OVG CEO: Future is bright, with considerable challenges
The sixth edition of VenuesNow Conference got under way Wednesday with about 1,000 people in attendance at the Hyatt Regency Indian Wells Resort and Spa in the greater Palm Springs area.
Oak View Group Chairman and CEO Tim Leiweke greeted registrants and exhibitors in his annual welcome remarks, noting that this year’s conference is OVG Media and Conference’s biggest VNC yet. But he also had words of caution for what might lie ahead after years of facing down economic and other challenges.
“Last week, I had the good fortune of going to a CEO summit with some of the top CEOs in the country, and the Secretary of Commerce was there and he spoke,” Leiweke said. “It was alarming to all of us, including a few commissioners in the room with us, that there was this kind of battle that we see today with the public sector and the private sector, corporations and the industry, and one of the points that we tried to get back to the secretary was, corporations and entrepreneurial business people were not the enemy.
Leiweke noted that the country has been through repeated shocks over the past five years.
ADDITIONAL VNC ’23 COVERAGE:
“We’ve all had to deal with COVID, we’ve had to deal with health issues, we’ve had to deal with labor issues, we’ve had to do with work-at-home issues, we’ve had to deal with supply issues, we’ve had to deal with inflation, we’ve had to deal with interest rates,” he said. “If you take all of that into consideration, this might be the most difficult five-year economic period of time I’ve ever seen for our industry. Can you imagine an industry on a live side that literally shut down for two years? And now we just had the two best years in our history. But we also know there is great uncertainty about not just our industry and where we go long term, but the economy. There is uncertainty with the political world we find ourselves in lately and there’s great uncertainty with a culture we’re trying to create with our employees, our facilities and our companies. It is a constant battle. And it was the number one topic last week amongst all the CEOs. How do we get people back to work? And how do we get people comfortable coming into the office? For us, it’s critical.”
Leiweke said that OVG has opened a new headquarters in Denver and he encouraged OVG employees to move there and get into the office on a regular basis.
“I’m a strong advocate of five days a week, everybody back in the office,” he said. “I just don’t believe we do our best work on Zoom. We’re in the live entertainment industry. If we don’t choose to come together within our organization, and work together as one, share ideas, share intensity, share passion, and most of all, share vision, I’m not sure how we, as an industry, convince people to come to our buildings year after year and celebrate together. We, after all, get paid to bring people into a social environment to celebrate sports and celebrate music. It’s kind of hard to convince them to do that if I can’t get people to come into the office every day.
“So we have challenges as an industry.”
In Canada, people have been saving their money, with about 85% being squirreled away during the pandemic, he said.
“That’s Canadians. In the United States, we spent like drunken sailors and we’re broke again,” he said. “So, the question is, how long can we keep this up as an industry? How long do we see Taylor Swift and billion-dollar tours? These are the questions we have face.”
Leiweke said he’s also concerned about the “cost of doing business.”
A purchase such as Legends buying ASM Global will require loans with interest rates north of 10%, he said.
Building venues has gotten more expensive, but OVG locked down rates on Climate Pledge Arena and Co-Op Live before they surged.
“Imagine, when we build Moody Center (in Austin), that was just a couple of years ago. We spent $365 million. That’s a pretty good building. Now you hear $3 billion for Intuit Dome, $2.3 billion for the Sphere. For us, or any of us in this room, to build a new arena today you’re probably looking at a minimum of $500 million and that’s the low side.”
Leiweke and OVG are at once bullish and cautious.
“We’re at the height of what we all do in life and that’s the great news,” he said. “For me, I’m excited about the future. It is without a doubt the hardest, most difficult I’ve ever seen within the history of our industry, being an entrepreneur, to do what we all do in this room, but we have to plow ahead. We have to keep on dreaming. And we have to have people like Jim Dolan thinking about the Sphere, of the technology used and created there. And we have to have great leaders like Steve Ballmer, willing to go spend one year of his Microsoft stock. This is a great time to be in our industry. I have to say, the more challenging it is, the more exciting. We as a company will double down.”