U2's giveaway reveals how they hit the big notes
There’s still money to be made in the rock’n’roll game. While the music industry narrative of late has been about losses due to HMV’s woes and disruption to the dominant players caused by technology, Paul McGuinness reminded us this week of the rewards which await the more successful acts.
The U2 manager, speaking at an event for music education charity Music Generation on Monday, said the band had donated the €5 million profits from their three Croke Park shows in 2009 to the charity.
He said that it was the band’s long-standing practice to donate profits from shows in their homeland, though this was more “discreetly” done in the past.
A cynic might argue that indiscreetly talking about such philanthropy is one way to draw attention away from the band’s tax-efficient practices.
In 2006, the band moved part of their business to the Netherlands to avail of a lower tax rate. This controversial decision is never far from the surface in any discussion about U2’s finances.
It led to protests by the UK Art Uncut campaign at the band’s Glastonbury performance in 2011. There have also been protests by groups like the Debt and Development Coalition Ireland against the move in the past.
However, McGuinness’s statement about profits from their Irish shows does shine a light on U2’s business affairs. Indeed, it is highly unusual to hear the manager talk so freely about the exact figures involved. McGuinness quipped at a Billboard awards ceremony a few years ago about how, when he and U2 first travelled to the United States in the early 1980s to tour, he found the US live industry’s fixation about the box-office grosses which bands were earning to be quite “gross”.
McGuinness has clearly grown more comfortable with these figures as U2’s grosses have climbed and climbed. His clients’ last tour, the 3600 tour, grossed more than $736 million from 110 shows in front of more than seven million people in 2009 and 2010.
That tour was the first under the band’s deal with Live Nation. In 2008, U2 signed a 12-year deal with the live music promoter to cover the band’s touring, merchandising, digital and branding rights.
No figures were made available at the time, but informed sources indicated that the deal was in the $100 million ballpark.
According to Billboard magazine, U2’s three shows in Croke Park on that tour attracted 243,198 people and ensured a box-office take of $28.8 million (roughly €20 million in 2009 figures). Tickets for the hometown shows ranged in price from €33.60 to €131.50.
Costs for a show at Croke Park would be considerable. The GAA’s rental hire fee for the venue is quite high – it was seeking 20 per cent of gross ticket sales in 2005 – but this figure would have been known by the promoters MCD when they won the tender to hold the show at the venue.
There would also have been huge production costs involved in transporting and erecting the 3600 tour set, even if the elaborate stage did allow the band to increase capacity at the venues they played on that tour.
Other costs would also have to be paid, such as VAT, the PRS music license (which is usually a percentage of the ticket price), staff wages, security costs, insurance and payments to local authorities and services.
But even after all these costs are taken care of, a €5 million take isn’t a bad pay-off for three nights’ work on Jones’s Road. In fact, some back-of-an-envelope calculations based on that figure would put the profit for the entire 3600 tour at about $184 million, give or take a few million.
You can understand therefore why McGuinness talked about his hope that the band manage to release a new album in 2013. A new album this year means U2 will be able to tour next year and get back on the bandwagon.
Given the slump in album sales, it is touring and other on-the-road activities rather than recording which brings in the cash these days. U2’s last album No Line on the Horizon sold five million copies, but it didn’t help that the record was one of the worst releases of the band’s career.
You could argue the band don’t even need the excuse of a new album to tour – dedicated fans and fairweather followers would probably prefer a greatest hits tour at this stage.
Now, there’s a thought to get U2 and Live Nation’s bean-counters excited.
* Jim Carroll writes about music for The Irish Times