Venues & National Acts

[Jazz Hands]

Over the last few yrs a few of the mid-sized music venues have closed & the other night at rehearsal my band was discussing the trend & just blowing smoke about opening our own club. Not that we're serious, but it did raise a few questions that I've never really thought about.

-Do most clubs lease or buy? To properly equip a space for music I'd imagine it'd be $$$, therefore not sure if venues would dump that much cash in a rental. Or does the audio equip get leased too?

-How do startups go about getting national acts?

-How are sound / lighting guys paid - per night, salary, etc?

-What's typical % for the venue to make per ticket sales? & is this the lion's share of profit or is it bar sales like a restaruant or pub?

~Later

[gweimer]

I can't answer all your questions, but I'd say the following:

My guess is that most venues are leased properties. It's far more expensive to buy. That said, I played for a club owner years ago that owned the building and property for his club. Every couple years, he'd get tired of running the club, so he would sell the BUSINESS, and lease his PROPERTY to the new club owner. There was a default clause in the sale of the business that reverted it back to him if the new club didn't keep up with payments. So you see how that works? This guy was always getting paid one way or another.
My last band was having the same discussion when several venues in Cincinnati shut down last year. I did a little research, and figured that leasing a decent space, and trying to staff it would take a minimum of $60K/mo.

Sound men seem to get about $100/night. It's not unheard of to hire sound that includes the system, which I think would be a better way to go. If you have a small club, you can probably put in a reasonably good sound system for $5000, provided you know what you're doing. The decision is whether you want to pay for maintenance, or make that a provision of leasing a sound company - they should take on those costs as part of the deal rather than charge the club.

The profits, if there are any, come from running the business wisely. Touring acts generally have a set asking price, but if you look to book off nights, you might get some deals. Road bands will frequently be looking for a spare date to avoid the expense of traveling with no work. Negotiation and compromise are your tools there. Your ticket prices will likely be determined a lot by your capacity. If you can hold 1000 people, and can get $15 apiece, then you can afford to pay maybe $13,000 for a show (band, sound, lights, incidentals) if you want to make about 10% in profits. You also have to pay your staff, and then figure in what kind of bar sales you'll have. Bar sales will probably be your bigger profit margin, and hiring the right bands at the right price will give you maximum profits at the bar for the crowds they draw.

A good club owner will keep numbers on the bar AND the band together. This is something we learned from a club owner years ago that had about 24 sets of numbers that he watched - attendance (day, week-end, week), beer sales (same), liquor sales (same), and then overall numbers. Over time, you learn which bands make you money. Band A may come in and play for $1500, and pack the house, but bring only beer drinkers who have an avg of 3 beers (yes, you do want to run these types of numbers). Band B may come in at the same price, but bring in only 2/3 of the same crowd, all of whom are raging alcoholics. Get the idea? Running a club takes a lot of work and know-how.

You may even need a booking agent to run the room. If you aren't able to successfully book your room, hiring someone to do it may help. Expect it to cost you 15% or more.

[mrokern]

Very good answers above...

I can't speak to bar numbers or real estate, but I can speak to the production and booking side (at least in terms of national acts).

I spent a good amount of time as a club sound engineer working at the "must-play" venues before moving into larger touring. We saw everyone on the way up and the way down, and got quite a few that were still at the top.

There were three different models that I saw for systems.

Club #1 had a long-term lease agreement with a local sound company. There was a fixed system in place that was capable of handing most acts (professional FOH, racks, and stacks). 5 monitor mixes could be done from FOH. If more gear was needed, there was a fixed nightly charge for things like a full monitor rig. Techs were paid on a couple of different scales. Weekdays normally had local / regional acts, techs were paid either $50 or $100 per night depending on their experience. Fridays / Saturdays (and some weekdays) usually had national acts, and I would come in at my daily rate ($250 back then). If we needed another engineer (e.g. monitors), we'd pay their daily rate. Every year the system would get necessary upgrades in terms of "rider-happy" equipment. The lease clause also allowed for an "out" by the club with 60 days notice in case business went down the tubes. Nice deal.

Club #2 owned their own gear. Similar fixed cost deals for add-on gear. They had part-time "everyday" techs, and I got brought in on weekends and for nationals at my day rate. Their own techs got hourly rates that varied from $7.50-$10 per hour. Cheap, but good experience for the techs. The problem here is that when business went down the toilet, they had a lot of gear that sat around not being used.

Club #3 rented in gear for everything. Major pain, and they paid more money than they would have if they'd set up a lease program or something similar. They crashed and burned, in large part because of the varying production quality from night to night. I still got my daily rate.

In terms of booking acts, having a booking agent is a great idea if you intend to work with a lot of touring acts. Agents have their own little network, and they know (or at least SHOULD know) how to get the best deals from each other. If you have an agent that understands market segments, tour routing, etc., you'll be light years ahead of the competition. Most nationals have a fixed price...it is often negotiable, but it gives you an idea where to start. Bear in mind that things like lodging, meals or buy-outs, production, and any other rider requirements are YOUR problem, not theirs.

There's serious money to be made, but it is not without risk. If you don't understand the business and aren't ready for it, it can eat you alive. Start out by truly understanding your market. The best club in the world won't survive in the wrong area. Example: First Ave. in Minneapolis is definitely a top-tier club. Think it would survive if it moved down to Rochester? Not a chance.

Best of luck!

-Mark

[modulusman]

Originally Posted by gweimer

I can't answer all your questions, but I'd say the following:

My guess is that most venues are leased properties. It's far more expensive to buy. That said, I played for a club owner years ago that owned the building and property for his club. Every couple years, he'd get tired of running the club, so he would sell the BUSINESS, and lease his PROPERTY to the new club owner. There was a default clause in the sale of the business that reverted it back to him if the new club didn't keep up with payments. So you see how that works? This guy was always getting paid one way or another.
My last band was having the same discussion when several venues in Cincinnati shut down last year. I did a little research, and figured that leasing a decent space, and trying to staff it would take a minimum of $60K/mo.

Sound men seem to get about $100/night. It's not unheard of to hire sound that includes the system, which I think would be a better way to go. If you have a small club, you can probably put in a reasonably good sound system for $5000, provided you know what you're doing. The decision is whether you want to pay for maintenance, or make that a provision of leasing a sound company - they should take on those costs as part of the deal rather than charge the club.

The profits, if there are any, come from running the business wisely. Touring acts generally have a set asking price, but if you look to book off nights, you might get some deals. Road bands will frequently be looking for a spare date to avoid the expense of traveling with no work. Negotiation and compromise are your tools there. Your ticket prices will likely be determined a lot by your capacity. If you can hold 1000 people, and can get $15 apiece, then you can afford to pay maybe $13,000 for a show (band, sound, lights, incidentals) if you want to make about 10% in profits. You also have to pay your staff, and then figure in what kind of bar sales you'll have. Bar sales will probably be your bigger profit margin, and hiring the right bands at the right price will give you maximum profits at the bar for the crowds they draw.

A good club owner will keep numbers on the bar AND the band together. This is something we learned from a club owner years ago that had about 24 sets of numbers that he watched - attendance (day, week-end, week), beer sales (same), liquor sales (same), and then overall numbers. Over time, you learn which bands make you money. Band A may come in and play for $1500, and pack the house, but bring only beer drinkers who have an avg of 3 beers (yes, you do want to run these types of numbers). Band B may come in at the same price, but bring in only 2/3 of the same crowd, all of whom are raging alcoholics. Get the idea? Running a club takes a lot of work and know-how.

You may even need a booking agent to run the room. If you aren't able to successfully book your room, hiring someone to do it may help. Expect it to cost you 15% or more.

Good luck getting a PA for a 1000 people and rider friendly for national acts for $5000. Maybe $50,000.00

[baba]

Originally Posted by modulusman

Good luck getting a PA for a 1000 people and rider friendly for national acts for $5000. Maybe $50,000.00

+ eleventy

If you plan on having national acts and a medium sized venue, sound reinforcement is going to be a MAJOR cost. Also, I highly doubt you'll find a quality soundman to run a show this size for $100.

[Redsand187]

One thing to remember, typically a rental PA and lighting systems normally fetch 8% of replacement cost, plus labor. So a decent club would pay for a rider friendly PA and Lighting rig in less then a year.

Leasing a system is good, but may be difficult depending on your local sound providers.

Owning a system can be pretty nice, and save tons in the long run, provided you have 2 things. A staff member that knows the system inside and out, preferably they should be a part owner... And second a solid hire in crew that is consistent and knows the system.

If you have an in house system, it will save tons of money in labor. You will not have to pay load in and out. You will just need your techs to show up maybe an hour before the band to get everything checked for a lot of acts. Plus if you have a co-owner that runs the system he'll be able to do the advance and all the tech side day to day.

It takes a lot of money to get a place going. A lot of the success depends on the booker. You need someone that can book great acts for a good price. Getting yourself established is another thing.

At least were I am, in small area, the way to make something work out well seems to be by building a reputation. It seems like a smart thing to do would be get a few really good acts in there and pray to God that you break even, preparing for a loss and thinking of it as paid advertisement. That way you get a buzz going. Getting some big national act in your 1000 head club that constantly plays theatres and bigger might be worth it just for the buzz. (With the right margins and tour schedule, it might be very lucrative money wise as well) Especially when you find some quality acts to open for them. That way you set up the reputation of always having good acts, and people know about the place. You want people to know that if they want to go out, you will always have something good to see, and will be worth the cover.

As for the actual building. It is best to lease, if you can find a place that will work. Unless you have a huge bankroll. But in that case, you are still best to set up two different companies, one that owns the building and leases to the club. That way if the club goes under, you still own the building and can sell it to help recoup your loss.

Getting a deal with a couple local hotels can save you tons of money as well. Many times you can get rooms for less then half the standard rates if you set up a corporate account that consistently rents blocks of rooms. Think, if you need 10 rooms, 2 nights a week, (or say you rent 20 rooms a week total) at the normal rate of 200 dollars a night, getting the rooms for 100 dollars a night can save you 100,000 dollars over the course of a year. (numbers are inflated to show the potential) Same goes with a caterer. Find someone good, and they can be pretty cheap and take care of all the hospitality on the rider, and save you money in the long run, normally in the form of time. Why pay someone to get drinks, and ice and candy and crap snack food for the crews when you can normally get discounted prices and not have to pay someone to do the running when the caterer can easily add it for very little.

One thing that I have only seen once, but maybe it is more normal then I have thought... Cars... if you are a big time venue, you will more then likely need at least a big 12 passenger van. But at the same time it can be expensive to buy, and they can be expensive to rent. It can also suck when bands might need/want something different. I know of one place actually that had a deal with a car dealerships sales manager that allowed them to demo new and used vehicles when needed.

Most of your profit will come from drinks. Like it or not, no matter how big of an act you are, if you are playing a club/bar, you are still a beer salesman. Likewise you must have a great bar. Preferably multiple locations for drinks, decent bar area with seating, and good cocktailers... If you have the hot spot, you can straight up rape people on drinks. Ever wonder were the big night/dance clubs you see Paris Hilton in make their money? It's by charging 400 dollars for a 30-50 dollar bottle of alcohol and 1000 dollars for a table, with a 2 bottle minimum. Are the drinks any better there? Nope. But there are thousands of people willing to spend that kind of money for the experience and atmosphere. Now those type of places are a different beast all together, but there are things to be learned from them.

You at the very least should be making 100% on drinks, but it is not uncommon to make upwards of 400%. If you get 300 thirsty people in your club that all drink 5 drinks a piece that cost 5 dollars a piece and net you 4 dollars... well think about it. That is 6 grand of pure cash in your pocket. Team that with 700 other people in your club that all average say 2 drinks a piece that net you a dollar a piece, do that 2 night a week, for a year, you are looking at nearly 3/4 of a MILLION DOLLARS PROFIT from drink sales, just 2 busy nights a week. These numbers may be complete ********, but you see there is a huge potential. If you can get acts in there that can pack the place with people willing to toss some cash at the bar all you need to do is have ticket prices/covers high enough to cover cost. Making 0% on ticket sales or on the door, or even taking a loss to make 10,000 dollars on drinks in a night can be very lucrative.

Bare minimum I cannot see you trying to open a 1000 person club with less then 500,000 dollars. And that is if you don't have to spend much on decor and remodeling a place to suit your needs. You might possibly be able to squeek out something for 250,000 dollars, but, then you aren't leaving money to actually pay the bills to get the place on it's feet.

If you have a million dollars to start a place, and have a solid plan, team, and can make the place a hot spot, you can easily make your initial investment back in a year. The problem? Most people still don't have a million dollars to toss around.