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In early September 2022, organizers of the Harvest Moon festival in Miramar, Fla., were forced to cancel their three-day country music event for an unusual reason: They could not find affordable cancellation insurance for the festival, which was scheduled to take place Oct. 27-29, little more than a month away.
Executives with destination-festival producer Topeka thought they had a policy in place when they announced Harvest Moon — which was to feature headliners Eric Church and the Turnpike Troubadours — and had had no problem getting coverage in the past; the festival fell outside the official hurricane season. But approximately six weeks before the event, weather forecasts indicated that Miramar could be in the path of two developing superstorms. As a result, sources close to the festival tell Billboard that Harvest Moon promoters were suddenly being quoted prohibitively high prices that led to the decision to scrap the event and refund buyers, despite being 70% sold.
While these circumstances are rare, the incident underscores how the liabilities posed by inclement weather and climate change have significantly increased financial risk for independent promoters.The event business used to be much more competitive, which meant much lower prices for the policyholders. But a substantial increase in the number of festivals taking place yearly in North America, coupled with an increase in adverse weather, has caused event cancellation insurance premiums to triple and deductibles to balloon in recent years.
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For much of the last decade, event cancellation insurance enabled promoters to insure their expenses and forecast profits for about 80 cents per $100. So, for example, a promoter that booked an artist for $500,000 could purchase a $4,000 policy covering that expense in the event of an adverse weather cancellation.
But policy prices have risen exponentially now that “insurance companies are increasingly relying on historic data about regional weather patterns and spending more time trying to identify the statistical risk based on location and time of year,” says Paul Bassman, a broker with Dallas event coverage firm Higginbotham.
Tim Epstein, an attorney for independent festivals in North America, says rising premium costs are first felt by indie promoters and organizers. While Live Nation and AEG have begun reducing payouts for festivals that cancel 60 to 30 days in advance, prompting some artists to carry their own policies, indie promoters can’t often stipulate similar terms for their acts, and, as a result, “people are becoming more cognizant of the risks they face from weather,” he says.
This story will appear in the March 30, 2024, issue of Billboard.
When Madonna was forced to reschedule her 84-date Celebration Tour on Wednesday after she was stricken with a bacterial infection and hospitalized in the ICU, concern immediately turned to the pop superstar’s health (luckily, she’s expected to make a full recovery). But for industry watchers, the postponement also raises an interesting question: Just how much does it cost to reschedule a tour of that magnitude?
It’s impossible to come up with a solid number given all of the moving parts involved in a tour of this scale, particularly without having access to any insurance policies or contracts with venues and vendors. But postponing that large of a tour just over two weeks short of the July 15 opener at the Rogers Arena in Vancouver, Canada — and then rescheduling it — will nonetheless amount to a huge endeavor requiring hours of phone calls, disruptions to people’s lives and plenty of sunk costs for venues, show crew members, ticket buyers and Madonna herself.
Live Nation and Madonna’s touring team have already spent millions on equipment and infrastructure. While much of the show is custom-built and designed, there are plenty of production pieces — from speakers to staging — that are rented from major backline companies. The tour has also chartered buses and trucks and rented venues, which are expenditures that require deposits with varying costs depending on demand and availability.
Live Nation and the Madonna tour will have to pay some of these deposits, especially for those high-demand items that can’t be redirected toward other tours. In some cases, they will also be on the hook for venue deposits for canceled shows, although most venues will waive the cost to maintain a good relationship with Live Nation, which brings many arenas most of their touring content.
The largest group impacted by the postponement will be the approximately 1.2 million fans who purchased tickets for the tour, representing hundreds of millions of dollars in revenue. Some fans booked airline tickets, hotel rooms and rental properties around the tour, and some of those purchases will be deemed non-refundable. Those fans will have to make new plans after the rescheduled Madonna dates are announced, likely sometime in the next few weeks. Those who can’t attend might be able to get a refund, depending on what Madonna’s team decides, or sell their tickets on either a fan-to-fan exchange for face value or on a ticket resale site like StubHub or Vivid Seats.
The largest human costs will be borne by a much smaller group: the men and women working as roadies, touring professionals and support staff for the tour. With just over two weeks to go before opening, most positions on the tour have been filled, and many have started work building sets, editing content and rehearsing. As independent contractors, rescheduling the tour means their pay will be interrupted too, potentially leaving hundreds of people unemployed when they had planned to be working. While many, depending on the state, will receive a small severance and qualify for limited unemployment benefits, the disruption caused by the postponement will almost certainly mean that many touring professionals will not generate the income they had budgeted for this year and will now have to spend the months they thought they had secure employment looking for new work.
Fortunately, because the concert business is currently so strong at the highest level, there are more work opportunities in touring now than ever before, and some crew members will be able to immediately find replacement gigs. Others, however, will have to wait months until the rescheduled Madonna tour launches.
For the touring operation itself, the costs of the postponement could easily add up to millions of dollars. But the Celebration Tour has been so successful — more than 600,000 tickets were sold the first day tickets went on sale — that it will still amount to a huge financial windfall for Live Nation and Madonna when the tour eventually hits the road. That doesn’t mean it’ll be easy for everyone getting there
A California judge says Metallica’s insurance company doesn’t need to pay for six South American concerts that were canceled when COVID-19 struck, thanks to an exclusion in the policy for “communicable diseases.”
The band earlier sued a unit of Lloyd’s of London after it refused to cover their losses stemming from a South American tour, which had been set to kick off on April 15, 2020, but was postponed when the governments of Argentina, Chile and Brazil imposed strict restrictions amid the worsening pandemic.
Though Metallica’s insurance policy expressly excluded any coverage for events canceled by “communicable diseases,” Metallica’s lawyers argued that COVID-19 itself wasn’t clearly the most direct cause of the tour cancellation.
But in a decision on Nov. 30 obtained by Billboard, Los Angeles Superior Court Judge Holly J. Fujie said she didn’t buy it.
“The travel restrictions which caused the concert cancellations were a direct response to the burgeoning COVID-19 pandemic,” the judge wrote. “The evidence … demonstrates that the COVID-19 pandemic spurred the travel restrictions to South America and restrictions on public gatherings. The COVID-19 pandemic was therefore the efficient proximate cause of the concerts’ cancellations.”
Metallica’s lawyers had also argued that the “diseases” exclusion didn’t apply at all, since the exact wording of the policy said Lloyd’s wouldn’t pay coverage stemming from a disease “or fear or threat thereof.” Citing that language, the band said “none of its bandmembers felt threatened or fearful.”
But Judge Fujie was similarly unswayed, ruling that the Metallica policy’s language “does not require that the policyholders [themselves] feel fearful or threatened.”
The ruling granted Lloyd’s so-called summary judgment, meaning the case is dismissed. Metallica’s attorney did not immediately return a request for comment on the decision. The ruling was first reported by Law360.
Metallica’s case is one of many that have been filed by music venues, bars and other businesses seeking insurance coverage for harm caused by COVID-19. Like Metallica’s case, the majority of those lawsuits have thus far been won by insurers. Many policies include express carveouts for problems caused by diseases, like the one in the band’s contract; other policies for brick-and-mortar businesses often require “physical damage” that’s tricky to show with a pandemic shutdown.
The biggest such case in the music industry is a sweeping lawsuit filed by Live Nation, seeking coverage from Factory Mutual Insurance Co. for more than 10,000 shows (encompassing a whopping 15 million tickets) that were canceled or postponed during the pandemic.
Factory Mutual tried to end the case by arguing that virus shutdowns are not the kind of “physical loss or damage” that would be covered under the wording of Live Nation’s policy, but a federal judge ruled in February that Live Nation might have a valid case: “The complaint sufficiently alleges that infectious respiratory droplets, which transmit COVID-19, are physical objects that may alter the property on which they land and remain.”
The lawsuit remains pending.
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