Question of the Day - 31 July 2020

It’s complicated.

As industry veteran Alan Feldman says, “The question about being paid now [during the entertainment hiatus] depends on insurance coverage and who has it. And even then, [it depends on] if the insurance companies are honoring the policies. As I’m sure you’ve seen, many are not.”

In Las Vegas, Phil Ruffin at Treasure Island, which hosts Cirque's Mystere, is suing his insurer for not covering his business losses. Magic City in Miami is another insisting that insurers should cover financial losses stemming from the property being shut down because of COVID-19. Similar disputes are playing out nationwide, with insurance companies accused of wrongfully denying coverage for “business- interruption” losses.

For even greater complexity, artist contracts will expire during the period that showrooms remain dark due to social-distancing protocols, leaving the casinos with the potential problem of reopening without some of their biggest draws.

Cult Vegas author Mike Weatherford adds, “There is no standard arrangement [as to fee structures], but 'no' is a fairly safe answer for whether any of them are getting paid during the shutdown. The superstar names such as Celine and Lady Gaga get a set fee per show." In other words, no show, no dough.

Mike goes on to explain, “I was told that if you multiply the average ticket price by the number of seats, you get pretty close to the guarantee. The superstar residency artists get paid so much that the margins for the house are in the merchandise splits [with the artist] and drink sales — hence the $12 beers.”

“In most of the major resident shows, there is a guarantee, plus a percentage above a certain threshold (possibly as much as 100 percent),” Feldman elaborates, “or it may be that the house simply takes a flat fee per ticket and the artist takes the rest. Each deal is a little different and all are complex. Simply put, the fees can be any or all of that. Flat fees are rare these days, but most often applied when there is no paid gate, a charity event, for example.”

“As you work your way down to the likes of Terry Fator,” Weatherford says, “you get what they call a 'door deal’: no guarantee up front; instead, they work for 'the door.’ Fator paid 10 percent to The Mirage and kept the rest. But out of his 90%, he paid his band, stagehands and technicians, and all his production expenses and overhead."

So there really is no one-size-fits-all answer. It’s also an open question as to whether such lavish headliner contracts can be sustained until such time as showrooms can play at full capacity. Expect a lean period in Vegas entertainment, at least for several more months. After all, what casino wants to put on a Lady Gaga show in a theater that seats 5,000 to a crowd, let's say, of 300?