Amid the current financial crisis, at least one thing is going up in value: the U.S. dollar.
For American artists on the road overseas, the dollar's sudden strength against the euro, the British pound and the Canadian and Australian dollars means that local costs like food and lodging are cheaper. But depending on how they structured their deals with promoters, artists could wind up taking home less than they would have months ago.
They can protect themselves from the dollar's surge to some extent by negotiating tour guarantees in dollars rather than in local currency. But they'll still lose money to currency fluctuations if their percentage of tour profits is calculated in local currency, as is common.
For promoters, currency fluctuations inject an additional level of uncertainty to an already risky game. Bill Zysblat, partner at RZO Productions and co-producer of the worldwide Police reunion tour, warns that "anyone who put tickets on sale in Europe and the U.K. a couple of months ago, and then budgeted their tours accordingly, is in for conversion shock."
On June 1, Zysblat notes, 100 euros was worth about $155. As of Friday, it came to about $127. Similarly, 100 pounds was worth $198 on June 1 and $148 on Friday.
Concert promoters can raise ticket prices to balance out potential losses, but "that's a very dangerous game to play," Hallett says. "We're in an economic downturn and if we push ticket prices too far, we're going to find ourselves losing out."
Currency fluctuation had a significant impact on recent Celine Dion concerts in Canada promoted by AEG Live, according to company CEO Randy Phillips.
"There was easily a 20% swing in the settlements for each show," he said. "I had a similar issue with Tom Petty, where I ended up compromising with Tom's business reps and manager. We split the difference."
Live Nation Canada president of touring and business development Shane Bourbonnais says the unstable Canadian dollar could affect who he books for next summer's Live Nation-produced Pemberton Festival in British Columbia.
"I'm starting to talk to agents now about Pemberton and thinking about what the dollar is going to look like next July," he says.
On June 1, the greenback and the Canadian dollar were near parity; now, one U.S. dollar buys about $1.22 Canadian dollars.
The strong dollar is also complicating touring in Latin America, where major touring acts are paid in dollars. Many local promoters, facing bigger payouts to the acts, are turning to corporate sponsors to help cover costs, but the global economic downturn means that those companies are likely to be suffering as well.
Jorge Naranjo, founder/president of Global Management and Booking Agency in Miami, says he is trying not to focus too much on short-term volatility. "I don't want to strangle the promoters," Naranjo says. "I have to negotiate the best deal for my artist, but I'm also working with entities who see this as a long-term alliance and aren't simply going to take the money and run."
In Australia, where most U.S. acts are paid in American dollars, the Aussie dollar has hit multi-year lows in recent months. This has prompted acts including Paul McCartney, Neil Diamond and Green Day to delay tours until the second half of 2009, sources say. Andrew McManus Presents managing director Andrew McManus says he's advised some of his touring acts that signed deals earlier in the year to renegotiate terms or cancel.
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