Private Equity Eats the Ticket Business!

Hi!

Happy Holidays! 

Don’t miss “First Wednesdays with Dave” on January 3rd when we discuss getting 2024 off to a solid start. 

I’m sure we will hit on some strategy, branding, and marketing ideas. Plus, a Q&A.

To the Tickets!

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Tim Chambers looks at the business of tickets and the PE model:

I love this kind of analysis because it always sparks something for me. 

Tim does a great job of laying out the situation and giving an explainer on the whole thing. 

A few things that pop to mind for me:

• Charlie Munger wasn’t a fan of EBITDA. 
• EBIT probably falls into the same category.
  • The idea that the cost of taxes and interest don’t matter is absurd. 
  • “Stripped of variable factors”. Sounds like a shell game.
  • It is crazy to think that an expense isn’t an expense from an accounting POV just because it isn’t a typical or consistent expense seems nuts.
    • I mean, if your business can’t handle a disruption or variable expense: is it healthy?
    • When have things gone 100% to plan in any situation? 
• PE model is likely reaching a point where it is going to break as well.
  • If I were teaching it in a strategy class, I’d say that we are reaching the end of the ability to support the extraction economy.
    • Why?
      • 51% of American families are “cashflow negative”.
        • In English: “They spend more than they make.”
      • $1T in US credit card debt.
        • 65% of UK households have credit card debt.
          • 16% have missed a payment. 
          • 15% have borrowed money to pay their household bills. 
        • 3M Australians have used credit card debt to fill in the gap in their cost of living.

You often write to me when I share numbers, so I have a few more:

• Since 2019, the cost of living has grown 19% in the United States.
  • Wages have gone up, but they haven’t really outpaced prices meaning folks don’t really feel it. 
• In the United Kingdom, the cost of living has jumped even more: 27% between 2021 and 2022.
  • Wages are finally outpacing inflation, but it took two years for that to happen…meaning people have felt like they were in a hole they couldn’t escape for a long time! 

What does all of this mean for folks trying to sell tickets?

• There has been a lot of calls for change in the industry:
  • As Tim points out, we’ve hit a point of monopsony: for talent, this means that they can’t shop their tours and events very widely.
    • This drives up prices on both sides. 
  • Without clarity in these calls for change are likely irrelevant. 

To help sell more tickets, a few lessons:

• You need to reach a bigger audience.
  • 20% of your customers are “heavy” buyers. 
  • 80% of your customers are “light” or occasional buyers.
    • These “light” buyers are incredibly powerful. You need more of them. 
• Elevate the perception of value for your events.
  • People are still spending on special events like Taylor Swift, Beyonce, or ‘Hamilton’.
    • This doesn’t happen by chance, it is brand management. 
• Don’t discount!
  • There is a cost of commodification that is even more pronounced now.
    • Your brand equity gets undermined.
    • The perception of your brand is eroded. 
    • The quality of your shows seems lower.
    • It costs you a ton of money. You lose 10%+ for every 1% you discount. 

Does this matter only to the people involved in technology?

No.

This idea matters to everyone.

Do you see any of this in your numbers? Are you even looking at your numbers right now?

Or, is there a different story that I am missing?

Let me know.

Reply to this email. 

DM me.

Or, chat with over 300 of us in the ‘Talking Tickets’ Slack Channel.

Dave!

PS. You’ve made it here…so I know you like the newsletter, give me a little holiday cheer by sharing this with one person that you know that would benefit from this kind of analysis. 

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