LONDON (Billboard) - The summer festival season is heating up Down Under, but a dramatic slump in the value of the Australian dollar has promoters sweating over bookings of international talent.
After hitting a 25-year high of 98.49 U.S. cents in mid-July, the Aussie ended the week at about 65 cents.
That’s “causing quite a lot of problems for all promoters in Australia,” says Vivian Lees, co-promoter of touring festival Big Day Out, which will travel to five Australian cities as well as the Auckland, New Zealand, between January 16 and February 1. “Such a rapid decline has meant everyone has been caught.”
Sources say negotiations over Australian tours by Paul McCartney, Neil Diamond, Green Day, Madonna and Metallica have been shelved until the financial situation settles.
Some of those acts were expected to play Sydney’s 21,000-capacity Acer Arena. “We’ve seen a couple of tours blow out,” the venue’s business development manager Don Elford says. “It probably has a lot to do with the dollar.”
Promoters who agreed to pay acts in U.S. dollars during the Aussie currency’s ascent have been badly stung. For example, if a promoter had agreed to pay an overseas act $9 million U.S. for an Australian tour, paying half of that upfront and the remaining $4.5 million when the act arrives. The second payment would now cost almost $7 million Australian — rather than the $4.6 million Australian it would have cost in mid-July. “We’re all taking a battering,” says Andrew McManus, managing director of Melbourne-based AMP.
The recent currency volatility follows two strong years for the Aussie live scene. Ticket revenue topped $1.2 billion Australian ($775 million U.S. at today’s values) in 2007, up 6.1% from 2006, when revenue surged 38.8%, according to trade association Live Performance Australia. Non-classical music, musicals and theater were the top three cash-earners.
McManus wants local promoters to insist all fees are paid in Australian dollars. “That cushions the promoters and the acts share the risks,” he says.
But many international touring acts demand payment in U.S. dollars and other promoters — who wish to remain anonymous — suggest their peers need to nail down currency conversions at the time of negotiation. Billboard has learned of other promoters aggressively renegotiating reduced appearance fees in exchange for larger shares of merchandising sales.
While the Australian dollar’s plunge is on the minds of promoters as they prepare for the summer festival season, some expect to fare just fine.
“We’re lucky because we’ve got the weight of the festival to insulate us from that,” Big Day Out co-promoter Lees says. “Only a fraction of our bands are paid in U.S. dollars.”
Big Day Out features such acts as Neil Young, Arctic Monkeys and TV on the Radio.