SFX Bankruptcy Court Allocates $15 Million In Payments To Artists
The judge overseeing the SFX bankruptcy gave top tier EDM artists and their agents reason to celebrate this week with the allocation of $15 million to be paid to artists performing at the beleaguered promoter's festivals this summer.
By Dave Brooks of touring industry trade Amplify
The judge overseeing the SFX bankruptcy case has agreed to allocate as much as $15 million to a number of top-tier talent agencies to ensure DJs and EDM artists are paid for performing at SFX festivals this summer. The deal is a lifeline for the beleaguered company – confidence in SFX had gotten so bad that some artists and their agents were requiring 100-percent payment before their names were even announced on the lineup.
On Monday, U.S. Bankruptcy judge Mary Walrath approved Artist Carveout Agreements between SFX and WME, AM Only, Windish and Paradigm Talent Agency. The agreement sets aside a pool of money so that SFX can pay the artists it has booked for its festivals and continue to operate while in bankruptcy.
"The value of the debtors’ estates and their ongoing business depends on their continued successful festivals, events and club shows," the motion from SFX attorney Dennis Meloro reads. "The profitability of these shows hinges, in significant part, on the artists performing and their ability to attract large numbers of fans. The pool of artists that can reliably attract large numbers of fans to the shows is extremely limited and the vast majority of them are represented by the agents. Thus, the debtors relationship with the agents and their represented artists are vital to a successful reorganization."
The deal allows for headliners performing at festivals of 10,000 or more people to be paid 25% before announcement of the lineup, 50% 30 days before the festival and 25% not less than five business days prior to the event. If the event gets cancelled, SFX owes the artist 100-percent payment.
Non-headliners will be paid 15% before announcement of the lineup; 40% thirty days before the event, and 45% not less than five business days prior. Smaller shows and nightclub concert talent will be paid 20% before announcement of the lineup, 40% thirty days before the event and 40% not less than five business days prior to the event.
The artist carve came after a month of negotiations with the major agencies and SFX's bankruptcy financier DIP Lenders. According to the document "[a]gents have agreed to reasonable Payment Terms for Artist Agreements during the Chapter 11" and agents have agreed that the booking contracts will stay intact if any of the participating festivals are sold off.
After the bankruptcy was announced earlier this year, a number of artists and agents stated they will refuse to perform at upcoming SFX festivals unless they were given "100% payment cash in advance" according to the filing, and in some case "100% payment prior to permitting (SFX's) announcement of a particular Artist as part of the line up for a Show."
The news comes after a round of layoffs were announced at the company. After filing Chapter 11 bankruptcy, SFX has announced plans to cut 50 employees from its New York headquarters. Last week, CEO Robert Sillerman announced he was stepping down from his post atop the company he helped create. FTI Consulting has taken leadership over SFX in hopes of restructuring the company’s $490 million debt. Meanwhile, SFX is moving forward with the sale of Beatport, Famehouse and Flavorus.
What is this, actual protection for musicians?