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| Friday, September 02, 2005 |
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Execs: Rod Stewart's big payday highly unorthodox"Quite an unusual thing" was how Gary Loveman, chief executive officer of Harrah's Entertainment, described his company's upfront payment of $2 million to rocker Rod Stewart for a December 31, 2000 concert which Stewart subsequently canceled. But other casino- and entertainment-industry executives interviewed by the Business Press describe a world in which Loveman's decision was not merely unusual but highly aberrant. "I feel very bad for Gary," Talent Buyers Network President Brian Knauff said of Loveman. "He probably wasn't involved in it and he's a really nice guy."
Loveman's position, as outlined in his testimony, is that Stewart and his management essentially blackmailed Harrah's into ponying up $2 million in advance for the 2000 date, lest they cancel an already contracted New Year's Eve 1999 concert. As described by Loveman, he booked the 2000 concert under duress, as a means of saving the 1999 performance at the 11th hour. Stewart's lawyers have argued that thyroid cancer surgery, performed on the singer in May 2000, prevented him from appearing at The Rio the following December. Citing the "Acts of God" clauses that appear in some performers' contracts, they argue that the unforeseeable throat malignancy entitled Stewart to keep the $2 million. That's a business practice unknown to Knauff, as well as to Reid McLean, who coordinates "Orchestra Hall Presents" pop concerts in Minneapolis, and to Station Casinos Vice President of Entertainment Judy Alberti. "It's rare that you would pay 100 percent of an act upfront and we never have," said Alberti, who estimates that she books 100 headline acts a year for Station's eight Vegas-area properties. "Every now and then you don't pay an act until the day of show," she added. For McLean, it's not uncommon to pay a 25 percent to 50 percent fee deposit, anywhere from one to six months in advance of an engagement. "Some artists might require an advance deposit," McLean added. "In some cases, management might hold the money in an account," with the balance typically paid off on the day of the show or shortly afterward. If there's a cancellation, the money reverts to Orchestra Hall's coffers. "Generally," said convention presenter Gary Berman, of Creation Entertainment, "we do not pay in advance unless it is with a new client or if demanded by the artist. I'd say this occurs in 10 to 15 percent of our bookings," involving hundreds of personal-appearance, theatrical and musical performances at dozens of conclaves per year. Alberti and Knauff are familiar with the escrow arrangement, with the former sometimes paying the performer bonuses based on ticket sales. While Alberti pays deposits of as much as 50 percent, Knauff thinks Station doesn't need to. "An established casino, they're as good as gold and everybody knows it." And a 100 percent upfront deposit like the one Harrah's paid Stewart? "Absolutely unusual," exclaimed Knauff. "That's only if your credit sucks." None of the people interviewed for this article knew of a circumstance whereby an artist could claim his or her full fee without performing, unless the host venue defaulted on its obligation to that artist in some fashion. "Once a contract is signed, there are no 'out' clauses," said Orchestra Hall's McLean. He added that major artists are permitted to cancel without repercussion if opportunities in feature films, TV series or on Broadway supersede their Minneapolis commitment, but they still don't get to pocket the fee. If medical problems force the artist to cancel, the deposits Alberti pays are refundable to Station. Virtually the only circumstance in which a performer can collect their fee from Station without taking the stage is if -- particularly during outdoor concerts -- inclement weather prevents them from doing so. Even then, Station has "severe weather insurance" to recoup its financial outlay. Knauff -- who currently books acts for the Fremont Street Experience, two Mesquite casinos and the Silver Legacy, in Reno -- has been with Talent Buyers Network since 1972. His colleague at Station, Alberti, has been in its entertainment division for a decade, her previous experience having been with the American Arbitration Association. "Throughout the city, I don't think most (casino entertainment buyers) have a performing arts background," Alberti said. To Knauff, that's the problem. "There's very little (understanding)" of the entertainment business, in his view. "That's why you've got a problem between Harrah's and Rod Stewart. The top brass really don't understand the entertainment business. They've had all kinds of experience in buying real estate, building buildings, but they don't have a handle on the entertainment business," and they don't have the in-house experts who could explain it. "They're losing millions of dollars because of that," Knauff added, "but the dollars are hidden." In other words, the casinos are so profitable in every other respect that softness in entertainment revenues would go unnoticed. "It's like they're printing money," Knauff said. "What they don't understand is that the artist is a finite entity," he continued, arguing that the laws of supply and demand tilt the negotiating table in the artist's favor. "They just think they can throw money at it," rather than build relationships, he argued. "The relationships in the entertainment business are even more important than the money. It's amazing how straight the entertainment business is." When Knauff teaches his next entertainment-management course at the University of Montana, Missoula, will the Harrah's/Rod Stewart courtroom clash be on the syllabus? "It's already been gone over many times," he responded. dmckee@lvpress.com | 702-303-5699 x318 |
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