The Business Of Concert Cancellations
When Lady Gaga was forced to cancel the remaining 22 dates of her Born This Way Ball tour in February due to a labral tear in her right hip, her fans weren't the only ones inconvenienced by the decision.
The trickle-down effect also directly impacted promoter Live Nation; Gaga's immediate management team; and her band members, dancing troupe, personal traveling entourage (wardrobe, makeup artits, chefs, trainers), and crew members, representing an estimated total of 130 personnel.
And that's not including the venue-by-venue cottage industry created by such a gigantic tour: food and merchandise vendors, security, ushers, box office and venue staff, and paramedics, among other professionals that ensure a concert runs smoothly.
Of course, at the top of the totem pole was Stefani Germanotta herself, whose sold-out tour was on track to gross more than $200 million, according to Billboard. A similar major cancellation arose during U2's 360 tour in 2010 when Bono had to undergo back surgery, which led to the postponement of 16 stadium concerts.
But high-profile artists such as Lady Gaga, U2 and others who have instigated postponements and cancellations due to an illness or injury — recent cancellations by Rihanna and Green Day come to mind — usually take out a form of specialty risk insurance to help soften the blow.
Robert Frost, founder and president of Nashville-based entertainment insurance firm Frost Specialty Inc., says performers often take out either cancellation or nonappearance insurance.
"If I was an artist, I'd carry cancellation/nonappearance [insurance] because I'd want to protect my income," says Frost, noting the maximum an artist can insure is 100 percent of their guarantee, the minimum fee they'll be paid by a promoter on a show or series-of-shows-basis.
"That would be very important to me personally to protect my income. But everybody has a different risk tolerance and everybody does things differently. But basically, cancellation/nonappearance is paying the artist if they can't perform."
Whether other individuals within an entertainer's immediate camp receive post-cancellation compensation through coverage is determined by the act's insurance policy.
"These policies can be designed to cover whatever you want to cover," says Frost, whose company primarily deals within the country and Christian music genres. "It gets complicated because the promoter will usually buy some coverage. The major artist will usually buy some coverage. Personal managers, business managers [and] booking agents are sometimes included under the coverage. It's truly designed to do whatever someone wants to cover.
"In my case, it's been different with every person: they have their own idea of what percentage they want to cover — if they'll cover the commissions, or not cover the commissions, so that the people [who] work with them will get paid. Sometimes the personal managers, the business managers and the booking agents pay part of the premium, so they're the agents that would be covered if something happens. It's just really all across the board."
Not as fortunate are the contract workers, who determine their compensation — if any — through the terms they negotiate when they get hired.
"You may get a month's pay with some cash per diems that you've lost. You may be compensated for the entire tour," suggests Rob Sonoda, who is the director of operations/technical services at Kitchener, Ontario-based venue Centre in the Square, and who toured as a crew member on tours for U2, Madonna and Paul McCartney in the early 2000s. "It's contract dependent."
Sonoda recalls situations in which he was temporarily let go due to a band-related illness, and more permanently when tours actually dissolved.
"In my instance, I picked up my last pay, my last set of per diems, they got me a flight and I went home," he recalls. "And they have my number to get in touch with me if this tour ever comes back. In a way that's like a first right of refusal: I have first rights to be the monitor guy, the backline guy or the production guy. And if the tour goes out, they'll call you. And nine times out of 10, they're pretty good about calling you."
He also says that a crew member doesn't get paid during any hiatuses that headliners work into their schedules.
"I remember U2 played Slane Castle in 2001, and then we weren't back for three weeks," he states. "They paid my flight home, and then I had to find work for those few weeks. Luckily, I picked up nine dates of a Madonna tour, then U2 flew me back to rejoin them on tour once it picked up again."
Frost says that though he's never seen pop acts protect their personnel due to the cyclical nature of touring, country acts operate differently.
"A lot of the country artists are really touring artists," Frost notes. "They have full-time employees they keep and have benefits like health insurance, short-term disability and group life insurance. That's unusual for a major pop or rock star, because they only tour every two or three years to support an album."
Frost says extended employees beyond the performer's inner circle would only be taken care of "if the artist had 100 percent coverage — if they were getting all their guarantees and they would keep everybody on."
But these policies don't come cheap.
"It's going to run anywhere — depending on the age, the health, the loss history, and everything else — up to 3 percent of the amount you insure," Frost explains.
"So if you've got $10 million coverage, that's $300,000."
(Nick Krewen is a Toronto-based journalist who has written for The Toronto Star, TV Guide, Billboard, Country Music and was a consultant for the National Film Board's music industry documentary Dream Machine.)