Financially Vulnerable, Independent Music Venues Worry Of Having To Sell

Six months ago, Scott Hammontree's job consisted of long nights spent at his music venue, The Intersection, where, as operating partner, he's been helping to break artists like Eric Church for nearly two decades. But, almost every day since Apr. 24, Hammontree has woken up, picked up the phone or logged on to a video conference app and started calling Washington, advocating for federal relief that could save homegrown businesses like his. As a precinct captain for the National Independent Venue Association (NIVA), he's determined to keep The Intersection's doors from shutting for good. And he's determined to keep his 1,500-capacity club exactly how it's been since it opened in 1972: independent.

"I had zero experience talking to congressmen and senators," Hammontree says. He also oversees two smaller venues in the same complex, Elevation and The Stache, and welcomed artists like Grace Potter and Trampled By Turtles this year at The Intersection before closing. Hammontree is not a super political guy, but it didn't take long for him to spring into socially distanced action. "This isn't a partisan issue. Everyone likes to go to concerts and forget about our problems."

But when Congress left Washington for recess without passing the COVID-19 Relief bill, which includes the Restart Act and the Save Our Stages Act, Hammontree felt "a massive gut punch." His customers, he says, have already bought all the venue-themed shirts they can. He put the company's liquor license into escrow, and went from a staff of 70 people to zero. He never expected, like hundreds of venue owners and workers across the country, to turn from partner and talent buyer to activist, overnight.

It was an essential pivot, though: that federal aid is crucial not only to avoid a mid-pandemic shutter, but to be able to resist the lure of a corporate buyout. "If you're a mom-and-pop business, not a Live Nation or AEG, you only can take on so much debt," he says, "until you can't take it anymore."

It's in that moment of weakness – months and months with no income, both unable to profit or to take a PPP loan – when many independent club owners across the country could resort to another way to keep the lights on: letting large corporate promoters like Live Nation or AEG, or even venture capital (VC) or real estate firms, acquire them. It's even been a main point of concern for Sen. Amy Klobuchar, who co-sponsored the Save Our Stages Act.

But those wheels are already in motion: "We have been approached by many people trying to buy the club and real estate, thinking now is a good time to get a deal on a 'distressed' property," says Robert Mercurio, of the famed 800-capacity New Orleans club Tipitina's – established in 1977, their last show before closing for COVID was the Stooges Brass Band on March 13th. "I'm sure there are a lot of people across the country getting similar offers, and I hate to think about the ones that are being sold and what will happen to those places and what the future of historic venues look like if help doesn't come. As one of them said to us, 'everything is now for sale.' "

And maybe it doesn't have to be. As NIVA argues, federal intervention is the key to keeping these venues afloat until the virus is under enough control to allow for live music. It could stave off private equity firms and local real estate entities, which are reportedly scouting out clubs like Tipitina's and Exit/In in New Orleans and Nashville, respectively. At Exit/In, a club that has hosted everyone from Sharon Jones to R.E.M. since its inception in 1971, owner Chris Cobb has, like Hammontree, transitioned from a guy who spends his life immersed in live music to one fully focused on "survival efforts" in order to avoid closing, or having to accept a corporate buyout. His goal is to generate about $5,000 a month – with monthly overhead at about $20,000.

"We measure our success," he says, by whether "we are only [$15,000] in debt that month."

In addition to the sheer financial losses felt daily, these independent owners have taken out their own lines of credit — in some cases, against their own homes and property — making a buyout offer all the more tempting. After all, it's hard to blame someone for seeking relief when it's possible that they could lose everything, even beyond their business, without federal aid. Personal assets for loans are personal assets to be seized without that intervention – a terrifying possibility.

"We don't make a ton of money, and we do it because it's what we love," says Liz Tallent of Asheville, N.C.'s 1,050-capacity club the Orange Peel, which opened in 2002 and has become a beloved local institution in the time since. Their last concert before closing for COVID was the Silversun Pickups, and Tallent recalls that the sold-out show only scanned 65-75% of tickets at the door due to initial concerns about the virus, she believes. "For us, our great hope and desire is to be able to maintain independence."

It would be "like Costco taking over a great local restaurant" if corporate owners acquire beloved independent establishments, says Margo Price, an artist who developed her sound and fan base at local clubs across her hometown of Nashville and beyond, working her way from small, beloved rooms like The 5 Spot to three sold-out nights at the Ryman Auditorium. She loves her scene so much that she livestreamed her That's How Rumors Get Started release show from the bar and venue Dee's. "I cut my teeth in small clubs and if I wouldn't have been able to, there is no way I could have broken through to the mainstream," she says.

For owners like Hammontree, the reality of anything but independent survival is beyond what he wants to ponder. "I try not to think about it because it's a chilling thought," he says. "I'm absolutely quite concerned that is what the other side of the pandemic looks like, and I don't think I am alone in stating that a couple of big corporations or people who are driven by numbers and the bottom line are not the best people to be in control at the foundational level of live music culture in the United States," he says. "You can't serve artists and fans if money is the main driver. It doesn't work. I would hate to see the homogenization of live music."

Says the Nashville-based artist Michaela Anne, who came up through New York's clubs before migrating south, "I don't want to imagine a world where these unique, individualized small spaces with different characters for their owners who maybe run sound themselves on certain nights are homogenized and corporatized, focusing on profit out of necessity over person-to-person connection, music and passion."

That homogenization is what Nashville-based singer-songwriter Will Hoge compares to the corporatization of radio in the wake of the Telecommunications Act, where the bathrooms might be cleaner and the bar food upgraded, but the character and independent tastemaking of a venue all but disappear. "Corporate promoters and VC folks coming in to purchase our indie venues will lead to the exact same thing in the touring world right down to the club level," he says. "These venues and the relationships that you build through decades of touring are the bricks that this whole business is built on. It's the life blood of artists both old and new."

Independent clubs are where the bulk of artists, like Hoge, Anne and Price, save for the odd TikTok or YouTube breakthrough, get their start. Early in their careers, before they have powerful booking agencies or promoter relationships, those owners are the people who take a chance knowing full well their rooms might not be filled – it's a gamble, based on quality. "What chance does a developing artist have connecting with someone that is not willing to take as many risks?" says the artist S.G. Goodman, who started out in spaces like Terrapin Station in Murray, Ky. "I booked my own shows for nine years before I had an agent."

They also "play a vital role in nurturing emerging talent, often supporting a more diverse range of genres beyond mainstream pop and rock," adds Doug Hall, founder of music PR company Big Feat, who watched firsthand as his clients, like Goodman and Grammy-nominee Yola, benefitted from these clubs and their bookers. These venues are often able to side with promise over profit, and also often provide a safer, more inclusive space for queer, Black, indigenous and artists of color.

"The existence of independent venues is vital to the continued growth of multi-genre musical diversity. Local underground music scenes flourish in the independent venues," says Stormy Shepherd of Leave Home Booking, who is also a co-founder of NITO, the non-profit National Independent Talent Organization, which represents independent agents and managers. "These artists and their fans found their first home in the independent venues, who are seemingly more willing to take risks when it comes to booking young, boundary-pushing artists. They are also the first to take calls from independent agents who represent many of these artists, forming a very integral symbiotic relationship in the realm of live touring." That ecosystem, Shepherd says, is at the core of keeping the music industry both thriving and diverse.

"A lot of these mom-and-pop clubs have been declining buyout offers for decades," says BJ Barham, of the band American Aquarium. "Now, when all of their resources have been exhausted and next month's overhead is creeping up on them, these clubs will have two choices. Close down or sell out – go into business with the bigger promoters. These larger promoters and VC firms are operating with unlimited resources and are the kind of folks that can afford to wait out the storm. They will chalk up the lost revenue and continued overhead as a mere business expense and continue moving forward. Without a doubt, we will see some of our favorite clubs turned into rock-and-roll Applebees' on the other side of this thing. A big-box shell of its former self, using a storied history to line the walls and sell more overpriced souvenir T-shirts."

This trend is not new – venues like Asbury Lanes have been criticized for accepting buyouts and morphing into more cartoonish or polished versions of their former selves. But even if those promoters do retain some of the original venue's character, it can put a monopolistic strain on the market. "Once the larger promoters have bought out the competition, bands like us have two options," says Barham. "Play the best room in town, no matter the ownership, or don't play the market at all. It really ties our hands as artists."

"I'm not necessarily here to further demonize the big conglomerates, as they have their purpose and we certainly have a good rapport with some of them," says Patterson Hood of The DBTs. "However, there was already a delicate balance in place between the big companies and the indies, especially in the size rooms [1000-2500 capacity] we tended to play . The indies fill a role that profit margins and corporate needs would prohibit."

It also puts corporate promoters in prime positions, once live music begins again en masse, to use their leverage to increase ticket prices. Sen. Klobuchar was a major backer of the Department of Justice's Live Nation investigation and a vocal critic of the company's merger with Ticketmaster. "Americans purchase millions of tickets each year and shouldn't be forced to pay sky-high prices because of unchecked consolidation in a broken ticketing industry," she tweeted in 2019. "I've called for accountability and I'm glad it's happening."

It's been a rough few months for Live Nation, financially and from a public relations perspective – a memo obtained by Rolling Stone detailed changes to artist guarantees and other booking processes that were highly criticized for being unfair, and the company posted a loss of $431.9 million in the second quarter of 2020. But they also recently secured some changes to their debt covenants, which will provide, as CEO Michael Rapino stated in a recent press release, "financial flexibility" through the pandemic.

"Like most necessary things, once they are too large they almost immediately outgrow their use to a community and only function towards a bottom line," says Ben Swank, co-owner of Third Man Records, alongside Jack White. Since opening in Nashville, Third Man has worked hard to create a symbiosis with the city beyond simple retail or live music, and Swank even met his wife, musician Jemina Pearl, at local club The End. Their venue, The Blue Room, hosted Billie Eilish late last year.

"Once you serve the dollar instead of the people, you are useless," he says. "This is just a newly evolved form of disaster capitalism. Independent venues wouldn't sell out to a national conglomerate before? Well how about after six months of hardship? They are taking advantage of a s****y situation in order to grow their wealth, and it is in no way about the love of music, or musicians, or the people who support them. It's cynical and it's honestly heartbreaking to consider a world where the local music community isn't in a position to serve itself."

There's also concern that acquisition could lead to closure. "What worries me about big companies buying out smaller venues is that they will shutter them," says Kendell Marvel. "If a company has two live venues in town that compete against each other, it will be a problem. Look what the Walmart did to mom-and-pop businesses. Without indie clubs, guys like me probably wouldn't exist."

Not everyone sees the threat of buyout as a total negative. Beyond federal aid, some speculate that the key to getting out of this perilous state might just be innovation – or intervention beyond the hand of government. "The independent venues have incredible character and personalities, as they've been nurtured by creative entrepreneurs and professionals," says John Petrocelli, CEO of live-streaming company Bulldog DM. "Hopefully they will be able to maintain their independence, but the data suggests that 90% of them will not survive without some kind of relief. Corporate ownership or investing can change the spirit of the entity but there is also the possibility for backers to allow entrepreneurs to continue to flourish while maintaining their brand."

Jason Miller, who was until recently a senior vice president at Live Nation, hopes for a more unconventional kind of investor. "My heart goes out to independent venues," he says. "If someone has big pockets, they have to come in and save these clubs. It could be Jeff Bezos, Spotify."

The idea of an Amazon-themed "independent" music venue might be more than most artists could stomach, but it doesn't stop some from mulling the possibilities of who could step up to the plate in absence of federal aid, and not in an outright purchase, but as an investment in the future of music.

"I think that it would be in the best interests of corporate entities like Spotify or Amazon — who rely on the well-being and health of artists for their streaming platforms to even exist — to step in and help foot the bill in keeping smaller independent venues alive," says Jessica Dobson of Deep Sea Diver. "Major corporations have the revenue to be able to step in and provide a leg up for these venues — and could be in their own interest — as it could present a new narrative about their role in keeping the arts alive and healthy."

Whether or not that outcome is anything within the realm of possibility is yet to be seen, but Tipitina's Mercurio does see one silver lining to the crisis: "I feel like all of the venues have become closer together throughout all of this," he says. "We are usually in a more competitive situation, but now more than ever, we are in the same boat."

The same boat of wanting to hang on to their independence and ability to sail through the pandemic without having to close for good or give up ownership. The difference? That federal aid.

"It cannot wait any longer," says Audrey Fix Schaefer, director of communications for NIVA. "We need them to act now." She encourages anyone concerned to go to SaveOurStages.com to let their elected officials know they want them to support the Save Our Stages Act, to buy gift cards from favorite venues and to decline to take a refund on cancelled shows if they're financially able.

"Independent venues are where every band gets its start," says Mercurio. "These are the spaces that foster the rock stars of the future."

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