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Jim DeRogatis

It’s official: The Death Star controls Walmart on the Lake

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Making official the “sources say” reports that first made national news in October, Live Nation, the giant and voracious corporate Pac-Man of the concert industry, announced on Friday that it now owns a 51-percent controlling interest in the smaller but no less ambitious Austin-based promoter C3 Presents—thereby giving it control of Lollapalooza in Chicago and a major presence in the U.S. festival market.

Many questions remain, from why C3 talked such a good game about its loyalty to Chicago for so long, then sold out, to exactly how much the “three Charlies” behind that company made, and how much they’ll still be around. But the deal is done. Here are the accounts in The Austin American-Statesman, The Austin Business Journal, and Pollstar, the primary trade publication in the concert industry.

This blog ran a list of 10 issues concerning Live Nation’s ownership of Lollapalooza in October, and they’re repeated here again down below. But the one key thing to note as the mayoral campaign heats up is that Rahm Emanuel’s brother Ari has stakes in Lollapalooza both as the head of Hollywood talent agency William Morris Endeavor (which now owns only 24.5 percent of the concert, since it used to own 50-percent in partnership with C3) and as a member of the board of directors of Live Nation.

Why is this more than a footnote? These corporations have an exclusive contract in perpetuity to present Lollapalooza in Grant Park, and that deal was renewed without competitive bidding and in violation of the mayor’s pledge during the last campaign to appoint an independent negotiator to deal with C3 for Lollapalooza, given his brother’s ties.

Add to that the fact that Live Nation won a bid-free sweetheart deal for a 30,000-seat concert venue on Northerly Island under Emanuel, and it sure seems like companies that Ari Emanuel is cozy with get a whole heck of a lot of good will from this administration, while the local music industry is pushed further and further to the margins in favor of those glitzy tourist dollars.

As noted earlier in this blog:

Here are 10 things you should know about these companies and their dealings with Chicago city government and the local music scene. (And we should note that neither company has yet commented on the pending deal, which The New York Times quotes sources as saying is worth about $250 million, and which would give Live Nation a 51-percent stake in C3, making it one of the largest festival promoters in the world.)

——1. Lollapalooza’s deal for Grant Park lasts forever.

Often misreported as a 10-year deal struck between the Park District and C3 Presents in 2012, a close read of the Lollapalooza contract (which this blog posted in its entirety after filing a Freedom of Information Act request) reveals that it is in fact a contract in perpetuity: When the agreement expires in 2021, Lollapalooza and the city are free to add another year after that year’s festival… and the next, and the next, and the next, for as long as both sides desire, and free from public scrutiny or competition. Which means a Ticketmaster/Live Nation/C3 Lollapalooza in Grant Park forever.

2. The original Lollapalooza deal reeked of favoritism.

The first contract the Daley administration approved in 2005—and later amended in 2008—included an unprecedented and very questionable arrangement whereby the concert partnered with the Parkways Foundation, a favorite charity of Maggie Daley, and operated as a non-profit venture. Despite generating considerable income, it thereby avoided the city and county amusement taxes paid by every other entertainment event in Chicago that draws more than 750 people, costing taxpayers millions in lost revenue for the concert’s first seven years.

3. That deal was negotiated by then-Mayor Daley’s nephew, and C3 recently repaid Daley and his kin with a big fat contract in Austin.

C3’s hired attorney and paid lobbyist, Daley nephew Mark Vanecko, negotiated that first deal with the Park District, despite the obvious conflict of interest. Late last month, Sun-Times reporter Dan Mihalopoulos had a tasty scoop revealing that C3 is paying the Austin Parks Foundation specifically to hire the former mayor’s consulting firm to work on a $100 million project essentially privatizing an Austin park for major events like the Austin City Limits Festival, the predecessor of and model for Lollapalooza. It’s hard not to see that as payback.

4. The current deal is almost as sweet as the first one.

While the new contract generates more income for the city—around $3 million a year total—it contains a number of problematic concessions. The biggest: Lollapalooza has an exclusive lock on Grant Park, prohibiting any other promoter from staging a similar event there. It also fails to stipulate penalties or set deadlines for post-concert repairs (and these have been extensive in years with bad rain). Bottom line: The city’s biggest and most prestigious public park now is handed to a private business for the third of the year with the best weather.

5. When Live Nation becomes a co-owner of Lollapalooza, it will now have sweetheart deals for two lakefront concert venues.

Live Nation initially got a sweetheart deal from the Daley administration in 2005 for a temporary, mid-sized concert venue on Northerly Island, where the former mayor had bulldozed Meigs Field in the middle of the night. In 2013, the Emanuel administration made the arrangement permanent, allowing Live Nation to build a massive fixed venue for 30,000 people—all without public hearings and sidestepping competitive bidding.

6. Rahm’s ties to Lollapalooza and C3 are even closer than Daley’s.

While C3 does all the work, Lollapalooza actually is co-owned in a 50/50 partnership by the Texas company and Hollywood talent agency William Morris Endeavor, which is run by Rahm’s brother, Ari Emanuel. (The concert’s founder, Perry Farrell, sold his stake to William Morris back in the alternative era, and is now basically a corporate spokes figure—the Gorton’s Fisherman of the music world.) Ari Emanuel also sits on the Board of Directors of Ticketmaster/Live Nation.

7. Rahm promised to appoint an independent negotiator to handle all city deals with C3 and Ticketmaster/Live Nation.

In addition to his nepotistic ties with C3/William Morris and Ticketmaster/Live Nation, Emanuel received campaign contributions from 15 William Morris employees and the top two corporate executives at Ticketmaster/Live Nation, totaling $156,000 during his first mayoral campaign. In response to this blog’s reporting on those contributions, then-campaign spokesman Ben LaBolt said: “Given his brother’s position at WME [William Morris Endeavor] and on the board of Live Nation, Rahm would ask the City Council to appoint an outside negotiator to handle any negotiations with these companies so that there wasn’t even a question of favoritism.”

8. Rahm broke that promise.

As mayor, Emanuel failed to appoint that independent negotiator to oversee the new contract with Ticketmaster/Live Nation for Northerly Island or with C3/William Morris for Lollapalooza. The administration has claimed the mayor had no role in those deals, since they were struck by the Park District. But Emanuel hand picks the Park District’s board and top executives.

9. Rahm is raking in the cash for his second run from C3.

The real reason for the mayor’s much-ballyhooed goodwill trip to Austin for South by Southwest 2013 was revealed by Chicago Tribune reporters John Byrne and Bill Ruthhart: Emanuel made the trip to collect “campaign donations at a fundraiser thrown for him by the promoters who hold the 10-year contract to put on the Lollapalooza music festival in Grant Park.” Doesn’t this blatantly contradict the executive order Rahm signed forgoing political contributions from city contractors, the Tribune asked? Once again, mayoral spokeswoman Sarah Hamilton countered that the rule does not apply because C3 has its deal with the Park District, not with City Hall, a fine distinction many would dismiss.

10. Lollapalooza never has “played nice” with the Chicago music scene, but Ticketmaster/Live Nation’s been even worse.

In addition to dominating the summer concert scene by its sheer size and scope, Lollapalooza wields unequaled power over the Chicago music world via the radius clauses C3 places on every act that plays its stages. These prohibit artists from performing for six months before the festival and three months after anywhere within 300 miles of Grant Park, which includes Milwaukee, Madison, Iowa City, Detroit, and Indianapolis. C3 claims it waives the radius clause for any band that asks; some artists have disagreed. Either way, the policy remains intact.

C3, which does not even have an office in Chicago, claims to be a good neighbor to the music scene by making sanctioned after-shows available to local venues. Some promoters and club owners have said that doesn’t come close to compensating for the nights they now are dark, but they’re almost always hesitant to speak for attribution lest they lose the handful of shows they do get.

For its part, Ticketmaster/Live Nation has been an even more problematic neighbor. Ticketmaster’s egregious “convenience fees” and poor customer service are notorious, as are its exclusivity agreements with venues. (These mean artists must use Ticketmaster or they cannot play that facility.) Live Nation has aggressively bought up or driven independent local promoters out of business from coast to coast; Chicago is one of the few major cities that still has an independent competitor, Jam Productions, but court testimony has included statements by top Live Nation execs promising to “crush, kill, and destroy” its smaller rival. And Live Nation’s radius clauses are as troubling as C3’s.

Though Ticketmaster’s merger with Live Nation in 2010 was roundly criticized by the music industry and legislators on both the left and the right, it nevertheless won the approval of the Obama administration. (At the time, Rahm Emanuel was the president’s chief of staff.) And though the Illinois Attorney General investigated Lollapalooza and C3 for possible anti-trust violations in 2010, the probe ended with no action taken. Complaints about the bullying practices of both companies have fallen on deaf ears.

Also worth noting: The city never has contracted for a thorough, independent Economic Impact Study weighing the benefits of the lakefront concerts staged by C3 and Ticketmaster/Live Nation against the detriments to local music businesses, especially the clubs and independent venues that operate here 365 days a year.

While the ramifications of the merger remain to be seen, two things are undeniable and don’t augur well for the future: Under Ticketmaster/Live Nation, concert tickets and service fees have only gotten more and more expensive while customers have increasingly been treated worse, marketing has grown more obnoxious, and bookings have grown ever more conservative. And competition has dwindled while the giants have thrived, leaving music lovers with fewer alternatives all the time.

SOME OF THIS BLOG’S KEY REPORTS ON THE SHENANIGANS BEHIND LOLLAPALOOZA, TICKETMASTER/LIVE NATION, AND THE CITY

Sept. 24, 2014: Lollapalooza, the gift that keeps giving—to Daley

May 30, 2013: Did the Chicago Park District sidestep competitive bidding for the Northerly Island concert venue?

Mar. 21, 2013: City OKs expansion of Ticketmaster/Live Nation on Northerly Island

Aug. 6, 2012: The lessons of Lollapalooza 2012

April 17, 2012: City releases Lollapalooza contract

April 15, 2012: The new Lollapalooza deal: A blown opportunity

March 15, 2012: Lollapalooza finally will pay what it owes

Feb. 1, 2012: County to Lollapalooza: Pay up!

Jan. 29, 2012: State rep probes Lollapalooza sales tax

Jan. 25, 2012: The county targets Lollapalooza's tax exemption

Sept. 18, 2011: Another pass for Lollapalooza: Restoring Grant Park

Aug. 8, 2011: Demand builds: Probe Lolla sweetheart deal

Aug. 2, 2011: Rahm: City will review Lollapalooza tax question

Aug. 1, 2011: Does Lollapalooza $hort Chicago?

April 7, 2011: Two key differences between the mega-fests, Dave Matthews Caravan vs. Lollapalooza

Feb. 24, 2011: Dear Rahm: How to quell fears about your ties to Ticketmaster/Live Nation and Lollapalooza and fix relations with the Chicago music scene

Feb. 7, 2011: Rahm Emanuel pledges hands off all dealings with Ticketmaster/Live Nation and Lollapalooza

Feb. 4, 2011: Rahm Emanuel: Pal$ with thuggish concert giants Ticketmaster/Live Nation and Lollapalooza

June 21, 2010: It’s official: Ticketmaster/Live Nation free to devour the concert business

Follow me on Twitter @JimDeRogatis, join me on Facebook, and podcast Sound Opinions.

 

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