Small venues: big problems
Small music venues are still having a hard time. In 2023, according to the Music Venue Trust, 16% of all UK Grassroots Music Venues permanently closed their doors. Moreover, this isn’t limited to just music but to other small to mid-sized venues in live entertainment. Earlier this month, Pryzm nightclubs announced the closure of 17 venues nationwide with the loss of 500 jobs. The Night Time Industries Association (NTIA) has estimated over 400 clubs have closed in the UK since March 2020.
Whilst grim reading for those running a small live entertainment space, it is less troubling for those that run and own the venues on the much larger end of the scale. Quite the opposite in fact. Stadium and large arenas are booming. According to Pollstar, Stadium acts raked in over $8 billion in 2023, whilst in the same year, the O2 Arena in London had its best results ever with 2.5 million tickets sold. Furthermore, these large venues are now looking to capitalise on this trend by building more of them.
The difference between the two scales of venues has highlighted the limitations of the live entertainment business model. Specifically, if over-simplified, that the model of live entertainment is always limited by the number of people in a venue.
Large companies such as Live Nation and AEG recognised this long ago and pushed heavily into markets that could host large outdoor festivals where the requirement of physical space was limited by land rather than a physical building. This has been super charged in recent years with the introduction of private equity. Private equity groups were investing over $10 billion in the live entertainment market alone in 2022. In November 2023, AEG spun off its ASM Global venue business to a private equity partner Onex Partners who are looking to ‘grow’ the business to ‘new heights’. Finally, also in 2023, the ‘most advanced arena ever’ was constructed in Las Vegas.
Small venues, however, don’t have this luxury. Limited by their size, they have the same macro-economic concerns of rising inflation, changing consumer behaviour, and higher energy and rent costs. However, they don’t have the capital to offset those costs or expand.
The government are trying to find a solution. One suggestion is that large venues should adopt a ‘premier league’ model and share their profits with smaller venues. Whilst not solving the problem entirely, it does help to address the fact that if acts don’t have a platform to perform from an early development age, in the long run there will be fewer acts to fill the large venues currently being built.
Furthermore, large arenas shouldn’t rejoice too quickly. 2023 saw a 5 year low in investment from private equity groups, falling dramatically to $1.4 billion. How this impacts their ability to expand will be watched closely in the coming months.