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With continued growth in 2007, a burst of corporate activity at the end
of the year and a vibrant beginning to 2008, the arena business is
positively buzzing. Lex Hunter takes a prime seat to watch the show
unfold.
As far as the big boys go, it’s AEG who have been capturing the
headlines. Over the past few weeks and months the US giant has opened
the Nokia Theatre in Los Angeles, acquired the Color Line Arena in
Hamburg and signed a joint venue deal with Odgen in Australia, finding
time in between the open The O2 in London, with O2 World in Berlin
following later this year.
 With continued growth in 2007, a burst of corporate activity at the end of the year and a vibrant beginning to 2008, the arena business is positively buzzing. Lex Hunter takes a prime seat to watch the show unfold.
As far as the big boys go, it’s AEG who have been capturing the headlines. Over the past few weeks and months the US giant has opened the Nokia Theatre in Los Angeles, acquired the Color Line Arena in Hamburg and signed a joint venue deal with Odgen in Australia, finding time in between the open The O2 in London, with O2 World in Berlin following later this year.
AEG’s burst of activity would signify that the arenas business, reflecting the fortunes of the live music business in general, seems to be in a rude state of health. And IQ’s independent survey bears that out, showing that member venues of the European Arenas Association (EAA) are trading at 4.7% up on last year’s figures.
“The market is quite healthy everywhere,” concurs John Sutherland, senior vice president of SMG Europe. “There’s an increase in new buildings across Europe – and old buildings have been upgraded with the advent of new style arenas.”
One factor which has been driving arenas is the increasing phenomenon of TV shows, including reality shows, transferring on to live stages.
Bringing TV On Stage
“The transfer of entertainment from TV reality shows into arena venues has been interesting,” says Geoff Huckstep, MD of Nottingham Arena, which has seen its seventh year of consecutive growth. There’s Dancing on Ice, Strictly Come Dancing and The X Factor. It brings people into the venues who wouldn’t normally come.”
Linda Lindvist, marketing manager of Stockholm’s Globe Arena agrees it’s a growing trend which is benefiting the business.
“That’s definitely a trend that we can see,” Lindvist says. “The final of Pop Idol, which was held here, was massive. And our biggest show this year will be the Swedish final of the Eurovision Song Contest.”
Credit Crunch
The one cloud on the horizon for what is otherwise a sunny scenario is talk of a potential downturn in the global economy, precipitated by the credit crunch of America’s sub-prime housing market.
“The leisure and entertainment industry is always the first to be hit, so we need to keep an eye on it,” says Huckstep, who is also chair of the UK’s National Arenas Association. “Having said that, I think arenas are in a better position than smaller venues, because people will always find the money to see their favourite big act. The effect may be felt more in 2009 when mortgage increases, and so on, may bite.”
Others are more bullish about the future. “There may be a correction,” says John Knight, general manager of the Manchester Evening News Arena, the biggest indoor entertainment arena in the UK. “But the live experience is now so ingrained in the public psyche that I think concert entertainment will be one of the last things that people give up.”
 Future-proof
One way of protecting arenas in the face of a threat of slowdown, is to incorporate them into a bigger entity, such as a convention centre and exhibition space.
Liverpool Echo Arena recently opened its doors in time for the city’s year as European Capital of Culture. The arena is part of the Arena and Convention Centre complex, which Huckstep describes as “the model for the future.”
The arena’s general manager Tim Banfield says it’s a question of spreading your assets: “Live music has seen a boom time, but it will slow down at some point, so you can’t have all your eggs in one basket.”
The convention centre has been sponsored by British Telecom, which brings its own advantages. “What comes with that is technology,” says Banfield. “It’s completely Wi-Fi, all our telephone systems are VOIP [voice over internet protocol] and we can Bluetooth in the arena. Everything is state-of-the-art. We’re really lucky that we are benefiting from being built in 2007.”
Jos van der Vegt is president of the EAA, as well as MD at Rotterdam’s Ahoy Arena, which is part of a complex that incorporates exhibitions, events, conferences and meetings.
He says: “We’ve learned that for big events it’s very good for an organisation to have more space than just a stand-alone arena – for VIP areas, backstage areas, press conferences etc, and new venues will be a combination of those things.”
Promoter Crossover
With the big companies like AEG and Live Nation flexing their muscles globally, there may be doubts over whether arena owners and promoters make the best bedfellows. But there is no doubt as to the global power and experience that big operators can bring on board.
Uwe Frommhold is general manager at Hamburg’s Color Line Arena, which attracted around half a million people to its music events alone last year. The arena was bought by AEG in October 2007, and Frommhold sees the move as extremely beneficial.
“Being a successful lone rider is nice, but it’s getting harder and harder to do it on your own,” he says. “You have to be able to develop and it’s good to discuss the business with people who have a lot of experience and know the best ways to move things forward.”
There are still a plethora of independent arenas out there, able to offer both dates and facilities to any promoter, regardless of association but the multinationals are increasingly starting to buy their own and use promoter-outposts to deliver content.
 Tickets Please – All Change
Neither is this trend of covering every revenue base limited to the multinationals, in the world of the independent arenas, ticketing is an area coming under increasing attention. The National Exhibition Centre (NEC) in Birmingham, England is one such believer, having recently set up its own agency, The Ticket Factory.
“We’re trying to adopt the service ethos of a venue box office and apply that to a UK agency,” says MD Phil Mead. “We’re selling for external events now, and the value in that is that when we’re selling tickets, we don’t just do it from an agency point of view, we have the empathy of venue operators and marketing as well.”
Tim Banfield at Liverpool Echo Arena has taken a similar view: “All the ticketing is done in house,” he says. “That way you can provide a better service. Our booking fees will be cheaper than the [other ticketing] agents. Our view is that to be successful we have to look after our customers better, and part of that was to bring the box office in house.”
New GM at Berlin’s O2 World, Mike Keller – previously event director at Color Line in Hamburg – says: “We haven’t finally determined our requirements, but whether in Hamburg or Berlin we want to take a more active role in the ticket sales process, no matter what ticketing system software.”
Similarly, Jos van der Vegt adds: “It’s important for venues to get more of a grasp on the ticket selling system and do it on their own.”
The O2 in London, meanwhile, has its own arrangement. “We have a deal with Ticketmaster for 50% of the tickets,” says MD of AEG Live Jessica Koravos. “The promoter places the other 50% according to whatever deal he or she happens to have in place.”
Other developments in ticketing are driven by technology, and Wembley Arena, which welcomed almost 980,000 visitors last year, uses Ticketmaster’s scanning system.
“Out in the foyer, Ticketmaster's Access Manager enables us to scan every ticket into the venue and deal with last minute issues such as unexpected sightline problems with a minimum of fuss,” says general manager Peter Tudor.
In Australia meanwhile, Ogden is using the Ticketek's print-at-home service, which is “becoming increasingly popular” according to Don Elford, business development manager at Acer Arena in Sydney.
Van der Vegt concludes: “I think there will be a lot of changes due to technology. Seats booked via a special code on your mobile phone. It’s not inconceivable that tickets will disappear in five years time.”
 Market Expansion
As well as benefiting from technology, Ogden is in rapid expansion, having done a deal with AEG at the end of last year. With growth in the sector and its traditional markets doing well, the deal exemplifies the current trend of expansion into areas previously underserved by arenas.
Ogden IFC chairman and CEO Harvey Lister says: “All the futurologists say that there will be fifty cities with a population of over 15 million in the next 40 years – and 40 of those will be in China, India and Asia.”
Meanwhile, Live Nation has entered into an agreement to manage a new multi-purpose outdoor venue, the 10,000-capacity Pop TV Arena (Zhong Tian Di) in Hong Kong.
Karen Kwan, senior sales manager at the 13,500-capacity AsiaWorld-Arena in Hong Kong, is not surprised by the moves.
“The business landscape is changing from a functional space-provider in the good old days to a business opportunities provider,” she states. “The robust economy and growing affluence of society here have created unprecedented prospects for the arena sector. Large corporations are looking for new avenues for brand-building and advertising.”
As well as the Far East, changes are afoot in Europe. “I must say this market is growing rapidly right now and things are going the right way,” says Edgars Buncis, director of Latvia’s 14,000-capacity Arena Riga. “There are lots more shows and more and more spectators.”
Saku Arena in Tallinn meanwhile pulled in more than 240,000 visitors in 2007 – an impressive number given that the Estonian population is only 1.4 million. And general manager Aivar Sirelpuu recognises that the market is still in evolution.
“Yes, business in terms of live shows and family entertainment is growing,” he says. “But costs are getting higher, as well as ticket prices and, in the end, that could mean less shows.”
The relative success of arenas in Eastern Europe has a knock-on effect on neighbouring regions. As an example, more tours are now being routed through Finland, thanks to the Baltic States and Russia opening up.
“Bands are playing in Russia now and Finland has become the stop in between,” says Risto Juvonen of the Live Nation-owned Welldone Agency. “That’s going to be the trend in the future. There’s so much money in St Petersburg and Moscow now.”
And, following in the footsteps of the Baltic expansion, Central Europe is the latest area to witness a development in the live music business.
“We are on the touring network,” says Carl Martin, general manager of Hungary’s 15,000-capacity Budapest Arena. “It doesn’t stop in Vienna anymore. The cost of living has gone up in Central and Eastern Europe.”
Martin is also involved in the building of two new arenas in Croatia – in Zagreb (12,000-15,000) and Split (10,000-12,000). They are being built initially to host the International Handball Championships but with live music very much in mind. “It’s a government initiative in partnership with private enterprise,” Martin says.
As well as his role at the Budapest Arena, Martin is director of European services at the European Academy for Venue Management, the European arm of the IAAM. As such, he is involved in the IAAM’s European Academy, aimed at training the next generation of arena managers.
Sponsorships Rule
Sponsorship is still a major element in the arena business with naming rights being central to many arenas’ existence.
“The O2 could not have been built without the programme of naming and founding partners that AEG has put in place,” Jessica Koravos says. “As our naming rights partner, O2 is more than just a sponsor, they are a ticketing and content partner as well. And their involvement has certainly been a contributor to our success.”
Grant Medcalf is sales and marketing manager at Cape Town’s Coca-Cola Dome, which welcomed over half a million visitors in 2007.
“Running a venue of this size is expensive as we’re privately owned and don’t get any subsidies from the government for electricity, water, rates and taxes,” Medcalf says. “So it helps having a sponsor on board from a financial point of view. Also being involved with the number one brand in the world has brought in many new events.”
The Customer’s Always Right
In keeping with the observable trend of the last few years, customer service is still at the top of the list of arena managers’ priorities.
Jordi Bernet, at Barcelona’s Palau Sant Jordi, explains: ”We have many different shops in the arena which give spectators the chance to have a whole entertainment day – comprising hospitality, live music, restaurants and pre- and after-show parties.”
In Italy, the ForumNet Group runs the Datchforum in Milan (1 million visitors in 2007) and the PalaLottomatica in Rome. Event manager at PalaLottomatica, Francesca Battistoni, takes a similar approach to Bernet.
“We are now focusing on what’s around an event,” she says. “That means especially services for the public and facilities for clients, as we feel that the number of events will not change that much.”
 The O2 Leads The Way
The prime example perhaps of customer satisfaction and providing the “whole entertainment” experience, as Bernet puts it, is The O2 in London, with its 28 food and drink outlet points, a multiplex cinema and an exhibition centre.
In the first six months of opening, The O2 exceeded the ticketed attendance of any other arena in the world for 2007 (over the same time period) – including Madison Square Garden in New York.
“The success of The O2 Arena has certainly exceeded even our wildest expectations,” says Koravos. “The UK market was clearly crying out for a state-of-the-art artist- and fan-friendly arena.”
And the effect that The O2 in London has had on the whole sector can’t be underestimated. “We’re going through a feasibility study to refurbish the NEC arena,” Phil Mead says. “There’s going to be a lot of focus on creating the total experience and making the NEC a destination venue. Enjoying the experience from when you arrive to when you depart. The O2 has helped make that case.”
The O2 has undoubtedly raised the bar, but it’s not all plain sailing for arenas in the UK. The mooted arena that SMG was set to run in Bristol has been shelved due to lack of funding.
“The financials didn’t add up, which is a shame as it’s a strong marketplace,” says John Sutherland at SMG Europe.
However, SMG – much like AEG – is in expansion globally and is exploring commercial potential in Europe, Latin America, Asia and the Middle East.
“Central Europe is starting to enhance old buildings and create new ones,” Sutherland says. “And they are looking for international partners to operate them or to operate them directly. The other area is the Middle East – Dubai and Abu Dhabi are looking at how they can bring entertainment to an area which has been starved of it.”
Dubai Sports City, scheduled for completion in 2010, will incorporate an 8,000-10,000 arena for live entertainment.
“The sector will be very healthy in the next five to ten years,” predicts Sutherland.
So, with attendance figures up and technology driving business, arenas are riding on the crest of a wave. Confidence in the sector is apparent and borne out by the determined and ambitious expansion by the major players into underdeveloped territories, and new touring routes are continuously being opened up.
But, as with any other business, activity has to be future-proofed, macro-economic factors need to be taken into account and, most importantly, customers have to be kept happy.
As a result, arena managers and owners are constantly reviewing and updating their practices – to continue to ride that wave of public taste and to make sure it doesn’t crash.
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