In 1997, the rock concert industry had its second biggest year ever with $1.3 billion in revenue generated by such major acts as the Rolling Stones, U2, Fleetwood Mac, Metallica and Garth Brooks. That total was surpassed only by the $1.4 billion generated in 1994 concerts, when the Stones, Pink Floyd, Eagles, Barbra Streisand and Grateful Dead were touring.
But the road is not entirely paved with gold in the ’90s. Though more successful than ever, the concert industry has never been a bigger target for consumer skepticism. Performers now routinely demand huge guarantees, which in turn has driven up ticket prices. Even as recently as 1990, the $30 concert ticket was considered a rarity. But now performers such as the Eagles and Streisand have broken the $100 barrier, and it’s not unusual for a major rock act such as the Stones, Pink Floyd or U2 to set prices at more than $50.
What’s more, the demand for high-profile entertainment events, whether it be the Chicago Bulls or the Stones, has made quality seats increasingly difficult to obtain. The convenience and access provided by services such as Ticketmaster has brought with it service fees that add as much as 25 percent to the price of a concert ticket. With brokers allowed to operate in Illinois and resell tickets at whatever the market will bear, the cost of a prime seat at a rock concert has never been greater.
Nor has the risk of putting on a rock concert. What was once a business spread among 100 entrepreneurs nationwide has become one dominated by two dozen major corporations with operations in several states. Among those giants is Jam
Productions Ltd., which Jerry Mickelson and Arny Granat formed out of the North Side apartment they shared in 1972. Since then, they have promoted 15,000 events across the country for more than 78 million people and generated gross revenue of $1.5 billion. Last year alone they put on 1,334 shows for 3.5 million people that generated $100.9 million in gross sales.
Little wonder that Jam has become synonymous with the concert industry in Chicago. It stages events ranging from progressive country shows at the 100-capacity Schubas to rock spectacles at the 50,000-seat Soldier Field. It is part-owner of one of North America’s biggest amphitheaters, the 30,000-capacity New World Music Theatre in Tinley Park, where it has staged hundreds of concerts since its opening in 1990.
Now in its 26th year, the Jam empire has spread throughout the Midwest and includes cities from San Francisco to Washington, D.C. Mickelson, 46, and Granat, 49, have become players in the theater business and are now broadcasting concerts over the Internet in conjunction with MTV. They are two of the most powerful men in the business, but they also may be among the least understood because, like most promoters, they prefer to stay in the background. As such, public perceptions of concert promoters are rarely favorable; they tend to get blamed for everything from high ticket prices to bad sound.
“We’re supposed to be `fat cats,’ ” Granat says with a rueful chuckle. “But you show the risks verses the rewards of what we do to most businessmen and they’d say we’re nuts. What we’ve made, we’ve earned. I’d like to set the record straight on that one.”
Recently, he and Mickelson agreed to set the record straight on a number of issues affecting concertgoers in a rare, wide-ranging interview at the three-story Jam Productions office building they own in Old Town.
Tribune–The two biggest gripes concertgoers have are that they have trouble getting access to the best seats and that not only are ticket prices steep, they’re deceptive, because of the service charges that are added to them. Both complaints point directly at Ticketmaster, the agency that handles your ticket sales. The scuttlebutt is that the reason Ticketmaster fees are so high is because it’s another source of income for promoters like yourselves, a way to make money that the bands and agents can’t tap into.
Mickelson–That’s a fallacy. We don’t control most of the venues we do shows in, so we don’t get any of the Ticketmaster money. We’re not in control. We wish we were. Most of the Ticketmaster deals are with the buildings themselves. Ticketmaster provides a service that’s expensive. I’m not saying that to defend them. I’m saying that as a businessman, and I understand the costs involved in running a business . . .
Tribune–So you’re saying you don’t make any money on Ticketmaster sales?
Mickelson–On most of them, no.
Tribune–The venues are making the money?
Mickelson–I’m not saying it’s the venues. I’m saying it’s the cost of doing business that keeps Ticketmaster prices going up. Everything has gone up in the entertainment business. A movie ticket has gone up.
Tribune–How much control does an act have over Ticketmaster fees? Can’t it negotiate a lower price like Green Day did a few years ago?
Mickelson–The bands don’t have any control. They don’t have the clout. We don’t have any clout, and they’re tickets to our shows. But the venues control the tickets.
Tribune–The $30 concert ticket was once taboo. Why have tickets shot past $30 for big shows?
Mickelson–The bands want more. And scalpers are a fact of the business. A lot of the people in the first 10 rows get the tickets from scalpers, who charge $100, $200, $500 a ticket. The bands are now saying they may as well charge the money rather than the scalpers getting it.
Tribune–By scalpers you mean ticket brokers, who operate legally in Illinois. What can be done to make the system more equitable for concertgoers?
Mickelson–We tried a few years ago to get a bill passed to outlaw them. We got the sports teams, the theatrical organizations involved and a bill was passed in the General Assembly, but six months later the scalpers got it reversed. They’re a powerful lobby group.
Tribune–With prices going up for entertainment of all kinds, when are consumers just going to say “enough” and stop coming?
Mickelson–Who knows? If a show is hot, if demand is there, people will pay. But there’s also a saying, I think it was PT Barnum: “If they don’t want to come, you can’t stop ’em.”
Tribune–So who gets those prime seats at the Stones show and why? Is it all the scalpers’ fault?
Mickelson–A lot of it is.
Granat–A lot depends on the act and whether they care or not.
Mickelson–Look what Prince did to keep the scalpers away. He instituted a lottery system and it worked.
Tribune–Why not do that with all the big shows?
Mickelson–You could do it. It’s a lot of work, and it costs more for everyone. It’s fairer to the fans but they will probably pay more for it.
Granat–Somehow, some way those tickets still end up in scalpers’ hands. Not as many, but a few of them. But we always hear: “I was fourth in line. How come I didn’t get a front row seat?” And we always try to explain there are only so many front row seats. And there are 150, 180 outlets and all the phone lines, and there are only 30 seats in the front row. Even with a four-ticket limit, that’s seven people, and those seats are gone like that (snaps fingers). Jam does not hold those front row seats. The demand is greater than we have the ability to sell. It’s not like some plan to make life difficult for people. The only problem is that an act is so hot that too many people want to see it.
Tribune–Is it right for a band like the Eagles to charge $100 for a ticket?
Granat–It is if the market will bear it.
Mickelson–Your first reaction is “no fair.” But when you think about it, you realize that people are paying scalpers those kinds of prices for a top act. May as well let the band and us get the money.
Tribune–Your attitude is, If the band can get that amount of money, they should charge it?
Mickelson–Our attitude is that we have to figure out a way to pay the band, and the band asks for a certain guarantee. So then we have to go backward and figure out how to scale the price of the house to pay them back that guarantee.
Tribune–So the Eagles come to you and say we want to make “X” amount of dollars, and they leave it up to you to set the ticket price?
Mickelson–Yes. But they also have a price in mind that they will go up to, but not over. $30 and that’s it. Or $50, or $100.
Granat–There are bands who make less money than they could because they want to keep ticket prices down.
Tribune–Examples?
Granat–Garth Brooks. Pearl Jam.
Tribune–They could still sell out and charge $10 more a ticket?
Granat–Yes.
Tribune–So those kinds of bands do exist. But the vast majority say, “We want the money, we don’t care how we get it?”
Mickelson–Most bands do care. There are plenty of big bands who don’t want to charge a high ticket.
Tribune–You’ve had a lot of competitors come through town in recent years. Clubs like Cubby Bear, China Club and now House of Blues. What impact has House of Blues had?
Granat–They pay the acts a lot of money, more than they can justify with that amount of seating.
Mickelson–We don’t mind competition. It’s actually good for us. We don’t mind it at all. Because it shows how good we really are. We haven’t given up that much. Sixty percent, 70 percent, 80 percent of their acts we don’t care about. Any act we really want, we usually get.
Tribune–But in bidding to get Steve Winwood away from House of Blues to play three nights at Park West recently, you had to pay him $30,000 a night. Which meant that even if you sold out all the shows, you barely broke even. You won, but you lost in a way. Is that worth it to you just to keep a competitor from getting the act?
Granat–In that case you’re right. We did pay a lot of money. We didn’t get rich off it. What it did for us is show we could do that kind of act in a smaller venue like Park West, have an audience pay that kind of money and enjoy the show. So in that respect it was a success.
Tribune–What about when Moby plays House of Blues after playing a bunch of Jam-sponsored shows at clubs like Metro? What are the consequences for an act like that the next time he comes to Chicago and wants to play a bigger venue and work with you?
Mickelson–If we feel an act is worth it, we’d do it. That’s the only way we make a decision. It’s all based on what we think they can draw.
Tribune–Do you ever hold a grudge?
Granat–No.
Tribune–Your competitors have described you as ruthless when negotiating for an act.
Mickelson–I wouldn’t say ruthless. I would say we’re tough, that we fight to the last drop of blood. It’s war. We’ll do everything we have to do that’s legal.
Granat–Otherwise we’re not in business anymore. Somebody gets in the ring and swings at us. Do you let them hit you or do you fight back?
Mickelson–It’s not like the supply of talent is limitless. There are a finite number of acts, and it comes down to, “Is it gonna be me or you?”
Tribune–You don’t do a lot of hip-hop and R&B shows, even though those genres are dominating the pop charts. How come?
Mickelson–They have to be able to sell concert tickets.
Granat–A lot of the acts don’t have a touring history. Potentially they’re not as good live. They put out a hit single, but it doesn’t mean anything when you perform for an hour and have to hold an audience.
Tribune–Isn’t that like saying a band is no good live because they never get the chance to perform live?
Granat–No, I’m just saying album sales don’t always relate to ticket sales. If you hit your head against the wall enough times with a certain of kind of show, you stop.
Mickelson–It’s like folk music. It used to be big. Now it’s not. We don’t do many folk shows. Jazz, we used to be able to sell Chick Corea, Weather Report, Pat Metheny at 4,000 to 5,000 tickets. Now we can’t do that. It’s not like we’re picking on any particular genre. It depends on their ability to create demand and sell tickets. And if it’s not there, we’d rather not do the show and lose the money.
Tribune–My guess would be that the World has been a bit of a disappointment to you.
Mickelson–Why would you say that?
Tribune–It was the final stepping stone for the acts you developed over the years, the big payoff in your investment in these bands, but the competition between the World and Poplar Creek became so intense neither of you were making any money. Now the Nederlander Group has closed Poplar Creek and you’ve joined forces with them to run the World, but you’re doing fewer shows.
Granat–The World has been very positive for us. Of course, there are things that we would have done differently. The economic feasibility of having two venues proved to be something that wasn’t working out.
Mickelson–We’re doing 30 to 35 shows each summer, even though there are 50 or 60 that are offered to us. A lot of times now we choose not do a show, whereas when Poplar was in business most of those shows would play the area.
Tribune–The World is also considered a venue with poor sound and sight lines. Would you redesign it if you could?
Mickelson–I don’t think it’s got bad sound. When I go to a show I don’t hear bad sound.
Granat–We’ve been hearing this question for 25 years. We’ve had the Aragon for that long. You go to the big arenas, you get comments that the sound is bad. The larger the venue, the harder it is to have every show sound the way people want it to sound. A lot depends on the people who mix the sound of the bands. A lot of bands have their own sound people, and they can make a big difference–good or bad. We’ve done things to improve the sound at the World with monitors and sloping the hills, but you can only do so much.
Mickelson–How can you say it’s bad sound?
Tribune–I walk around the place in the middle of a show and unless you’re in the center section there’s a lot of echo. It sounds considerably less punchy and clear on the sides. It has less presence on the lawn.
Mickelson–I don’t care what the venue is, anytime you’re on the side it’s not going to sound as good as when you’re in the middle.
Granat–Two acts can go into the World, and one may sound better than the other. It doesn’t mean the venue made the band sound bad. It’s not always a function of the venue.
Tribune–Has crowd safety become a greater concern with the rise of the mosh pits and crowd surfing becoming an almost nightly ritual?
Mickelson–It’s not a bigger problem. It’s like when people used to light lighters at the end of shows. Surfing is a phase like that one. This is a voluntary activity in which kids are a willing participant. It doesn’t make us happy. The only way to stop it is to remove every person on the main floor.
Tribune–Does it require more security?
Mickelson–Not necessarily more, but different ways to do it with positioning barricades.
Tribune–Are there more injuries at concerts because of this?
Mickelson–We’ve been told by our insurance company that we have the best safety record in the country. We have fewer incidents than anybody else. We do everything we can to warn people against doing this. We put signs up and warnings on the tickets.
Tribune–So a kid is surfing despite what the signs say, and he lands in the clutches of a security guard. What happens to the kid?
Mickelson–One of two things. Security can throw him out, or the kid says, “I’ll never do it again,” and the guard gives him a second chance.
Tribune–You leave it up to the guard’s discretion?
Mickelson: Yeah. It also depends on the kind of show, the kind of band, the attitude of the kid. We can’t always be that kid’s parents. We do what’s best for the people at the show who are obeying the rules.
Tribune–You’ve said if you had to do it all over again, you wouldn’t get into this business. Why?
Mickelson–The business has changed. The risk-reward ratio has gotten worse for us. Higher risk, lower reward. We have to reinvent ourselves, and we’re in the process of doing it.
Tribune–How?
Mickelson–We can’t just do concerts anymore. We have to do theatrical events–we do 300 a year, out of 1,500 events we put on. The Jam-TV Internet venture with MTV. We have to spread ourselves out, not have all our eggs in one basket.
Tribune–When did the business change to where it became less fun?
Mickelson–Ten years after we started. Bands started to take a larger chunk of the gate. That reduced what we could make.
Granat–It’s like with sports–a lot of financial people got into the mix. It’s like we’re not supposed to make money because they say whatever is on the table should go to the artist. But we feel if we put up the money we expect some reward.
Tribune–Give me an example of how the risk-reward ratio has changed with some veteran bands you worked with over the years.
Mickelson–Let’s just say that the band that could sell out the Rosemont Horizon or the United Center, that band would have gotten a $25,000 guarantee back when we started. Granted, ticket prices were $10, $12. But today that same band is getting somewhere between $250,000 and $500,000 for a guarantee. To break even when we started out, we needed to sell 60 percent to 65 percent of capacity. Now we need to do 80 percent to 85 percent . . .
Tribune–What’s the most you lost on a show?
Mickelson–I still remember losing a quarter-million on a concert at Comiskey Park in 1978. And we lost $200,000 on a show at the World a few years ago.
Tribune–Name some names.
Mickelson–(laughs)
Tribune–You look at the big concerts in recent years and most of those–the Stones, Pink Floyd, the Dead, Eagles, Fleetwood Mac–are acts from an older generation. Is the concert industry facing a crisis where not enough big bands are coming up to sustain it at the present level into the next century?
Mickelson–We’re rooting for a bunch of bands to break through.
Granat–It goes through peaks and valleys. There were a few acts in recent years like the Smashing Pumpkins, Pearl Jam, who went up to that arena level. But there haven’t been as many as there used to be.
