Patrick Ryan - Eventellect

Patrick Ryan:        Hey, what's up, Lawrence?

Lawrence Peryer:  Hey, Patrick.  How are you?

PR:                        Oh, you know, all things considered, doing OK.

LP:                        Yeah, yeah.  I'm not gonna ask you too many questions before we start talking.  Are you getting an echo?

PR:                        Not really.

LP:                        OK.  I am.

PR:                        Are you getting one from me?

LP:                        Actually – OK, it's all right.  I was just getting my [unintelligible 00:00:26] for a second there.  So I'm gonna start, and then I'll be more polite at the end.

PR:                        OK, great.

LP:                        Thank you for making time.  First and foremost, how are you family [unintelligible 00:00:41]?  Like how are things in your world?

PR:                        You know, everything – Well, you know, it's interesting.  So I'm single, so I live by myself.  And so it's interesting is that last week really wasn't [unintelligible 00:00:55] week for me, on weeks that I'm not traveling.  So that's what's been unique, is that like, you know, I'm usually traveling 50 percent of the time, so my life usually is like, wake up, go to the office, go home to an empty house.  And I've still been coming into the office.  We haven't formally shut down.  Most are working from home.  But we didn't want to close the office because we've got a pretty young staff, so like, if someone needed snacks or toilet paper or sanitizer, you know, we wanted to be a resource to people.  So we're all doing OK.  I think we're all kind of collectively getting a little antsy around like, testing.  You know, like I was at the Sloan Conference, and a week before, apparently there was a case, and there was a case – someone attended the Sloan Conference.

I went from Sloan in Boston.  I took a plane to D.C., and then I took a train to Philadelphia; then I took a plane to Buffalo, and then I took a plane home.  So I was traveling a lot this time two weeks ago.  So I think we're all just anxious to get tests.

LP:                        Yeah.  Where is home for you?  Where are you guys based?

PR:                        We're based in Houston, which is nice because, you know, it's like three and a half hours to L.A., three and half hours to New York, and then everywhere else in between.

LP:                        Yeah, yeah, I understand what you're saying about the travel change.  I'm usually on the road three days two nights a week, and I was doing that up until – think I got back to Seattle on March 12th, and that felt like I was pushing it a little late.  People were already starting to talk about shutdowns and things like that.  It's a big change, yeah.

PR:                        How are you?  I mean, you're in the one of the epicenters?

LP:                        Yes, it certainly felt more like that 10 days ago.  There was a bit more – I wouldn't say hysteria, but more urgency, and a bit more like a sort of stridency in the communication.  And then it seems like it got – You know, once schools were shut down, and they are shut down now till late April, it got a little quite here, and it started to become news from New York and other places, San Francisco.  But in the last 24 or 48 hours, it's picked back up here.  There's a lot of discussion as to whether there's gonna be a shelter-in-place order.

I think part of the problem is the weather's been beautiful here, unseasonably beautiful.  And it happens this time of year in Seattle.  The weather breaks a little, and just for people's sanity, everybody gets outside.  And so the last – Like I said, the last couple of days, there's been a lot of – the governor and the mayor are both not pleased with [laughs] people milling around, so it might get a little heavier.

The other thing is though it's about to start raining again, so it may take care of itself and drive everybody [unintelligible 00:03:53] –

PR:                        [Laughs] I hear you.

LP:                        Nothing's open [unintelligible 00:03:54].  I mean, other than takeout and grocery stores, it's pretty darn quite, yeah.

So you said your work routine hasn't really been impacted other than the travel?

PR:                        Well, I mean, you know, by routine, it's interesting.  I'm probably having more phone calls than I've had before because there are just – In the sports world, you know, we're dealing with like the MLS started and then how it's been stopped.  The XFL ended their season.  MLB opening day has been delayed.  We don't know what's going on with the NBA or NHL in terms of their playoffs; NFL's schedule release around the corner, so this is generally a very busy time.  So it's busy in that we're like trying to get prepared for some normalcy, but we've also got to prepare for what happens once we finally get formal cancellations.  Just keep in mind, none of the big five leagues have formally canceled anything.  Everything's considered a postponement for now.

LP:                        Yeah.  And so can you explain a little bit what the subtlety is there or the distinction there, in terms of what that means for fans, what that means for your business?

PR:                        Right.  Well, generally, you know, our business, we want to help teams – So taking a step back, we want to help teams sort of fully leverage the power of the single game market.  And when we talk about the single game market, we're really focused on kind of taking down that wall between the primary and secondary.  This day and age, you know, I think about when StubHub emerged, you know, 10, 15 years ago, people would say, oh, that's, you know, a scalper website or a resale website.  You know, people don't use the word "resale" or "scalper" when they're talking about SeatGeek and Gametime and Ticket Master even, or StubHub; it's just a ticket site.  So we want to help our partners have a full view of what the single game business looks like.

We're obviously responsible for [unintelligible 00:05:57] [unintelligible] on the quote unquote secondary market channels.  And so we've built technology and software to help us, you know, really deliver solutions in a way that, you know, successful merchandises tickets across thousands of channels.  And then also, you know, we take risk positions in that inventory.  So, you know, that's where we're a little bit unique, because of the software companies, they're not taking risk positions.  We're a software-enabled business that has a big component of risk management.

So generally, when we're taking risk positions, you know, we're sitting alongside the best interest of the season ticket holder.  So, you know, generally speaking, when an event is canceled, you know, the fan gets a refund.  Now, I think some teams are still kind of wade through the waters of what they want to do long term.  You know, I think some teams are gonna be pretty aggressive about trying to make that refund roll over to the form of a credit, you know, but I think there's other teams that are gonna be like, look, we understand you might not be able to renew with us, so we're gonna, you know, give you the refund you're entitled to.  So there's still a lot to be determined, and nothing can really happen until the leagues formally cancel games and say, hey, you're 80-game baseball package is gonna down to a 70-game package.  That's when the mechanics and the fans' rights are gonna, you know, have to be upheld, and the teams are gonna have to have strategic, you know, communication around it.

So in terms of our business, you know, it's interesting.  Like, there are some events that we own inventory to, because, look, this time of the year for basketball and NHL, we have partners that are completely out of the playoff [unintelligible 00:07:45], so we're literally just losing money on most of those games.  So those games getting canceled is unilaterally, quite frankly, good for us from a financial position.  But we have teams that are fighting for a playoff spot or fighting for playoff positioning, and those tickets are hot.  And so those getting canceled is not good for us.  And obviously, you know, the concept of the playoffs, you know, what's gonna happen when the NHL and NBA be able to have a normal playoff in front of fans?

So, right now, things aren't, you know, devastating to our business because we're in the risk business.  So there are things that are getting taken off our plates that are good to get taken off our plates and then things that we don't want taken off our plates.  So Tom will sort of tell ultimately how it all shapes out.

LP:                        Yeah.  Thank you for that context.  I think when I think about when a business such as yours is helping the teams de-risk, to a certain extent, you know, in parts of their schedule or across their season as portfolio, what seat at the table will you get in the decision-making process, or will you simply execute whatever business rules come down?

PR:                        You know, I mean, I think what's interesting is that we have 70 relationships in the pro sports world across the five major leagues.  And quite frankly, almost every single deal is underwritten and sort of crafted in a unique way based on every team's unique situation.  So as we start kind of wading through this refund to cancel, postponement, credit kind of world, you know, we're gonna take up a one-on-one approach with each partner.  You know, I think where things get interesting and challenging is kind of understanding what the new world is gonna be, because this is really a two-pronged issue, is that, you know, it's got the skittishness of there's gonna be some people who they're just not gonna go back out in the large public gatherings until there's a vaccine and there's proven treatment, right.  So there might be a small percentage of the bucket, but there are people who are gonna just be out of the movie theater business, the sports venue business.  Like, they're just not doing that sort of thing until there's a vaccine in place.

And then the other kind of part of the equation is the economy, you know.  When we have seen like the last recession, which was around the time the secondary market really growing.  You know, I mean, I think I see the secondary market today being labeled as like a $12 billion a year business.  You know, during the last recession, it was a billion-dollar business more or less.  And when teams – You know, when fans were sort of walking away from their ticket packages in 2009, the broker appetite was at an all-time high to add inventory.  So, to a large extent, teams didn't see the dip that they maybe normally would have expected to see because there was all this emerging distribution and all this, you know, merging appetite for inventory.  But, you know, now the markets are kind of saturated.  So, you know, dumping on secondary, the way it happened in 2009, is not gonna be a viable option.

So it's gonna be a matter of teams kind of resetting their business from – You know, a lot of teams have needed to do this [unintelligible 00:11:14], just take a step back and say, OK, maybe we're not selling enough group tickets, or maybe we're not making enough bundled offers, you know.  And when I say bundled offers, like, hey, with this ticket comes a t-shirt plus $25 in S&B, right.  So I think teams are gonna – You know, people have talked about the deaths of the season ticket for years now.  And we definitely don't believe that the season ticket's gonna die, but I think it's gonna have to evolve, and I think that what we're gonna be dealing with in terms of the economy sort of getting reset is teams are gonna have to take a fresh look at, you know, their overall ticket marketing strategy.

LP:                        Yeah.  Well, to think about risk and opportunity a little bit more for a minute, it sounds like there is an opportunity in the lessening of risk for you in some of these positions that were sort of question marks because of the way the season runs out.  So I totally get that; you get to sort of – you get to lighten that part of the portfolio.  But is there a more positive view you have of the opportunities?  Is there an opportunity to acquire inventory for pennies on the dollar, you know, some kind of futures business that you can be in?  How are you thinking about opportunity, or is it too soon [unintelligible 00:12:28]?

PR:                        Yeah, I mean, I think it's a little too soon.  And the reason it's still a little too soon is that, you know, we're still having conversations with sports properties.  And they're using the term "business as usual," right.  And so think about fall sports.  Like, think about football.  We have, you know, partners both in the college space and the NFL space who don't really think that this is gonna impact them, because, oh, it'll – you know, things will be cleaned up, and you know, stadiums will be safe again by the time we kick off.  And well, that might be fine and true.  We don't know the long-term financial impact of what's going on.

And if you look specifically at football products, you know, the upper deck has just become not viable for a lot of fans.  And so we think that a lot of football stadiums, they need to reimagine their upper deck product.  Because with the advent of HG television 10 years ago, you know, no one really wants to hoof it up to the last three rolls to the stadium any longer, right, like, you know, outside of a few markets, Seattle being one, and there's a handful of others, you know, and just like, why am I up here?  Like, this is just sort of ridiculous.

But if teams take a step back and say, look, you know what?  We're not gonna sell season tickets in the upper deck outside of the first 10 rows, and then the rest of the upper deck we're gonna turn into a GA, you know, first come, first served, and it's gonna be a 20-dollar ticket, you know, the teams that get ahead of being proactively realistic about the value of some of their inventory.  And a lot of times that inventory was already distressed.  It's just that it was kind of getting covered up, because, you know, we would step in and say, yeah, we can buy 4,000 upper deck season tickets; we also need 4,000 Mower Bowl season ticket, right.  So if teams take a step back and then just realize that there might be some creative solutions to making the products more viable to begin with, which needed to happen probably five, ten years ago, I mean, I think there's some real opportunity to sit side by side with our partners and innovate.

And then once people have, you know, realistic expectations, then yeah.  I mean, you know, we'll want to obviously take care of all of our current contractual obligations and not do anything to jeopardize our position to fulfill our obligations.  But, yeah, there is gonna be some opportunity because, you know, there's three – I've got two business partners, just the three of us.  We don't have a bank financing us.  Every year we've been in business we've made money, so you know, we have a strong balance sheet.  So we just want to be stewards of that balance sheet, and yeah, looking at some interesting deals can be a part of that for sure.

LP:                        Yeah.  What's the issue you can address here, if you're comfortable addressing it?  What's the scale or scope of your operations?  How many employees?  How many offices?

PR:                        Yeah, so, you know, we've got 35 team members.  And in 2019 and 2018, we managed about $300 millions of inventory a year.  You know, most of that inventory, we were at risk on.  But, you know, some of our deals have involved to be a little bit more creative, where, you know, we're kind of taking a pool risk look at things, where we take a look at a team's, you know, overall business.  And rather than just taking risk in the secondary market, we're taking risk in, you know, their primary market or their overall ticketing business.  So that revenue number is a little bit kind of just deceptive based on how we're sort of modeling out risk now.  But, you know, back-to-back years of handling seven million tickets in any given year, so we sell more tickets than any single professional sports entity.  And we're doing that across 70 teams.  We do have a relationship with some entertainment companies, a couple of festival companies and then a couple of family entertainment companies.  So we've got a little bit of diversification on that end.

You know, of our – It's interesting.  So with our staff, you know, we have 14 people on the software and science side of the house, so kind of, you know, building out our platform, making it more efficient, fine-tuning our pricing algorithms.  Quite frankly, the slowdown has been good for them because they've been able to get caught up and get ahead of some pretty important projects because they're not disrupted with the day-to-days of maintaining our software platform.  And the rest of business were still active because we're generally customer – on the teams either customer-focused, or they're marketplace-focused.  So our relationships of the marketplace are very, very important, and so, you know, we're just in constant communication with all of our partners and all the marketplaces.

LP:                        Is there a consistent fear or sort of mega concern you're hearing from the commercial side, you know, from the marketplace where all of – You know, is there a doomsday scenario?

PR:                        I don't know if there is a doomsday scenario because, again, some of these marketplaces are super well-capitalized, and they're in good positions to where they're probably like licking their chops, waiting for a couple to fall out.  I mean, look, at the end of the day, there are gonna be – there's gonna be, you know, without – barring this gets resolved in the next 10 days or something, there's gonna be marketplace bankruptcies, at least one from a – at least one.  You know, so, again, we could potentially lose distribution, right.  Like, some of the apps and some of the marketplaces are uniquely sticky.  And a lot of people do rely on some of these marketplaces to kind of be their social calendar.

So [unintelligible 00:18:21] – So we could see some, you know, real [unintelligible], not significant, but like there's people who like, they don't think of going to things, but they get a notification on their phone saying, "Hey, there's a baseball game Friday night.  You know, tickets start at 12 bucks."  You know, that can be incremental, so, you know, we're not really thrilled to see that happen.  So, you know, who knows how those marketplaces sort of play out.

I mean, I will say that generally speaking, some of the marketplaces are still too depending on Google ad words.  [Unintelligible00:18:56] Google is still surprised by the lack of consolidation in the marketplace business.  So, you know, I think there's a very real chance that we can see some consolidation, which might – That's probably the best thing.  So like as long – if these apps can stay up and running, and their marketing engines can stay up and running after consolidating their ad stand, there could be some real efficiencies gained.  You know, so, I mean, what – to put it in perspective, I mean, some [unintelligible 00:19:23] gets lost, you know, and this whole scope of things is – the final four, plus all the March Madness tournaments, I would say it's basically about a $60 million piece of resale business, which means the fee revenue collected is about $15 million.

So whether you are a huge marketplace, like StubHub, and they probably have 30 to 50 percent of that market share, maybe even hire, or you are a smaller player, and you only had five percent market share, you had a line item for fee revenue from March Madness.  And that line item is now zero.  That's tough.  Like, that's where the marketplaces are a little bit vulnerable, is that, you know, if there's events that like, we will be thrilled if they get canceled because were gonna just lose money on them, right.  But the marketplaces, because they're in the fee business, they are just making fees whether the event's hot or the event's cold, and so they're starting to kind of miss some opportunity, which is less than ideal.

LP:                        Yeah.  You've talked a lot about sports, and you sort of – you mentioned the other verticals.  And I'm not asking to talk, you know, to just sort of break down your revenue pie, but just how do you feel about – or what would be your commentary on sort of the festival space and family entertainment contrasted to sports?

PR:                        Yeah, well, I mean, I think, you know, looking at basically non-sports arena events, right.  So whether it be family entertainment, 'Cirque du Soleil,' Oprah when she's touring, you know, basically things that are happening in arenas, that sort of touring business has been completely disrupted because the NBA and NHL, they have the first rights to the holds in the buildings they own.  So, they basically just laid down all their holds and like, everything could get completely just rescheduled, or it won't be possible to put that jigsaw back together.

You know, touring and routing is hard to begin with.  And now, when you have a bunch of properties that are just literally blocked every date on the building for the next four months, you can't really do anything.  So I think there's gonna be some fallout from what happens there.  So that's one piece of it.  But we're generally in tune with what's going on it the concert business because, you know, consumer spending is an incident.  So, you know, off – Like, a couple of summers ago, you had Jay Z and Beyonce touring.  You had Taylor Swift touring, and you had Drake touring, and they were all during the summer.  That absolutely impacted people's spending capacities, right.  Like, there are some people that the only concert they go to is Taylor Swift.  And so if Taylor Swift's once every three years, the year that Taylor Swift's touring is gonna impact their discretionary spending for other live entertainment.  So, we try to stay current with pricing trends and sort of, you know, who's hot and where they're going, so, you know, because it's not completely isolated.

The festival world is gonna be an interesting one.  We had seen pricing, you know, really kind of start picking up over the last five years.  So what I think the festivals have unique opportunities around is, you know, if they don't want to step back their pricing because of the recession, they're gonna need to find ways to give value to the fans otherwise.  And so I think that, you know, some of the smart festivals will roll out like to their previous buyers, hey, you know, you've bought previously.  You haven't bought this year.  Here's a unique code.  If you buy with this code, we're gonna load your wristband with $75 of F&B, you know, or $50 of F&B.  So, not necessarily discounting the ticket, but doing something like, well, shoot, I wasn't gonna go, but that basically covers my sandwiches and water for three days of the festival.  That's pretty good value to me as a consumer.

So those who get ahead of this and start thinking about ways to add value to the fans' experience to where it's like, OK, I'm still gonna buy the ticket, and I'm buying the ticket because other aspects of the experience have been provided for me.  I think that's what we're gonna have to see, you know, in the festival space.

The other thing too is that there's gonna be big winners and big losers because [unintelligible 00:24:01] things go live again, anything that's like in that like first sort of pass, like first three weeks basically, I mean, we're like caged animals right now.  You know, so like, the move – we're gonna see lions at the movies, right, like the malls.  I mean, everything is gonna become packed.  So if like someone has a festival and they're able to keep the date within some realistic time period, if that's [unintelligible 00:24:27] than three months of America reopening, they're gonna crush it, you know.  But if it's on the tail end, and it's four months after, you know, who knows.

That being said, you know, like things like the Kentucky Derby got pushed to a new date, on Labor Day, you know.  One hand, like for me, the spring was always hard due to my work scheduled, so I'm actually gonna go to the Derby this year.  I'm gonna go to the Derby because it's at a time that's better for me work wise.  Then also, I want to go to the only Derby that'll ever be over Labor Day.  So, sports bucket list, the Derby opened up their market a little bit.  But now they're competing with opening weekend of college football, right.

Bottle Rock pushed back.  I think Bottle Rock opened up a new market.  I know that's – you guys have a partnership there.  I think that that new date, they're gonna learn a lot.  You know, they're a well-capitalized organization.  They're a really well-run business.  Those guys are smart.  You know, they're probably like, look, even if this isn't ideal, we're gonna learn a lot, because maybe they're find an opportunity just to launch a sister property or a scaled down one, because, again, some dates that work for some people don't work for others, so smart organizations that take a long-term approach.  The Derby's gonna collect some interesting data; Bottle Rock's gonna collect some interesting data, and some things could really emerge from that.

LP:                        I think that's really – that's great insight.  I think you're exactly right.  I think the timing is sort of one vector, and I think the other is, you know, a lot of it's the brand names.  You know, your example of I want to go to the one Kentucky Derby over Labor Day weekend, or I wanted to go to Bottle Rock when it was, you know, earlier in the season, but I want to go to Bottle Rock.  I trust Bottle Rock is gonna put on a great event no matter when they do it.  And I think that longevity and that investment in the brand gets a lot of good will.

You know, where I see some concern is in, you know, those secondary tertiary sort of regional level, real genre-specific festivals, not necessarily very capitalized people that maybe came out of a scene, but don't necessarily have a corporate backer or a partner like that, who were maybe depending on the cash flow from their ticketing companies that's now drying up.  You know, I'd love to know do you have any point of view on what's happening with the primary ticketing companies and how they're refund policies, or lack thereof, and how they're keeping capital from sloshing around back to somebody's companies that maybe were living off of it?

PR:                        Right.  So, to your first point, because that's such an interesting one, many people thought the festival market had gotten really bloated, right.  So if you think about a property like 'Lollapalooza,' you know, 10 years ago people would go to 'Lollapalooza' from Cleveland to Cincinnati, Indianapolis, Milwaukee, so forth and so on, right, and people still do, obviously.  But all those cities have their own sort of pretty big two-day festival.  And a lot of those didn't really need to exist.  And so I think, again, the good brands, the well-operated ones, the ones with the long-term view, they're gonna really benefit because some of those other festivals, like they're just gonna go away, and they're gonna be able to expand their market again.  So I think that, you know, with some negatives comes some positives of the weaker players getting flushed out who are maybe not going about the business the right way to begin with.

You know, on the ticketing side, those contracts and stuff, they're all very different, you know.  And I know some of the primary markets, they were winning business by telling the promoters, "We will give you the money as the sales come in."  And that was a way to win business, and things seemed really good.  But if they've wired some relatively small promoter, you know, $20,000 for a club date and then, you know, it's getting canceled, you know, a lot of these guys will just fold the LLC.  I mean, they'll disappear off the face of the earth, and they'll have that money and run with it.  And that might be what they live off of for the next year.

I think the secondary marketplaces have some concerns about some of their smaller resalers, you know.  I mean, they're – you know, for all the NHL and NBA games that might get canceled, the marketplace have paid out the sellers, you know.  And so, if they've got to start issuing refunds, and those people have just sort of disappeared, that could pinch a lot of – that could pinch people in a couple of places.  So, really what's interesting is in this – I mean, look, do you read – What's his face?  Bob Lefsetz, do you read Lefsetz?

LP:                        [Laughs] On occasion, yeah, yeah.

PR:                        So he's been putting out a lot of content.  And I really haven't been reading much of it, but I read a mail bag that he did Friday.  And it was from a promoter, who wanted to be nameless, talking about the fact that over the last couple of years, some agencies had been really aggressive about striking the force majeure clause and basically saying, look, no, if the band is there, and they're able to play, but they can't play for something completely out of their control, they get paid.  And because we've had such limited, quietly frankly, events, like that get canceled, I think a lot of the promoters were like, fine, whatever.  And I think the agencies took this as kind of going to their artists and saying, look, like, this is now guaranteed revenue, right.  Like, so whether it be from a financing perspective or just a peace of mind –

LP:                        Lifestyle, yeah.

PR:                        – lifestyle, you know, all of a sudden, like if that had become really standard, there could be some really tough situations between the promoter and the ticketing company.  And this just really highlights the value of having good contracts, clear contracts, and alignment with, you know, partners and whatnot.  And look, you know, we don't have a ton of exposure to the concert space, but, man, it seems like that whole world was kind of ruthless.  Like, the agency is beating up the promoters; the promoter is beating up the venues; the venue is beating up the ticketing company.  Like, they're have been – Like, sometimes obviously things work really well, and there's really great relationships, but a lot of times it just felt like a bit of a cat fight.  And so if [unintelligible 00:31:11] operating off really thin margins, and there were certain layers that had contracts that were more favorably worded for them and their interests, you know, this is when – You know, people don't like lawyers until you really need one, and there's a lot of people who are gonna be wishing they could get in a time machine and have hired a better lawyer.

LP:                        Yeah, you know, you mentioned earlier some of the things you're hearing from and about whether it's the death of the season ticket or the – you know, business as usual.  And one of the things I keep hearing is that this is a reset, and models are gonna have to change.  And specifically in the context of what you just said, you know, that chain that you just articulated, the one party that you didn't mention is the one at the end of that change, which is the fan.  And the way that chain manifests itself in the fan is in the service fee, yes, and the ticket price, but in the service fee.

And so all those people along the way, pushing their risks down, and pushing their guarantees down or their personal interests down, down, down, down, further down the chain, it ultimately has to stop somewhere, and today it stops with the fan.  And so I think there's lots of folks, they're looking at the party in front of them and the party behind them and saying, how is our relationship gonna change?  But I think at the end of the day, like if fans gonna be standing there saying, you know, you can call the event postponed all you want; it looks canceled to me.  I want my money back [laughs].

PR:                        Right.  Well, and then think about this: It's the credit card company's right.  So –

LP:                        That's right.

PR:                        – and [unintelligible 00:32:50] – I mean, and again, all the policies around when you can file a chargeback, they're all very different.  And obviously the sooner you file a chargeback the better your chance as a consumer of winning the chargeback is.  But in the chargeback world, I mean, the credit card companies side with the consumer like at some outrageously high rate.  And then you think about the fact that oftentimes the biggest sponsors of some of these festivals and events are the Annex presale or the Citi card presale.  So like, those ones that are directly tied to those concerts and those purchases, they're not gonna have any tolerance for any sort of, you know, bad behavior that might impact or slow down the fans' ability to get their money back.

[Unintelligible 00:33:33] the credit card company's putting pressure on everybody.  And look, the government's gonna get involved at some point, right.  So if the government's looking at some sort of like thousand dollar consumer spending release package to every individual and they catch wind of that, a concert promoter or a team owner is refusing refunds or slowing down refunds or trying to force people into taking credits that they might not really be able to afford based on their current circumstances, the government's gonna step in and go ballistic because –

LP:                        Wow.  Yeah, and you also can foresee a scenario where if everyone of these industries is looking for some kind of bailout or bridge loan, be careful of the terms that the government imposes on you as it relates to consumer protections.  You know, we're gonna hand over –

PR:                        Right, and –

LP:                        – a billion dollars to your industry just to have you not refund consumers.

PR:                        Yeah, Coran Capshaw's group, you know, he's obviously got a lot of influence, and they're looking for a bailout, not for the musicians, but you know, a couple of really big names.  David Matthews signed it, obviously, Lizzo.  There are a few others.  I saw a press release where they're wanting relief for, you know, the touring crews, right, because they get paid on a show-by-show basis, and they're not working right now.  And so –

LP:                        And vulnerable.

PR:                        Right, they're vulnerable, and so, yeah, that makes total sense.  Those people need some sort of bridge until the show gets rescheduled.  But like, yeah, if the government takes looking at that bailout very seriously or that aid really serious, they're gonna say, well, hold on a second.  You haven't refunded the customers yet, so where's all the money?  So people need to be prepared to have the right answers for the tough questions.

LP:                        Yeah.  The thing that's exciting to me about the concert business – And again, you know, here we are, maybe a week or a 10 days into this whole thing.  It can get – It can go a lot of different directions over the next few weeks.  The thing that's interesting and exciting about the concert business is that if you're an artist and you need to tour, and you want to tour, but ultimately if you need to tour because it's a lifestyle, you know, issue for you, to a certain extent, I think the artists have a lot more leverage to pull than people think about.  In other words, I can go out and tour arenas, and I can bring the most mind-blowing production in the world, and I can charge $300 for a PL1, or I can dynamically price the house.  Or, I could go out and bill it as a back-to-basics tour and just do what I do as a musician and maybe kick down my ticket price a little bit and be able to compete better for those finite dollars you talked about earlier.  And it's gonna be super interesting to see who goes back out with what.

I think like you said, the timing's gonna impact a lot of it.  But outside of the real – the pain and suffering that is very real, and that I think we're all seeing in our businesses day to day as we deal with our colleagues, you know, who are not in a strong positions, outside of all that, and as we help people cope with that, it really is gonna be an interesting process to see how this industry stands back up.  I wonder in that context, is there anything that you see – I say in the context in sort of the reset, this metaphorical reset.  What would you say that what has happened in the course of, you know, just this time so far that might be beneficial or useful?  Like, what's a positive that you could say, you know what if this thing I've seen developing, if this actually comes to light or if this plays out or if this attitude gets adopted, this would change our business for the better, or it would change our positions as people for the better?

PR:                        Right.  Well, so it's interesting.  So I think that when you think about the touring world, as you sort of described it, it had been become very turnkey, which meant that it really wasn't taking that much creativity.  You know, basically, someone at the agency came up with the creative; the promoter signs off on the creative.  It was a lot of very mechanical work getting these big tours off the ground.  So I think what we're gonna see is an infusion of creativity, like you said, about back to basics.

And so I think of a couple of different things.  For one, these cruises have become very good connective tools for artists.  The Kiss Kruise, I think Luke Bryan does one.  So it's kind of like, OK, look, we're not gonna be able to get 40 days in, so let's do like four cruises, right.  And when you're doing – And again, of course saying cruise, considering the sensitivity of everything, but barring everything's is on the up and up, you know, hey, look, before the cheapest cruise package was $500.  You might have some cruise companies who are like you can have the boat if you just pay our staff, right.  So like, I think people are gonna want to take a real sharp look at partnering with hotels, partnering with cruises, and kind of reimagining: Hey, look, we're not gonna be able to do 40 dates, but we can do 10.  So what if we get people spending money Friday, Saturday, Sunday with us, instead of just one of those days?  So I think that people that already have those sorts, that understand that world of partnering with hotels and partnering with cruises, I think they're gonna have a huge advantage.

The other piece is – Are you familiar with the band called Jackopierce?  They're a Dallas-based – So, interestingly, my sister's a huge fan of theirs.  They have a pretty small audience.  But they do these destination concerts, and it's like you get a show, and it's like you get a nice buffet, high-end wine.  It's at some scenic place.  And you know, they're making a big [vig], not just on the ticket, but like, they're partnering with these hotels and these properties to find a time that makes sense financially for them and for that property.  And so the kind of destination touring, I think could be something very real because they're very successful.  So I think kind of looking at through those lenses of destination touring, package it properly, look at the cruise touring.  Then the other thing too is I think that Merchant Merch had just got lazy, lazy in sort of the music world.  And I think part of the reason the Merchant gotten lazy was because we lost the physical CD, and so everything had become digital.

I don't know if it's coincidental, but like, you know, The Weekend, he was signing like basically to get their units up.  A lot of artists are like signing CDs at a pretty cheap price.  Well, I bought one of his CDs.  It arrived.  And then I had an ad to buy an album, right.  And the vinyl was 40 bucks, and it looked really cool.  And I was like, I'll buy that.  Like, that just looks cool.

City and Colour, Dallas Green, he's constantly repressing albums and doing special edition covers.  And you know, so I think if people take a step back, like, some of people's favorite albums I'll definitely re-buy this.  If you repackage it and make it cool, I'll absolutely buy that for artists.  Like, I like The Weekend a lot; I like 2 Chainz a lot; I like Dallas Green a lot, you know, Death Cab for Cutie.  I've got pretty diverse taste.  Some of those artists have like albums that were so important to me, and if they would sign one, I'll pay 150, 250, whatever, if it looks cool.

So think that they're gonna have to look at those sorts of streams of revenue.  I think the final piece is sponsorship, you know.  Artists have been very hesitant to put a Sprite logo in the corner of their Instagram videos, or you know, that just seemed fake or whatever.  But you know what?  If fake pays the bills, you'd better put a Sprite logo on your Instagram feed or whatever.

So I think we're gonna just see – Just like you want to have a good lawyer, the people that have good agents that are gonna like bust their ass for them and find new opportunities, there is money there. They just got to be creative about it.

LP:                        Yeah, yeah.  Well, listen, I appreciate your time.  I appreciate your insight.  And I hope that you guys stay healthy, fiscally as well as [laughs] from a personal point of view.  It's a difficult time.  And I keep reminding people, you know we're closer to the beginning than the end, I think.  It certainly seemed that way.  You know, if they're talking about late April, it's barely late March.  And you know, in some quarters we're already starting to hear about May and June going way.  So, try to caution people that, you know, we're not thinking about the next 10 days.  But I do appreciate your time, and I wish you the best.