Promoters' spat rocks the music industry

A row between two promoters provides fascinating insights into the world of concert promotions, writes SIMON CARSWELL, Finance Correspondent

EAMONN McCANN and Denis Desmond are the “MC” and the “D” respectively in the name of MCD Productions, the State’s largest concert promoter, though they parted company in 2006, leaving Mr Desmond with full control of the Dublin-based business.

Their split may not have been as a result of creative differences or as heated as the rows between the combustible rock brothers Liam and Noel Gallagher, but it has turned acrimonious nonetheless.

And the dispute moved up a gear when McCann resorted to the High Court last July in a bid to resolve his grievances over claims for money due to him by his former co-promoter.

The action raises fascinating insights into the hitherto private financial dealings within the starry world of concert promotions.

Mr McCann claims he is owed as much as €22 million and possibly more by Mr Desmond as his examination of the books and records behind their partnership to ascertain the profit levels within the business continues.

The €22 million comprises €16.3 million for the purchase of his share of their business as agreed in June 2006; €3.8 million for his share of profits from concerts promoted by MCD between 2001 and 2006; and a share in a €5 million once-off payment from Ticketmaster.

The payment from Ticketmaster, which sells concert tickets, was made to Mr Desmond’s firm, Gaiety Investments, in November 2005. Mr McCann describes the €5 million payment as “a non-recoupable term volume discount”.

It’s believed this payment was a 10-year advance to MCD for which it agreed to sell 600,000 tickets a year through Ticketmaster.

Mr Desmond had no comment. Mr McCann could not be reached for comment.

Ticketmaster Ireland managing director Eamon O’Connor said the company does not discuss payments with the media.

The gigs at the centre of the dispute include the biggest outdoor summer concerts promoted in the Republic, reflecting MCD’s position as the State’s leading promoter.

They include the Witness and Oxegen festivals between 2001 and 2006, the U2 gigs at Slane Castle in 2001 and Croke Park in 2005, Madonna at Slane in 2004, Neil Diamond at Croke Park in 2005 and the Eagles in 2006.

Among the submissions made to court are MCD’s records on profits and losses made on outdoor summer shows from 2001 to 2006.

Profits earned by MCD for the shows amount to €281,815 in 2001, €2.1 million in 2003, €445,228 in 2004 and €41,822 in 2006, while the promoter made losses of €588,851 in 2002 and €1.7 million in 2005. A further €5 million was earned by Gaiety Investments through concessions such as food and retail stalls at the concerts.

Mr McCann claims that the outdoor concerts promoted in the years 2003, 2004 and 2005 made a net profit of almost €3.5 million, based on figures obtained by his accountants.

Mr Desmond is vigorously defending the action. Last Monday the case was admitted to the Commercial Court, the division of the High Court that fast-tracks large business disputes.

Maurice Collins SC, for Mr Desmond, told the court on Monday that it “beggars belief” that a claim of such magnitude, if it exists, would have been allowed to linger since 2006.

The case is set for a full court performance with high-profile barristers headlining and prominent Dublin law firms supporting. AL Goodbody is acting for Mr McCann, while Mr Desmond’s lawyers are Arthur Cox.

Mr McCann’s claim for €3.8 million on profit share on concerts between 2001 and 2006 is contested by Mr Desmond who claims that the figure should be €104,680. At no stage had Mr Desmond put a “realistic value” on the amount due, Mr McCann has claimed.

He also claims that Mr Desmond is disputing Mr McCann’s understanding of net profit and is seeking to make deductions for overheads associated with his companies or tax liabilities.

It appears that a key aspect of the case centres on each side’s understanding of the 2006 buy-out agreement and interpretation of the profit on which the purchase price was agreed, and whether that figure was gross profit or net of overheads incurred on the concerts.

Mr McCann alleges that Mr Desmond is seeking to write off under the partnership expenses which in fact relate to the business conducted by his companies. He claims that Mr Desmond has not paid him in relation to the agreement on the sale of his stake in 2006.

According to Mr McCann’s case, he claims that in the 1970s the men began a business relationship to promote and organise music events.

Mr McCann and Mr Desmond were responsible for bringing hordes of rock music fans to the sleepy Meath village of Slane for the first time when gigs started there in 1981.

Tapping a growing popularity for outdoor concerts, they launched Féile in Thurles in 1990, which later moved to Kildare and Cork.

Court filings include a letter sent from Mr Desmond’s solicitors dated July 28th, 2008, in which they said that the business relationship between the two men could at best be described as a joint venture to promote open air shows in the Republic and that the split of profits and losses would be on a ratio of 55 per cent to 45 per cent in favour of Mr Desmond.

Tickets sold in Northern Ireland, where Mr McCann is based, went to his firm, Wonderland Promotions, and profits due to him by MCD were offset against profits made by the Dublin-based company in the Republic.

MCD’s records show that profits due to him were offset against ticket sales by his firm.

The business relationship developed into a partnership, Mr McCann claims, but that partnership was never put in writing.

They continued to work closely until June 2006 when, Mr McCann claims, Mr Desmond agreed to buy out his share of the partnership in relation to the promotion and operation of outdoor concerts in the Republic for 4.66 times the average net profits of the partnership for the years 2003, 2004 and 2005.

The claim for €16.3 million by Mr McCann is based on a 4.66 multiple of 100 per cent of the net profits, according to the court submissions.

Mr McCann claims Mr Desmond later disputed the existence of a partnership but confirmed it in a letter dated December 4th, 2006 from his solicitors. Mr McCann claims Mr Desmond denies the existence of any partnership.

It is also claimed by Mr McCann that he needed full access to the books and records of the partnership to determine its profits to calculate the purchase price on his share of the business relationship that was due to him by Mr Desmond after their 2006 agreement.

Mr McCann alleges that, based on the limited information made available to him between August 2006 and July 2008, it became apparent to him and his advisers that Mr Desmond had not kept proper books and records of the partnership. He claims that it also became apparent to him that partnership funds may have been intermingled with funds and accounts relating to other businesses and companies controlled by Mr Desmond, in which Mr McCann has no interest.

Mr Desmond later agreed to provide supervised access to Mr McCann’s advisers to Gaiety Investments’ books and records.

Accountants Grant Thornton, hired by Mr McCann, concluded that separate books and records had been maintained for the partnership but that partnership funds had been intermingled with funds relating to companies controlled by Mr Desmond.

Mr McCann claims that Grant Thornton uncovered payments which should have been recorded as partnership income but were instead recorded in the books and records of companies controlled by Mr Desmond. They became aware of agreements entered into by Gaiety Investments and MCD with Ticketmaster, Mr McCann claims he was unaware of.

Mr McCann says that Grant Thornton is still carrying out its examination and that he is not satisfied that a full disclosure has been made.

He said that as late as September 2009 the accountancy firm had received new information from MCD Productions in relation to settlement statements for the outdoor concerts at Lansdowne Road between 2002 and 2006.

He claims that Grant Thornton has, in particular, been provided with selected settlement statements with the artists and with certain settlement statements for Oliver Barry, the event co-organiser, but that it has not been possible to reconcile the two sets of statements.

Another claim by Mr McCann is that €1.1 million in revenue from ticket sales from concerts in the period 2002 to 2005 was not included in Ticketmaster records or reconciliations.

Mr McCann claims Mr Desmond asserted that these sales were included in the summary of one concert, the 2002 Witness concert, which was headlined by Oasis and Green Day.

Mr Desmond is expected to argue that this is money that was owed to him by Mr McCann.

The case takes its place in the ever-lengthening list of disputes to be heard by the Commercial Court.

Disputed gigs

THE OUTDOOR concerts at the centre of the dispute between Eamonn McCann and Denis Desmond

Witness at Fairyhouse Racecourse

August 2001, July 2002, July 2003

Oxegen at Punchestown Racecourse

July 2004, July 2005, July 2006

Slane Castle

U2 (two nights): August-September 2001

Stereophonics: August 2002

Red Hot Chilli Peppers: August 2003

Madonna: August 2004

Lansdowne Road

Robbie Williams: July 2001

Red Hot Chilli Peppers: June 2002

Destiny's Child: June 2005

Neil Diamond: June 2005

The Eagles (2 nights): June 2006

Croke Park

U2 (3 nights): June 2005

Bon Jovi: May 2006

Robbie Williams: June 2006

Billy Joel: July 2006

Phoenix Park

Robbie Williams: August 2003

Red Hot Chilli Peppers: June 2004

Ardgillan Castle

REM: June 2005

Meatloaf/Status Quo: June 2005