When Lady Gaga announced she was canceling the remainder of her Born This Way Ball on Tuesday night, the initial reaction from her fans was one of concern: after all, she was about to undergo surgery to repair a labral tear in her hip, a serious — but treatable — injury that will leave her sidelined for three to six months.
Of course, the Little Monsters weren't the only ones sweating the news of Gaga's injury: To the folks at Live Nation, the global promoters of her tour, the cancellation of the remaining 21 dates meant they'd lose out on some serious revenue. To venues across the country, it meant they could say goodbye to expected hauls from ticket sales, concessions, merchandise and parking. And to Gaga itself, scrapping her tour meant missing out on per-show pay-outs in the seven-figure range.
Simply put, the Born This Way Ball was big business — according to Pollstar, it grossed more than $160 million in 2012 — and now, that business has been shuttered indefinitely. But who will be left to foot the bill? Well, let's just say the folks at Live Nation probably aren't too happy today.
"Live Nation will eat the majority of the cost on this — big costs things like staging, building a production — it's like developing an airplane, they have a huge upfront cost that you hope to make up on shows, so they miss out on that," Dave Brooks, managing editor of Venues Today added. "And you can't underestimate how much money they spent marketing this, online, commercials, radio, they can't make that up. They also have to refund the money, which means hiring people to refund ticket money. It's going to be costly for them."
Brooks said that Live Nation will no doubt attempt to negotiate with Gaga's management to defer some of those costs, they'd probably he hesitant to ask for it all, considering "it might not be in the best interest for their long-term relationship." He also added that venues will feel the impact of the cancellation, which is bad news for arenas in smaller markets and those still reeling from factors beyond their control.
"It's bad news because for any venue, because this was going to be one of their highest-grossing shows at least for the first part of the year, and to lose that, it's going to change the way you do budgeting for the rest of the year," he said. "A lot of venues are still recovering from the NHL lockout, so it doesn't come at a very good time for them. They're going to miss out on a lot of revenue, from tickets and fees, food and beverage, and merchandise sales, which could be anywhere from $10-30 per person."
Brooks couldn't speculate on just what the cancellation meant for the touring members of Gaga's production team but in the short run, it probably means they won't be getting paid. And the same can be said for the Mother Monster herself ... which is why he's not buying rumors that she scrapped the tour because of soft ticket sales.
"I've heard those rumors, but I wouldn't give that much credence to them," he said. "I would generally think when all is said and done you would lose a lot more money canceling the tour than playing dates that might not sell as well as you'd like. These are major markets she's playing, and the numbers I see are huge.
"We're not privy to exactly what's going on, but Live Nation generally would pay a guarantee for each show and then split revenues on top of that, so she's got this guarantee up front, plus potential to make more money," he continued. "It's very normal for an artist like Lady Gaga to do a 90-10 split on the gross, where she takes 90 percent of ticket sales, minus costs — touring revenues are artist's largest form of revenue, so she stands to lose a lot."
Still, Brooks expects that, whenever she's ready, Gaga will reschedule her dates ... and most venues will welcome her back with open arms. And while she's losing out on a big payday in the short term, it's important to put all of this in perspective.
"Honestly, the biggest issue is her health; at the end of the day, she's taking the short term loss to protect her long term brand," Brooks said. "I guarantee you is exponentially more important than two dozen shows. That's a set amount of money, that's not going to change, but if she could never perform again, that will be catastrophic."