seen
its own investors get excited about the deal. Richard Greenfield of
Pali Capital, a Wall Street financial firm, recently downgraded the
stock to “sell” status after rumors of the deal leaked out. The
investment community was hoping James Dolan would sell the
company's cable assets to Time Warner, not further invest in live

“We think Cablevision is undervalued and is taking the strength
of its cash flow to invest in the lower margin business of live
events with AEG,” he said, adding that he believes Madison Square
Garden will attempt to acquire more 2,000-5,000 capacity theaters
following its purchases of New York's Beacon Theatre in 2006 and
the Chicago Theatre in 2007.

The report caused the stock to drop $1.28, or 4.8 percent, to
close at $25.51 Monday. The stock has traded as high as $39.75 in
the past year. – Dave Brooks

Interviewed for this story: Peter Luukko, (215) 389-9530; Brad
Mayne, (214) 222-3687; Michael Marion, (501) 340-5660; Jim Goddard,
(408) 287-9200; Roger Newton, (864) 250-4917; Richard Greenfield,
(212) 259-5176