Congress wrote a pandemic relief law that excluded Live Nation and companies like it. But the Small Business Administration gave nearly $19 million to Live Nation subsidiaries or companies in which it has a significant investment.
Congress was wary of allowing grants to publicly traded companies such as Live Nation, worrying that the funds could be used to bail out stock market investors. In the end, lawmakers wrote the law to exclude large companies like Live Nation, as well as firms they own or control.
But the parameters set by Congress and the Small Business Administration, which disbursed the funds, allowed several companies in which Live Nation has significant investments to receive grants: Nearly $19 million went to firms listed as subsidiaries on Live Nation’s 2022 securities filings or in which Live Nation has a substantial, though not majority, ownership stake, according to a Washington Post review of Securities and Exchange Commission filings, state corporate documents and SBA data, as well as interviews with executives at companies that received grants. The grants do not appear to have violated the law or any rules set by the SBA.
Nevertheless, the revelation demonstrates how a large company with stakes in hundreds of smaller businesses could, while following the rules, reap a benefit that some legislators didn’t want. And it’s an example of how the way agencies implement a law can be just as important as the way it is written by Congress.
“When we wrote this, we specifically didn’t want these publicly traded companies — Live Nation foremost among them — to get their hands on this money,” said Rep. Peter Welch (D-Vt.), a key co-sponsor of the relief legislation. “I did not want Live Nation getting a nickel.”
Live Nation as a parent company did not directly receive any money from the program, but the government relief to its subsidiaries still protected its investments and improved its long-term outlook, however slightly. The earnings of its subsidiaries provide Live Nation with crucial cash flow and enable it to service its debt, it said in securities filings. The aid enabled the companies to pay staff and recover more quickly from the disruption, their executives said in interviews and emailed statements.
In one case, one of the companies that received funds from the SBA borrowed money from Live Nation and its other owners in the first months after covid hit, showing how the parent company played an active role in its survival. In another case, one of the subsidiaries that received taxpayer funds did not need to tap an available credit line from Live Nation, showing how the grant could have shielded the parent company from having to finance the entity’s survival.
Several companies listed as Live Nation subsidiaries in February SEC filings received funds from the grant program, according to SBA data. They include Wisconsin company Frank Productions Concerts LLC, which received $10 million; artist management firm Gellman Management LLC, which received nearly $407,000; and Missouri firm Delmar Hall LLC, which received $1.75 million. Corporate documents filed in Wisconsin and California list Live Nation executives or subsidiaries having roles at Frank Productions Concerts and Gellman Management. Frank Productions Concerts, Gellman Management, and Delmar Hall are all included on a list of hundreds of subsidiaries filed as part of Live Nation’s annual report covering 2021.
A fourth company, The Pageant LLC, received $6.7 million dollars from the program. It, along with Delmar Hall LLC, is 50 percent owned by Live Nation, said Patrick Hagin, the managing partner of both businesses. He added that Delmar Hall was erroneously listed as a Live Nation subsidiary.
Live Nation said in a statement that it does not have majority ownership or a controlling stake in any of the entities that received funds.
“Therefore we don’t have the ability to tell these partners that they can’t get access to these funds, especially considering the SBA reviewed and approved their applications before any funds were given out,” the company’s statement said. “These entities control their own day to day operations, and the folks running these small businesses used every resource legally available to them to support their employees through this crisis, which was not only their right but also an entirely understandable and human thing to do.”
In a written statement, an SBA official defended the awards as proper, and said that Live Nation does not “directly own” any entity that received grants through the program.
“SBA is also aware of and monitoring all applicants and awardees in which Live Nation Entertainment, Inc. has disclosed to the SEC in its annual filings as being ‘subsidiaries,’” the SBA statement said. “Through a robust grant monitoring process, SBA reviews and investigates, as necessary, to ensure the law is being followed and vice versa, that businesses are not penalized for having non-controlling, silent investors or completely typical legal and tax structures.”
Live Nation is a dominant force in the entertainment industry, with operations in North America, Europe, Asia and the Middle East. Music industry experts said that after nearly two decades of acquiring smaller companies and regional chains, the company has deepened its geographic reach and now reaps profits along each step of the entertainment business — from artist management to venues to sponsorships to ticketing.
A 2010 merger with Ticketmaster and the company’s dominance ever since has drawn intense criticism from some antitrust experts and members of Congress, and in 2019 the Justice Department alleged that Live Nation had violated the terms of the merger. In an agreement reached between the company and the federal government in 2019, Live Nation’s antitrust consent decree was modified and extended through 2025.
“Even before the merger with Ticketmaster, it was indeed an amalgamation of many different local promoters and even local venues that were brought under the same umbrella,” said Brandon Ross, an analyst at LightShed Partners.
Live Nation continues to deny DOJ’s allegations.
“The live entertainment industry has never been more vibrant and competitive, which is evident from the many companies that continue entering the market,” the company said in a statement.
Live Nation’s business includes storied concert venues like the Fillmore in San Francisco and the House of Blues chain, popular festivals like Lollapalooza, and talent management firms overseeing hundreds of artists. In its most recent public filings, the company said it has more than 10,000 full-time employees. It brought in $6.3 billion in revenue in 2021.
The grant program, known as the Shuttered Venue Operators Grants, was passed by Congress in late 2020 and offered relief awards of up to $10 million to performance venues, museums, producers and talent managers. The money was approved at a time when much of the concert industry across the United States was shut down because of restrictions meant to prevent the spread of the coronavirus. Congress later added more funds to the program, for a total of more than $16 billion.
Lawmakers unveiled the plan, then known as “Save Our Stages,” in mid-2020. The National Independent Venue Association (NIVA), an alliance formed in response to the pandemic, was a driving force behind the measure and urged lawmakers to support it.
“This was about, yes, Nashville and New York. But it was just as much about the Fargo Theatre or a small, small country music venue in Texas,” a key supporter of the measure, Sen. Amy Klobuchar (D-Minn.), said in a speech on the Senate floor in December 2020.
In an interview with the trade publication Pollstar published that month, Klobuchar was blunt in saying that lawmakers did not think Live Nation should qualify for the funds.
“It’s true it (the legislation) doesn’t include Live Nation venues, because they have such a vast empire with the ticketing and things,” she was quoted as saying.
In making their case for the funding, advocates emphasized the intense financial pressure that small businesses faced, including the risk that owners who had made personal guarantees would lose their homes and life savings in trying to meet their obligations to employees and vendors.
“The thousands of independent venues that came together to form NIVA could not have survived the pandemic shutdowns had it not been for the emergency relief provided by the Save Our Stages Act,” said Rev. Moose, NIVA’s executive director and co-founder. “Our members are small business people that don’t have access to Wall Street financial instruments to survive a historic crisis not of their making.”
By the time the measure passed, trillions of dollars in pandemic relief already had been approved by Congress. That created an opportunity to apply lessons learned when designing the new funding. One lesson in particular stood out: Taxpayer funds should not be used to bail out the shareholders of public companies, which unlike mom-and-pop businesses can access capital markets to raise money.
Congress was especially displeased that aid meant for small businesses via the Paycheck Protection Program, launched in spring 2020, had in some instances made its way to large public companies. The news that major hotel and restaurant chains helped drain the program’s funds sparked a backlash and calls for more oversight.
Public companies received $1 billion in stimulus funds meant for small businesses
“They got burned by PPP on both sides of the aisle. They were very focused on that,” said one person with knowledge of the congressional negotiations who spoke on the condition of anonymity because they weren’t authorized to discuss the deliberations.
Still, Live Nation initially sought to shape the bill so it could qualify for the funds, according to five people with knowledge of the discussions. Live Nation ramped up its lobbying in the fall of 2020, seeking to make it easier for the company — and its many subsidiaries, large and small — to access the money, one of the sources said. They specifically opposed language barring aid to publicly traded companies, a congressional aide said on condition of anonymity to describe private conversations.
The amount that Live Nation spent on lobbying the federal government across a range of issues including the grants more than doubled in 2020 compared to the prior year to over $1 million, and increased again in 2021, according to a tally by OpenSecrets, a nonprofit group that tracks the influence of money in politics.
Ultimately, the measure approved by Congress excluded, among others, public companies — or venues or firms “majority owned or controlled” by such companies — from receiving any of the aid.
In its statement to The Post, Live Nation said its lobbying effort was meant to protect jobs.
“As the largest employer in the live music industry of course we advocated for support to be available to all live music workers no matter where they work,” the company’s statement said. “Ultimately Live Nation wasn’t eligible and that’s ok, we still supported the bill for the good of the industry.”
But while Congress wrote the broad rules of the program, its implementation and exact requirements were left to the SBA. Majority ownership is relatively straightforward to determine, but corporate experts said determining “control” of a company can require more nuance and case-by-case analysis. In this case, the SBA defined “control” as “both the strategic policy setting exercised by boards of directors or similar organizational governance bodies and the day-to-day management and administration of business operations as overseen by principals,” according to an agency document on the program. In other words, a firm could be the largest single shareholder of a subsidiary but not technically “control” it.
The SEC’s definition of “subsidiary” is “an affiliate controlled by such person directly, or indirectly through one or more intermediaries.”
Keith Higgins, a retired partner at the law firm Ropes & Gray and a former director of corporation finance at the SEC, said the definitions reflect “simply two separate sets of regulations administered by two different agencies.”
“Even though the language in the two regulations appears to get at the same concepts, it is not inconceivable that an entity the SEC considers a subsidiary for its purposes is not ‘controlled’ for SBA purposes,” Higgins said.
In 2018 Live Nation purchased what it described at the time as a majority interest in Frank Productions, a Madison, Wis.-based concert venue promoter. Frank Productions’ operating company, Frank Productions Concerts LLC, received $10 million from the SBA grant program in July, the maximum amount possible. Both Frank Productions and Frank Productions Concerts are listed as Live Nation subsidiaries in the SEC filings.
Joel Plant, chief executive of Frank Productions, said in emailed statements to The Post that Live Nation only has a minority stake in Frank Productions Concerts, the entity that received the SBA grant.
“It is accurate to say that both Frank Productions and Frank Productions Concerts are subsidiaries of Live Nation, and it is important to note that under the SVOG program, simply being a subsidiary of a publicly-traded entity does not make an entity ineligible,” Plant said.
Frank Production Concerts’ 2021 annual report, filed with the Wisconsin Department of Financial Institutions, lists a corporate address that is the same as Live Nation’s Beverly Hills headquarters, and was signed by Live Nation Worldwide, Inc., a Delaware subsidiary of Live Nation Entertainment. Live Nation Worldwide is described as a “member” of Frank Productions Concerts in the filing, which also states that the company’s management is vested in its members.
“The day-to-day operations and management of FPC remains the responsibility of our local management team,” Plant said. “The filing of annual reports is an administrative function that Live Nation has taken on as part its joint venture with Frank Productions, LLC.”
Plant said the SVOG funds enabled the company to quickly hire back employees it had temporarily laid off during the pandemic, and overall get “back to full strength and beyond very quickly.” The company’s pared-back spending and the grant helped ensure that FPC did not have to borrow money from Live Nation, he said.
“We have mechanisms with Live Nation to lend us money that we did not access during covid,” Plant said in a phone interview. “The intent of the (SVOG) program was to keep people employed and keep businesses operating and it did that. There was a pretty complicated and thorough set of rules and guidelines promulgated about the program, we read through them carefully and we are eligible at the FPC level to receive the funds.”
Gellman Management LLC, an artist-management firm with offices in California and Nashville, received around $407,000 in SVOG funds. Gellman Management LLC was listed as a Live Nation subsidiary in Live Nation’s 2022 SEC filings, and corporate documents filed in California in August 2020 name Live Nation CEO Michael Rapino as a “member or manager.” A past Live Nation annual report stated the company acquired a 50 percent stake in Gellman Management in October 2010.
In a statement to The Post, Gellman Management said its grant helped the company retain staff.
“None of these funds were allocated for personal gain of management nor Live Nation,” the statement said. “We did everything by the book and followed all of the guidelines outlined by the SVOG, and it is unfair and incorrect to insinuate otherwise.”
In July 2021, nearly $8.5 million went to a pair of St. Louis venues — Delmar Hall and The Pageant — in which Live Nation holds a 50 percent stake and is the largest single stakeholder, according to SBA data and information provided by the venues’ managing partner, Patrick Hagin. Hagin said he and his business partner each own a 25 percent stake in each of the businesses.
The venues, which sit next to each other on the city’s famed Delmar Loop, are a staple of the St. Louis live music scene. Because they are 50 percent — but not 51 percent — owned by Live Nation, Hagin said, the venues qualified for the grants.
“We are following the rules here,” Hagin said in an interview. “We are very conscious of what the rules were.”
In addition to the federal aid, The Pageant LLC did receive a loan from Live Nation to help it survive the pandemic, Hagin said, though he and his business partner also contributed a “proportionate” amount. He declined to specify how much.
In its 2022 SEC filings, Live Nation lists Delmar Hall LLC as one of its subsidiaries. But Hagin said Live Nation plays no role in running either Delmar Hall or The Pageant, and neither venue is a Live Nation subsidiary, adding that he did not know why Delmar Hall LLC was described as a subsidiary in the SEC filing. He said he had contacted Live Nation to alert them of what he believes is a mistake.
Hagin said the SBA grants had made an enormous difference for the venues, enabling them to retain the vast majority of staff and keep up with rent and utilities.
“It would have been really, really ugly without it,” he said.