Venue Promoter Agreements: What Are They?
A venue promoter agreement is a contract between an individual or company—typically a promoter or artist management company—and a venue, usually a concert hall, theater, or other entertainment space that can hold events. It sets out a framework for the staging of a specific event or series of events, and details the rights and responsibilities of the promoter and venue owner/operator concerning the production and presentation of the event. It also includes details about how the revenue from the project will be divided between the two parties.
For the promoter, the venue promoter agreement is vital for protecting their investment in the event. Entertaining a band at an arena or amphitheater can be a million-dollar expenditure . For the venue, it is a way to guarantee that they will be compensated for opening their doors when the promoter books a date at their location. For both parties, it can be an opportunity to price their services on the market so that if a third party wants to hold an event they liked the price that is set in the venue promoter agreement and book an event at that established rate.
The terms of the agreement will include not only the date of the event, but also all of the different fees—rental fee, staffing, kegs, curtains, insurance, equipment—and how those fees are calculated. Also included will be profit sharing—that portion of the ticket price as well as calculating how the numbers will work if it is a co-promotion or in conjunction with a sponsor or other organization.
Provisions You Must Include in a Venue Promoter Agreement
Most venue promoter agreements will consist of the following basic elements:
Roles and Responsibilities. The agreement should clearly delineate which party has what responsibility for aspects of the event. For example, if a promoter requires an artist to perform for a certain amount of time, the agreement should specify whether it is the promoter or the venue that is responsible for providing the stage, sound and lighting services ordered by the promoter. Similarly, if an artist has agreed to perform a "free" concert, but the promoter has budgeted compensation for the artist, it should be clear whether or not the artist is permitted to promote the concert as free.
Payment Terms. This clear delineation is especially important to an artist who may be unfamiliar with the promoter and/or the venue. Whether the agreement calls for an advance and a guaranty of a minimum amount paid to the artist, or everything is contingent upon performance at the door, both the artist and the venue should understand and agree to the payment terms before the concert takes place.
Limitation of Liability. If the promoter is purchasing a broad range of services, and acting as a one-stop shopping source for the artist (like scallions for a potato salad), there is a good chance that the promoter will also want the venue to provide liability coverage for the promoter. Promoters and venues (including artists and other service providers) should be aware that blanket indemnities are generally unenforceable, while mutual indemnities are reasonable and enforceable.
Force Majeure. The prominent inclusion of this clause in any venue promoter agreement should be an indicator to both parties of the likelihood of a cancellation, particularly if that clause is limited to cancellation of an event due to circumstances beyond either party’s control. Artists and promoters would be well advised to consider this carefully before entering into an agreement that contains this, or any other, overly-broad force majeure clause. The agreement should also state clearly which party has the burden to prove force majeure in the event of a cancellation.
These are just some of the more common components of a venue promoter agreement. While many promoters simply utilize a generic form, an experienced attorney can help provide customized agreements that address the unique needs of a particular artist, promoter or venue.
Negotiating Venue Promoter Agreements
With the stakes as high as they are in a venue promoter agreement, it’s important to get the deal terms right. When you’re negotiating a venue promoter agreement, there are some important points to negotiate, set clear expectations and try to deal with potential disputes.
Make Sure the Intention for the Deal is Clear
The person who controls the venue will want to know if its the intent of the parties that the venue promoter will have exclusive rights to book artists or to otherwise control the use of the venue for the negotiated period of time, or just the right to do so before others who would also like to use the venue for various events. That should be specifically stated in the venue promoter agreement itself.
Articulate the Promotion Obligations Clearly
For the promoter, its important to make sure that obligations to promote the events at the site become part of the venue promoter agreement and are clear so as to avoid an artist convincing the venue operator to hire them directly for the next show leaving the promoter "out of the money" for all of its hard work and investment. It is preferable to state that within a certain period of time after the venue promoter books an artist, the venue must hire the promoter to provide the promotion services for that artist under the agreed terms, or the venue must pay a negotiated nominal fee to compensate the promoter for its past work and service on behalf of the artist, without giving the venue an option to hire the promoter; rather, it has to be compulsory.
Also, the venue needs to warrant that it will not employ anyone else to perform the same type of promotion or marketing activities as the promoter for the venue promoter agreement term.
Both sides need to have clarity on the scope of the promoter’s obligations. The promoter may have an extremely demanding promotional campaign to drive ticket and merchandise sales for the event, which may be too demanding on the venue. Alternatively, the promoter may not have the resources to promote the event as aggressively as the venue would like to so that needs to be addressed in the venue promoter agreements as well.
Compensation & Expenses
The compensation structure for the promoter should be clearly stated in the venue promoter agreement so that doesn’t become a point of contention later. If two or three different compensation models are acceptable, all of them should be described in the venue promoter agreement as well.
Also, the costs associated with running a successful promotion such as advertising and printing expenses should be broken down and apportioned between the promoter and the venue. But generally, the promoter will be responsible for some of the costs and the venue for others.
Indemnification and Insurance
Indemnification and insurance are critical issues for both parties. Depending on the nature of the agreement, it may be the promoter or the venue that is assuming greater liability or risk so that would need to be discussed between the parties and indemnification and insurance obligations would reflect that.
Legal Issues and Compliance
The legal implications of venue promoter agreements can be as complex as the agreements themselves. From both a regulatory compliance and a business perspective, venue promoters should be well-versed in the licensing requirements and legal stipulations that will impact their offerings. The stakes are especially high when considering that the underlying activities for certain events potentially implicate several legal disciplines, including liquor licensing, labor and employment, insurance coverage, tax considerations, and the event organizer’s financial solvency – to name a few.
In addition to state licensing requirements, which will vary from state to state, the sale of tickets to an event typically qualifies as a regulated commodity under federal law subject to certain restrictions – e.g., you cannot sell a ticket to a concert at Madison Square Gardens that is scheduled to be held within 60 days of the sale, and you must provide a full refund of the ticket price for a cancelation or date change occurring more than 7 days before an event (15 days for sports events) under federal law. Concert promoters should also be aware of ticketing restrictions set out by New York law, which requires that a resale of a ticket within 72 hours of purchase is only legal if the artist receives all profits from the ticket sale or the ticket is resold for face value. A breach of the federal Ticket Resale Act can result in significant penalties of $11,000 for each violation – and a ban on resale of tickets for a particular event for 6 months.
Tickets cannot be sold through a venue (i.e., a building or other facility where an event takes place) – a practice referred to as "rebilling" or "rebate." Rebilling occurs when the venue promoter acquires a block of tickets for itself or a designated resale agent, with the intent to resell them on the secondary market, often by way of its own website or online platform. This practice is virtually the same as a business selling the tickets on its own. At present, at least 20 states have enacted laws or other restrictions restricting rebilling. Given that a breach of a rebilling restriction is a criminal offense in many states (and also involves substantial civil liability), it is imperative to engage an attorney experienced in the field to draft and review your ticket sale contracts.
As a corollary to the rebilling prohibition, a concert promoter – or any business that is promoting an event at a venue – is not legally permitted to mandate that the venue resell tickets on its behalf. Again, this type of agreement qualifies as a ticket re-sale agreement, which is also prohibited in most jurisdictions, and could also violate federal anti-kickback laws.
In addition to restrictions on sales, several states have also enacted laws to limit the types of fees or markups that can be charged to ticket holders by venue promoters. For example, N.C. Gen. Stat. § 66-426 prohibits an online ticket seller from charging a service charge of more than 10% of the advertised price. In a similar vein, under Mass. Gen. Laws ch. 93 § 184, Massachusetts prohibits a venue promoter from charging more than 5% in service charges or fees. In California, GA 39-1.8 limits the amount of a convenience charge to 10% of the ticket price, and also prohibits minimum price service charges. Failure to comply with these laws has the potential to result in substantial civil liability.
The ramifications for violating either the rebilling or ticket charge restrictions can be severe. Quoting N.C. Gen. Stat. § 66-426, any person who "purchases tickets to an event with the intent of reselling the tickets without full disclosure of the markup above the original ticket price or the availability of lower-priced seats" is guilty of a Class I felony – "all violations are a Class H felony," – and "each ticket purchased in violation of" the statute is "a separate offense."
As demonstrated by these examples, the less glamorous side of concert promotion is the legal red tape. Yet any concert promoter or venue operator should be well informed on the regulatory restrictions and compliance requirements specific to their jurisdiction and industry.
Common Issues and Solutions
One of the most common challenges is a dispute relating to the profit share splits as set out in the agreement. Since a promoter sometimes enters into the venue promoter agreement with one eye on the bottom line, it is the profits that the promoter takes home that become the single most important factor. For example, while a settlement may provide for 70 percent of profits from the bar to go to the promoter, it also provides that 10 percent will go to the entertainment provided from time to time, 10 percent to the secured parking area, and 10 percent to the NPO. The promoter’s incentive to provide all the money up front to the NPO can serve only to aggravate the situation and lead to serious disagreements.
The best way around this is to set definite terms to divide the profits from the total after costs are deducted, having ensured that those costs are reasonable. Terms such as the following may be helpful: "The promoter shall be responsible for paying and must pay all its own costs relating to the event through to the date that the balance of the funds are due and payable to the promoter under the relevant deed of covenant. After that date, the funds received from the patronage are collected by the NPO and deposited by it into a bank account which the NPO is required to establish solely for the purposes of receiving those funds. Of that amount, 80 percent must be paid to the promoter. Ninety percent of the balance of the other 20 percent will be payable to charitable causes on the advice from the promoter annual general meeting . "
A second issue that arises is theft or damage of, or by, patrons. A common way for promoters to protect themselves from these risks is to have patrons sign an indemnity. This agreement, which is legally binding, is enforceable in the courts. It can sometimes be very difficult to establish who or what has caused the damage. This is especially so in instances where more than one person or object is involved in a single act that can cause damage, or there is more than one person at fault in the single act. Examples include a glass falls to the floor as a singer swings his microphone but the security guard posts outside the bar fails to see it. Another example is the drunk patron who slips and falls at the bar because he is being shoved aside by rowdy patrons arguing over football.
The duty to plan adequately for a disaster is often overlooked by promoters. A lender often requires the borrower to obtain and hold a public liability insurance policy that covers not only the premises, facilities and equipment but also claims for personal injury or property damage related to negligence. Some policies, however, may offer limited payment for claims arising outside the premises, cover only certain sections of the venue at a time (e.g. the building plus the grounds), cover only specific events or only a certain portion of a certain event, or even that portion of a certain event that the NPO has to rent and hire.
The promoter should ensure the borrow covers these risks. So for example, if food safety providors undertake work in the kitchen, this should be covered by an extension to the policy.
Trends and Recent Developments with Venue Promoter Agreements
The trends for venue promoter agreements are continuing to trend toward a more standard language and structure. Previously, a concert promoter would have to draw up a separate contract for each venue in the areas that they were trying to perform at. Finding a venue was done through word-of-mouth referrals. This both slowed down the process and led to events taking place after the original target date. The concert promoter now has the advantage of knowing which venues are likely to be open at a given time every year. They can simply send out a request for a contract and have a landlord/venue owner respond. These contractual relationships now cover multiple years and multiple events. These are sometimes referred to as multi-year booking arrangements.
These booking arrangements can be profitable, as concert promoters do not need to build new relationships with venues each year. A good relationship with a landlord can lead to a higher likelihood of getting a contract signed quickly. Multi-year booking arrangements also provide certainty for landlords who get notified well in advance which acts will be performing in their venues. Landlords can more effectively market their venue by advertising ahead of time which acts will be coming to perform. Both landlords and concert promoters get the benefit of having the contract signed ahead of time. Concert promoters typically avoid double booking when they have these arrangements in place.
One area where venues and concert promoters are still disagreeing is choice of law and choice of forum. Many venues still require that their contract be governed under their state’s laws, but most of the time the courts do not necessarily uphold these provisions. If concert promoters and venues are in different states, then the chances of getting a favorable ruling in the venue’s home state is low (under a conflict of laws analysis). Concert promoters might try to avoid even going through the litigation process by changing the choice of law to that of their home state. For a concert promoter, this is a reasonable position, but for a venue who spends more time in the home state where the venue is located, it does not provide them with the same flexibility.
A few years ago, it was standard to see a venue promoter prohibit the venue from selling tickets (i.e., "no ticketing provisions"). A venue’s ability to sell tickets reduces the concert promoter’s ability to control the audience. If a venue cannot sell tickets, it should be clear that the venue has agreed to lose any and all control over the event. In recent years, it has become common for larger concert promoters to give some ticketing control back to the venue. Venue owners are understandably reluctant to sign away control over the sale of tickets. Some concert promoters will require that their ticketing agent (which is usually Ticketmaster or Live Nation) be the venue’s ticket seller. This gives the concert promoter some exertion of control over the audience. A larger concert promoter might purchase a share of the event ticket company, which gives them some influence over how the company sells tickets. Having a closer relationship with the ticketing company gives concert promoters more leverage over the terms of their relationship with the venue as a whole.
Conclusion and Best Practices
Best Practices for Venue Promoter Agreement
In closing, to protect the interests of both venue owners and promoters, consideration should be given to the following best practices:
In our experience, with the right guidance, the venue owner/promoter relationship can be a mutually beneficial one . The principles outlined in this article, in addition to the best practices discussed, should help promoters, venue owners and the venue management teams navigate the often difficult task of providing the best concert experience for artists and fans alike while ensuring that the promoter’s bottom line is accounted for.