Welcome!
I’m trying something a little different today — the economics of a TIER 1 FAMOUS ROCK BAND. Also: I made this a video. Give it a watch here!
This week’s breakdown: The wild amount of money changing hands at Dead & Company’s month-long residence at the Sphere in Las Vegas.
A little background:
- The Sphere is a unique concert venue in Vegas with all kinds of crazy lighting and effects — mega acts like U2 have played there.
- Dead & Company is the surviving members of my all-time favorite band, the Grateful Dead, plus guitar legend John Mayer (and some other dudes in the background).
When Dead & Co announced a month-long residency at the Sphere, I jumped to buy tickets on the first day.
But when I looked, all the even half-decent tickets were like $700! Or more.
It got my brain working.
These guys have to be killing it.
How much money is this band making?
I asked a concert promoter friend of mine how deals work for bands.
He told me that big-name, Tier 1, fill-your-venue-100%-of-the-time artists like Dead & Co (or Taylor Swift, or Metallica, or JLo) can demand 100% of the ticket price, plus a cut of all other revenue streams.
Oh and promoters like LiveNation will often pay much of that upfront to the bands.
Let’s do a little napkin math.
Ticket price
Sometimes finding the real ticket price can be tricky. That’s thanks to Ticketmaster.
They’ve invented “platinum tickets,” which everyone who loves commerce or America or freedom should hate.
Normally Ticketmaster is just a middleman, selling you tickets, taking their transaction fee, and passing the money to the venue, which hands it over to the band.
But a “platinum” ticket is one where Ticketmaster bought the ticket for themselves at the regular price (e.g., $395), then marked it up as high as they wanted—say, $828.
Dead & Co still gets their $395, because the ticket was “sold”. But Ticketmaster makes $437 in pure profit by scalping their own tickets.
But back to the band — let’s ballpark it.
Let’s say they’re going to sell out every show. (Not unreasonable with these guys.)
Trying to guess an average ticket price, you’ve got to weigh the nosebleeds way at the top against the expensive ones up front. And there’s going to be a lot of rich, old hippies who can afford the $800 platinum seats for what is, essentially, a Grateful Dead cover band.
Anyway, enough criticism from me and let’s do some estimating here.
I’d conservatively ballpark it at an average of $270 per ticket.
So $270 x 17,600 seats x 24 shows = $114 million from just the tickets.
But that’s not all.
Merchandise and concessions
We did a little research and found some averages for the industry.
The average spend per guest at a big concert like this is $7.70 on merch.
So $7.70 x 17,600 x 24 brings in another $3.3mm.
Then there’s beer and hot dogs: apparently the average concessions spend is $32 per person, which works out to $13.5mm across the 24 shows.
That’s a lot of frickin hot dogs.
I don’t know exactly what cut of that the band gets. I’m sure it varies by contract. But even a piece of that extra $17mm isn’t bad.
Okay. Quick break, then let’s look at their expenses.
Splits and expenses
Expenses are pretty minimal. First, you’ve got the band. There are six of them:
There’s John Mayer, clearly a top-tier rock star. Then there are three original Grateful Dead members: Bob Weir, Bill Kreutzmann, and Mickey Hart.
Then there are two other guys, Oteil and Jeff. I’m sure they’re nice guys, but if somebody else shows up and plays their instruments, nobody notices.
So let’s say Oteil and Jeff make $1,000,000 each for the whole run of shows.
Then they’ve got to pay their crew.
Then they’ve got to pay their private jets — the shows are on Thursday, Friday, Saturday, so I’m sure they’re flying in and out every weekend.
Let’s highball those expenses, and say they’re paying $25mm in expenses over the run. That’s $1mm per concert.
That means John, Bob, Bill, and Mickey are taking home $25mm each for a month’s worth of work.
Insane.
Who wants to be in the NBA anymore? I want to be in Dead & Company.
It doesn’t get any better than this.
(Until I talk about Taylor Swift’s tour.)
Thanks for reading!
Michael
