The global Coronavirus COVID-19 health crisis has triggered a macro-economic recession which will undoubtedly lead to a prolonged and painful downturn in business activity.
Assuming eventual medical science countermeasures are successfully tested and delivered in the next twelve-to-eighteen months, in the interim there will also need to be widescale adoption by mass populations of the practise of improved hygiene (including tighter regulation over animal wet markets), a continued level of physical not simply social-distancing, improved access to sanitising and protective wear, potentially restrictive controls and higher costs relating to international travel, a fundamentally different level of insurance risk and coverage cost for all aspects of life, and a host of other currently unimagined protocols relating to the new post-virus normalcy.
2020 and thus 2021 is going to be difficult for millions, and deadly for tens of thousands across the world.
Conventional government fiscal policies such as reducing the cost of borrowing, lowering taxes or QE (Quantitative Easing) aren’t going to fundamentally address the supply & demand shock that has devastated the dining, live entertainment, events, hospitality and travel sectors. Which is why even laissez-faire governments, hitherto true-believer’s in free-market economics are now dramatically adopting centralised fiscal engineering on a previously unimaginable level.
Having (eventually) imposed bans and restrictions on public assembly and contact, advising and then restricting venues from opening, most governments will be loath to ease countermeasures too soon – for fear of a phase two outbreak – and organisations that have survived may be unable to easily or quickly resume operations (with little capital reserve or employed resource), the populace i.e. those not hospitalised or recuperating from the virus, will be exhausted, mentally if not physically, and will have little disposable income for the non-essentials of life.
Even if there is a temporary summer-season respite from the virus transference and re-infection, this autumn/winter season is not going to see the events and entertainment industries return to the way-it-was.
The backlog of postponed events provisionally scheduled for later this year all clamouring for venues, media-attention, or consumer disposable income will need to successfully retain previously contracted talent, suppliers, support services and ticket bookers, and then perform to breakeven+ capacities.
Unfortunately, that scenario may elude many of the rescheduled events, whenever they are eventually timetabled, despite the optimistic statements from many CEO’s of fiscally impaired companies, or that the public will automatically embrace the opportunity to attend formally organised events.
Rather the consumer-facing (whether attendee, fan, patron, spectator or supporter) service-led sector will require an extended period of non-infection and economic confidence for mass audiences to then rediscover their ‘live-is-back’ mojo.
As a first step, agents, promoters and producers of artists, attractions, teams and sports leagues will need to re-negotiate event funding and logistics, and contractually agree upon a phased relaunching of performances, tours or matches with the health & safety of all constituents a new fundamental concern.
Venues will have to be staffed and ready, able to accentuate their cleanliness with facilities fit for a more health-conscious environment, and with additional concierge and security available to enforce the new norm of acceptable crowd-behaviours.
Ticket retailers and distributors may have to provide additional rights-to-refund for new or rescheduled events to ensure the cash-strapped and nervous populous commit to purchase in advance, or have policies in place to accommodate later-than-usual sales including the management of walk-up ticket enquiries.
Potentially the eventual rebirth of ‘live’ will first develop from spontaneous, unofficial street parties and smaller, localised more grassroots activities, an experiential patchwork of creative community-based initiatives, rather than the automatic implementation of international tours, major sporting tournaments and spectacles.
Unless ‘culture’ is to become a new coordinated and fundamental government priority.
Bread & Circus’s
Arguably one role for governments in the immediate period of post-virus recuperation will be the establishment of events and attractions to instil confidence in the re-emergence of public assembly – to entertain, inspire and delight without the primary need for a fiscal ROI, e.g. ‘A Festival for Britain 2.0’.
The scale of funding and access to capital, logistics and resources for any major national ‘celebrations’ will be beyond many of the current live industry operators – from the exhausted and depleted independent venues and promoters with little or no cash reserves, or the major international operators, typically leveraged to the hilt even before the recent market-correction, who have subsequently initiated wholesale furloughing or termination of employees, freelancers, supporting agencies and service providers.
The Coronavirus pandemic has laid bare just how fiscally fragile the live entertainment ecosystem is.
Historically, with declining local, regional or governmental support for the performing arts, museums, music and culture, any civic commissions, grants and subsidies have typically been directed to organisations with longstanding social and economic support networks i.e. metropolitan high-culture art forms, to the neglect of the regions, grassroots or community events or for those creating ‘low-brow’ or commercial pop-culture.
Outside of those organisations fortunate to receive funding or patronage, the mass culture of entertainment and events has largely been left to the free-markets, some of whom have responded to COVID-19 with pleas for government bailouts whilst retaining apparently non-refundable advance ticket revenues in the guise of indefinite event postponements and restrictive right-to-resale.
The supply-side orientation of the live entertainment sector has always relied upon the marketing-engineered advance purchase (weeks, months or years) and then patience of the end-consumer, the fan, patron or supporter to acquire upfront a non-transferable licence-to-attend. Luckily for many of the currently cashless events and live entertainment producers a notable number of consumers have extended their generous behaviour to convert their previous ticket transactions into credit notes or donations for the relief of organisations, some of whom may still fail to meet their refund responsibilities, and/or shutdown.
Force Majeure & COVID-19
Producers with business interruption or event cancellation insurance would have trusted that their policies, and specifically the ‘force majeure’ clause would cover eventualities such as the COVID-19 pandemic.
However, that may not be the case.
Without claiming to be an insurance expert (but acknowledging the definition as provided by the EventManagerBlog – https://www.eventmanagerblog.com/coronavirus-force-majeure), a ‘force majeure’ must be: Unforeseeable, External, and Irresistible i.e. impossible to overcome.
Which certainly sounds like the Coronavirus.
However, if the insurance coverage plan does not explicitly list epidemics and/or communicable diseases as qualifying ‘force majeure’ circumstances, then any payments would be disputed.
The position that many event producers have recently found is that the insurance underwriters will determine any business disruption or cancellation claim around the specific language of each individual insurance policy, and epidemics are not usually included.
Going forward, if there is no insurance claim possible, and producer’s operating funds do not support cancellation costs, then the only option available for many organisations is to indefinitely postpone, negotiate an extension from the talent, beg forgiveness from contracted suppliers and services, and trust the end-consumer will wait. Or cease operations.
The Nationalisation of Live
As outlined in the immediate period post-virus, event production technology and operational logistics will require the timetabling, resources and cashflow to enable the ready deployment of venues, as well as articulated transporters, power, staging, pa, lighting, toilets, and staff whether bars, caterers, cleaners, concierge, crew and medics – straight from the hospital front-line to events and festivals?
Security going forward will also be of a heightened concern. The health and safety of the talent, event personnel and public will have to be a key focus for protection and maintenance of the well-being of individual events, as well as society at large.
Event insurance of all types will inevitably be both more expensive and limited in scope, with increased levels of operational requirements to fulfil strictly defined pay-out clauses, and unlikely to include any pandemic coverage.
Further, the ability for event producers to commit to any re-launch will depend upon cash reserves, if any, credit facilities (when have the Banks ever lent to live?), or attempt to extend the current events ‘flywheel’ business model of today’s Pre-Sale receipts typically diverted to pay the deposits required (whether for the talent, venue-hire, or marketing costs) of tomorrows Onsale. With incremental event revenues derived from car parking, F&B, merchandise, ‘Venue Restoration Fees’ or ticketing rebates contributing towards the breakeven aspirations of promoters.
Box offices and ticketing agencies routinely advance ticket sale revenues to (in-house or external) event promoter / producers safe in their domino-theory that whilst individual events may underperform, not all events could fail, or be summarily outlawed. (Whoops!)
Ticketing parties may also co-mingle operational and escrow accounts to advance funds to promoter clients (on occasion underpinned by a level of Reps & Warranties, or other form of contractual indemnity) predicated on the belief that consumers / fans / spectators with their event-spectacle FOMO or supporter loyalty will wait, until the ticket purchased months in advance of the eventual event maturity and event admittance.
And so many parties in the live industries (for their own siloed cashflow requirements) have routinely frustrated basic consumer right-to-refund for ticketing related to rescheduled or postponed events – because the money has already been spent elsewhere.
So, with the current zero events baseline, and hundreds or thousands of already cancelled or postponed events where does the live industry source its ‘kick-starter’ funding from?
Whom therefore is in a better situation than the governments with their ability to underwrite and support a return to ‘live’?
But please without the attendant cultural commissars.