Negotiation and Deal-Making

Live Nation formed in 2005 by a spin-off from Clear Channel Communications. Live Nation is the largest producer of live concerts in the world. With over 16,000 concerts held worldwide with 1,500 artists in 57 countries and selling 45-million concert ticket a year. Live Nation has become the new model and a major rival against record labels with the signing of megastars, such as Madonna and Jay-Z. Live Nation owns all entertainment venture, live shows, tours and future recordings for the next 10 years for these artists.

There are many key positions within the company that make Live Nation the largest producer of live concerts in the world. The main goal of the company is to supply the best live entertainment in the world to concertgoers. This all begins with the Live Nation Talent/Touring department, which is known for having the best talent buyers in the industries. Some of the skill that makes them the best is their proven track record, respected in the industry and experience in negotiations.

Being a talent buyer is a one of the hardest jobs in the industry. Why is this? When a tour is being routed around the United States and you are a talent buyer for House of Blues (a Live Nation company), you are not the only person in the city that is negotiating with that artist to book them at your venue. This is a very competitive business and companies will do anything to get that tour booked. Some venues will pay over market price to lock in the tour at their venue. This is why Live Nation must have the best talent buyer in the world. Just last month the VP of booking for the Midwest region at Live Nation, Michael Yerke was promoted to president of talent for House of Blues. Yerke will oversee the talent buyers for the 13 House of Blues venues across the United States. "Michael has a proven track record as one of the most respected and experienced talent bookers in our industry and I am confident he will successfully lead the booking team as we grow our HOB, club and theater businesses in 2009," in a statement by Ben Weeden - Chief Operating Officer, North American Music for Live Nation. (Billboard.biz.) This leaves Yerke position open at the Live Nation office in Chicago, which has been filled by Tommy Ginoza, a long time veteran of talent buying.

Tommy Ginoza was born and raised in Los Angeles, California. Many people would say that being one of the talent buyers for the largest producer of live concerts in the world would mean you should have many years of education to obtain this position. Tommy is just the opposite. Dropping out of school at the age of 16 and hanging out with his friends on the streets of LA was not a normal start to becoming a successful talent buyer. His love for 45’s and listening to all types of music fueled his love for the music business. After working for a short period in the car business he obtained an internship with EMI Records. After interning for 7 months he was hired as an assistant in the EMI office. Soon after Tommy left EMI moved to Golden Voice Concerts, which is now owned by AEG Live. Tommy really did not have a job title while working for Golden Voice. “All the employees did everything from booking to stagehand” Tommy said. Next Ginoza moved on to Universal Concerts as Marketing Coordinator where he worked on marking tours for Backstreet Boys and Britney Spears. While Ginoza was employed at Universal Concerts, Clear Channel took them over and shortly after that Live Nation formed in 2005. Tommy was asked to move to Minneapolis Minnesota to be a talent buyer for Live Nation. He booked for the Live Nation venues in the Minneapolis area but worked out of the Live Nation office in Chicago. In 2009 Tommy took over for Michael Yerke position and is now the talent buyer for House of Blues Chicago and the Amphitheatres in the Chicago area.

The Situation

Tommy Ginoza talent buyer of House of Blues Chicago uses negotiation everyday to broker performance deals with bands, agents and manages. On occasion he will negotiate deals for catering services that House of Blues will provide.

The Negotiator

In this industry the negotiator must be on top of their game and research the talent they are trying to buy. Being accurate on forecasting how a show or month will go is very important. Ginoza is known for being one of the best in forecasting and researching the talent prior to presenting an offer, making him one of the best negotiators in the business.

The negotiator’s deal-making techniques

Tommy uses a few easy techniques when negotiating. First is the VS. Technique. This is only used when he knows the act/band will attract 3000 plus people. When negotiating he must research to know how the act/band is doing on other shows. If he feels good he will offer the act/band a VS. Deal, which is an offer for the act/band to receive a guarantee with the option of getting a bonus if they sell it out. At the end of the night after expenses are taken out, the larger amount goes to the act/band. If the guarantee is $35,000 but they sell out and make $36,000 in ticket sales, the act/band will get a bonus on $1000, walk away with a total of $36,000.

The other technique Tommy uses is Promoter Profit which is the more common technique used in this industry and is based on a percentage deal. When negotiating with talent agents most deals are based on a percentage of 80% for the artist and 20% for the promoter/venue.

Example:

200 people come to the show and paid $5 to get in = $1000

Costs of the show:

Band = $100 guaranteed

Sound = $100

Advertising = $100

Promoter Profit (15% of expenses or $300 in this example) = $45

Split point (total of all) = $345

Amount to split (total income $1000 - total expenses $345) = $655

Band gets 80% after split = $524

Promoter gets 20% after split - $131

Band total ($100 guarantee + 80% after split) = $624

Promoter total (promoter profit + 20% after split) = $176

What you learned about negotiation from the interview

Negotiation in the entertainment business is unpredictable; it is like a poker game and you are taking a gamble on every deal you make and you never know what you will get. Some agents will try to take average of you and push you to the limit, while others are easy to work with and will make it the best for both the venue and the artist. On the other hand, some agents do not understand that the venue has overhead expenses to make the show happen, which leads to one of the major problems when it comes down to confirming the offer or deal.

What you learned about yourself from the interview

After interviewing Tommy I feel that I am on the right path in my life to become a major player in this industry. I learned that I am a good negotiator based on my history of booking bands and tours. My view of this industry as gotten better over the last 3 years and my heart is in this industry, and I feel that being a talent buyer is what I want to do in the future. Emotions play a big role when I negotiate with bands or venues, because I try to make people happy; if the show does not do well I feel personally responsible Working in this industry does not feel like work for me because I truly love what I do.

What you learned about the role of emotions

Being a talent buyer for the largest live concert company in the world can be challenging. Once you get to that level many think that the talent buyer does not care anymore and just views it as a nine to five job. This is not the case with Tommy Ginoza, because he wears his heart on his sleeve, and has personal ties with each show he books. When the show does not do well, he takes it personally and makes notes to why it failed so that he can improve the next time he does his forecasting for the band. Ginoza takes pride in each band/artist he books and does everything he can to make the night the best it can be. On any given night when a show is going on at House of Blues you will see Tommy running around the venue looking at the crowd, making note of age, gender, and type of people are in attendance. This shows that the role of emotions plays a big part in his job and he personally feels responsible for each show he puts on.

What you learned about the role of research/preparation

Being prepared for a negotiation is most important when being a talent buyer. Knowing everything about the band/artist you are trying to buy is very crucial in getting a good deal. Putting in time to research the band’s draw history the last time playing the venue or tour draw history if it is their first time playing your venue can pay off in the end. Additional points of research are ticket prices from last show/tour, what band played with them the last tour and did they have any help from outside sources such as radio sponsors. After researching the act you will feel more comfortable with making an offer and the possibility of the night doing well is greater.

What you learned about the role of communication

Communicating is very important when conducting business as a talent buyer. The Internet has become one of the most important tools in the world of business because more talent buyers are turning to the Internet to conduct business via email. While this may be true locally, I find it more often at the larger levels the phone is used more. “I like using email because I can go back and see the paper trail, but sometimes a tone of the email can be taken the wrong way.” Said Tommy Ginoza. One additional technique Tommy uses is a phone log. He keeps a log of all the calls he makes in and out, so when he gets into a negotiation he always has all the information in front of him to make the deal. Attention to detail is what makes Tommy a great negotiator.

Negotiation and Deal-Making (PDF)