Concert promoter AEG announces significant layoffs, furloughs due to coronavirus fallout
AEG, the parent company of the second-largest concert promoter in America, will significantly cut its staff because of the economic fallout from the COVID-19 pandemic.
In a company-wide memo sent to employees Monday and obtained by The Times, Chief Executive Dan Beckerman wrote, “This global pandemic has disrupted life for everyone, and the shelter-in-place orders, while critical to flatten the curve, have dealt a devastating blow to our businesses. It is clear now that live events with fans will not resume for many months and likely not until sometime in 2021, so we are faced with no easy options.”
The cuts, according to the memo, will include a combination of layoffs, furloughs and salary reductions set to take place July 1.
California is slowly reopening, providing hope that you might soon see your favorite artist in concert. But from an arena stage? A computer screen? A drive-in?
“We have gone to extreme measures to cut costs and preserve jobs. We instituted a 20% across-the-board reduction in salaries, we drastically cut expenses and we eliminated all unnecessary projects, investments and capital expenditures,” Beckerman said. “But we’ve simply never experienced times like these, in which our operations have come to a complete stop due to a force beyond our control.
“Our businesses were among the first to close,” he continued, referring to state-mandated postponements of gatherings, including tours for Justin Bieber and Billie Eilish, “and unfortunately will be among the last to reopen. Despite the drastic measures we’ve taken to avoid staff reductions, unfortunately it is clear that this step is unavoidable.”
Sources inside AEG Presents familiar with the plans said that the exact number and scope of the cuts were still being finalized and that they couldn’t give precise figures.
The L.A.-based firm, founded by Denver billionaire Philip Anschutz (with an estimated worth of close to $12 billion), has close to 30,000 full- and part-time employees and owns a number of high-profile venues, including Staples Center in downtown L.A. and Dignity Health Sports Park in Carson. The company also owns the L.A. Kings and a third of the L.A. Lakers.
Until COVID-19, the concert business had been on a bullish run, according to industry analysts at Pollstar, which had projected $12.2 billion in live revenue for the year. While AEG Presents hasn’t made any formal announcement about the fate of its Coachella Valley Music & Arts Festival, rescheduled for October, few industry experts expect it to go on as planned this year.
“Until this all shakes out, you never know where it will land,” one source inside the company said on background, as the person was not authorized to discuss the plans. “We haven’t had a dollar of revenue in 3 1/2 months, and we did everything we could to keep the company intact. [Other firms] all did this two months ago, and we held on as long as could. The unfortunate part is nobody knows when we’ll be back.”
The source stressed that laid-off workers will receive competitive severance packages and that furloughed workers will continue to receive health coverage.
The cuts will affect all divisions of AEG, not just its concert-specific AEG Presents, which is the parent company of Coachella promoter Goldenvoice. Representatives for AEG, which includes its sports, facilities and real-estate divisions, confirmed the plans for company-wide staff cuts but would not elaborate on exact figures.
In specific regard to its concert business, Jay Marciano, chief executive of AEG Presents, said in his own company-wide memo Monday, “Today’s email is the most difficult one I’ve ever had to write.”
“I don’t think it’s an overstatement to say that, just a few short months ago, nobody in our business or any business could have predicted where we would be today,” he added. “The world has changed with an impact and scope that’s impossible to fathom. I wish I could tell you when it will be safe to reopen. At present, it appears large-scale events — the core of our business — will be the last to reopen.”
Live Nation, the country’s largest promoter and AEG Presents’ main rival, announced in April that it had furloughed 20% of its staff, along with 50% pay cuts for executives. Chief Executive Michael Rapino declined a salary for the remainder of the furlough period. Talent agencies like WME and Paradigm announced deep cuts to staff this spring because of the fallout from COVID-19.
While reopening policies vary from state to state, the return of large gatherings like concerts will be in the final phase of Gov. Gavin Newsom’s four-step reopening plan for California.
“I’d like to drive home one point: nobody should feel like they are responsible, that they could have done something differently, or that they could have better prepared,” Marciano wrote in his memo. “I know this may sound obvious, but in the coming days and weeks please remember, this is not your fault.”