The increased speed of the vaccine rollout has given many in the live events industry an overly optimistic outlook regarding the swift return to pre-pandemic packed shows. The primary focus thus far has been on how venues need to adjust to “The New Normal” and if they can balance new health mandates against their already razor-thin margins. While the vaccine may relax some of these mandates and allow operators to increase capacity, it does not address the shift we may be facing in the macro-economic demand curve of live events.
In December of 2020, The Washington Post found nearly 12 million renters would owe an average of $5,850 in back rent and utilities by January of 2021. According to Mark Zandi, chief economist at Moody’s Analytics, that could equate to almost $70 billion in unpaid debt – “a painful amount that renters, landlords and utility companies will have to sort out.” The US government has been working to provide relief for this housing crisis. Just last week, newly elected US President Joe Biden extended the federal eviction moratorium, which is set to expire on Jan. 31, through at least March 31. In addition to this pause, US Congress had provided $25 billion in rental assistance through their December 2020 stimulus package with Biden asking for an additional $25 billion in his future bill.
These cash infusions will chip away at that growing $70 billion debt, but will ultimately come up short and relief will take time to trickle down to concert fans. Likely falling at a time when venues start to re-open at more profitable capacities. This “perfect storm” could leave venues across the country looking to pack their houses against a large portion of their consumer base conflicted over purchasing concert tickets or catching up on their physiological and safety needs. And as Maslow has taught us many will opt to catch up on those basic needs first.
This conflict is not a new phenomenon. There are always demographic segments facing the choice of want versus need. However, businesses usually adjust their marketing approach to capitalize on the segments free of that conflict. This is not the case today where a disproportionate percentage of the entire world population has been shaken by the economic impacts of the pandemic. This leaves venue owners to fight over a very small percentage with the necessary disposable income to fork-over.
How can concert promoters face this challenge? First, it is imperative that the majors such as Live Nation, AEG, and NIVA begin to focus their lobbying efforts on getting that second $25 billion round of housing assistance passed. Without it, the suggested rental shortfall is just shy of $50 billion and growing. This would, in essence, double the time for the collective concert fan segment to catch-up on their basic needs and be able to regularly support live events. Second, the industry will have to accept that the supply/demand curve will shift when we return to operations. With fewer fans with adequate resources to attend shows, the only solution is to reduce the price of tickets. Promoters, suppliers, artists, and managers will have to work together to find that new equilibrium and then adjust as the consumer pool emerges from its COVID-catch-up. Ultimately, we will return to those pre-pandemic levels. However, it is going to take time and compassion for concert fans to get there.