Room With a View
La Zona Rosa's Ripple Effect
In truth, the war hasn't really started," says Liberty Lunch owner Mark Pratz of a highly anticipated booking battle that local music insiders say is about to erupt between Austin's mid-size venues. "I think we've been operating more on the anticipation of it than the reality of it. It could be that we're all psyching ourselves out." That's a quote from Pratz's calm and rational side. What Pratz calls his "excited and negative side," however, has been more vocal of late, particularly after the March announcement that Direct Events was purchasing La Zona Rosa in order to add another facet to its growing stable of venues. While capacities for Direct Events' other two venues, the Backyard and Austin Music Hall, hover between 2,000 and 3,000 depending on their configuration, La Zona Rosa, after extensive renovations, will feature a 450-person dining room/front stage area as well as a now-enclosed main room with a capacity of 1,500. Since Liberty Lunch's capacity is approximately 1,000, Pratz immediately interpreted the new, improved La Zona Rosa as his club's death sentence.
Meanwhile, across town, similar concerns were raised (albeit more quietly), by the ownership of Stubb's, which sports an indoor stage accommodating several hundred and its outdoor Waller Creek stage, which can host between 2,000-3,000 live music patrons. While Liberty Lunch worried that Direct Events' entrance into the mid-size venue market would surely test the relationships they've forged with artists and agents over the club's 21-year existence, the owners of Stubb's worried that the new La Zona Rosa would become the viable alternative to Liberty Lunch that they've spent the last 18 months working successfully towards.
Yet as La Zona Rosa nears completion (the big room is scheduled for christening by Ziggy Marley's September 25 appearance there), all three clubs are saying that no bidding wars have yet erupted. For starters, they're all breathing a little easier that a fourth mid-size venue won't be opening up in Austin; the Fox Theater, a successful Boulder, Colorado-based organization that has spent three years investigating local opportunities, announced recently that it won't be joining local investors in converting the Aquarius Theater on East Riverside into a mid-size venue or acquiring an interest in Steamboat to possibly move in on Sixth Street.
Nevertheless, Pratz and Stubb's co-owner Charles Attal recently unveiled plans to join forces and occasionally "co-promote" shows at each other's venues, beginning with October dates for Rusted Root and Dog's Eye View at Liberty and David Lindley at Stubb's. And in what constitutes an announcement equally surprising, Direct Events president Tim O'Connor has declared that he would like to meet with both Pratz and Attal to discuss a potential ceiling for what local mid-size venues will pay artists and agents in the case of highly contested bidding wars.
Due in part to these developments, all three venues say only a handful of shows between August and November have been competitively bid on by more than one party. And although Steamboat's Danny Crooks has expressed anger over a band which has built its draw at his club, Sister 7, playing at La Zona Rosa, and Susan Antone quietly bemoaned the loss of a Taj Mahal gig to Stubb's, insiders say these incidents are coincidental rather than proof that a tri-lateral war between La Zona Rosa, Stubb's, and Liberty Lunch has commenced. Not that this would necessarily be catastrophic according to one onlooker.
"In general, competition is always beneficial to the market as a whole," says Brain Greenbaum, an agent for Creative Artists Agency, who handles booking in Austin for 450 CAA artists, ranging from Abra Moore to Smashing Pumpkins. "In the long run, it means more available dates and more opportunities, which only benefits the musical experience. And although bidding wars will inevitably surround certain acts, there's always going to be promoters coming into a market to throw money at some acts anyway, regardless of a new venue. That's not a new problem, and there's not much risk of that escalating just because there's a new room."
Indeed. So far, business for all three rooms has been mostly status quo or better. Then again, O'Connor says he has only recently started bidding seriously on shows and expects to confirm a batch of high-profile touring talent for La Zona Rosa's grand opening in October. For its part, Stubb's has already enjoyed a string of successful outdoor shows: Suicidal Tendencies, Sugar Ray, Cheap Trick, Squirrel Nut Zippers, and most recently George Clinton. Spearhead, booked for the day after Ziggy Marley, is also expected to do well. Finally, there is Pratz, who initially worried the most, but now says that although he was disappointed to lose the Marley date after the band and label indicated he had secured the show, he has actually been offered more shows of late than ever before. In fact, he says the shows he has booked from the end of September through the beginning of November might represent the tightest-packed calendar in the club's history.
"The agents work in a pretty straightforward way," says Pratz. "They'll either offer the show to you directly and work out a deal, or tell you that they're also taking offers from other venues. We know what that means. It means, `Give me your best offer.' But so far, and it makes me a little suspicious, the agents themselves haven't really tried to exploit the perception of some kind of war between the clubs."
Assuming, for a moment, that agents continue to spread the wealth evenly and this fall doesn't turn into Tour Wars, 1998 is most certainly poised to become the Year of the Flexible Venue. O'Connor, for instance, says that he had already been interested in acquiring a smaller 300-600 when he found La Zona Rosa available. Realizing the venue could be expanded to fit another piece of the Direct Events' puzzle -- the 1,500-seater -- O'Connor knew he was in business.
Converted under the direction of O'Connor and Direct Events' general manager/talent buyer Charlie Jones, La Zona Rosa features a new roof, a stage set-up only fractionally smaller than the Music Hall stage, retractable garage doors to adjust for show size, and a 50-ton air conditioning unit. And while O'Connor says the smaller room is intended to renew his company's connection to the local music community by booking local talent seven days a week, it clearly serves other intentions equally well. Not only can he develop touring talent in the smaller room, O'Connor can also use the room to juggle his big room and small room commitments. If a show booked for the large room isn't selling well in advance, O'Connor can cut his overhead and move it to the smaller room. The reverse is true for shows booked into that small room that sell better than expected.
Additionally, La Zona Rosa's new set-up allows the small room to shift gears and accommodate private parties, while also competing nightly with local music-based rooms like the Continental Club, Steamboat, Electric Lounge, Emo's, and the Hole in the Wall. Better yet, with La Zona Rosa's existing kitchen and a new Mexican menu, the inside room will also function as a restaurant, serving lunch and dinner before turning into a music venue.
"The reality of this business is that you have to have something that's more stable than the concert business alone," says O'Connor. "A restaurant is stable. You can take that money and go to the venue side and risk it on touring acts without having to wonder if you're going to be there tomorrow. The restaurant is the insurance against having to live show by show."
While Pratz and Liberty Lunch have not survived 21 years living show to show, flexibility in room size is clearly not the club's strong suit. In reality, anything less than a couple of hundred people makes Liberty Lunch look empty -- even if the show is financially successful. In fact, Pratz believes this empty appearance has recently hurt his ability to book several local bands who prefer to play smaller rooms for the same number of people because the smaller spaces appear more crowded.
"The local angle has been our biggest loss," admits Pratz. "By not having those local bands, it increases the chances we could lose money on the touring stuff, because a lot of the time we would have passed on that touring stuff knowing that we had a local draw that could make money. Then you end up buying stuff just to stay open weekends, and end up with real marginal shit. So now we have to operate more like a venue than a club, and if there's nothing to put in on a Saturday night, we'll close. Two years ago, we'd have panicked if we didn't have a Saturday booked. It's a real change in perspective."
Because Pratz says he's witnessed an overall industry trend take shape over the last five years which has bands demanding exponentially more money, turning a profit on smaller shows has become an increasingly difficult proposition. "La Zona's small room may wind up giving them as many bad nights as it's ever had, but it also gives them that niche. Not only can that small room count in their overall capacity, it can also turn into a very nice medium-sized room that's profitable. They've wisely designed it to be everything, and in some ways it's aimed more at Stubb's with a 1,500-person venue and a small room for 400. That's quite a few niches and they know -- like anybody else that's been in this business very long -- that if you're going to try to be open Monday through Thursday, you're not going to make it in the big room alone."
That La Zona Rosa offers similar-sized rooms to Stubb's is richly ironic, because Stubb's Waller Creek Amphitheater has often been compared both physically and in concept to O'Connor's Backyard. For his part, O'Connor denies going after any one club's audience, let alone Stubb's. Originally, aside from South by Southwest showcases, Stubb's outdoor venue was used primarily for large local shows like Ian Moore and Joe Ely -- acts that were never really considered competition for the Backyard's big touring acts. "Outside, we've established more in the last six months than in the nearly two years before," says Attal. "Now, I get a call on almost every big show coming."
Like La Zona Rosa, Stubb's is also a restaurant, and although Attal says the concert and food businesses are separate, he admits that the barbecue helps the music side's bottom line. The real key to the success of Stubb's, however, has been a roster of local bands that are capable of filling the 350-person room inside -- bands like Soulhat, the Ugly Americans, the Derailers, the Gourds, and the Bad Livers.
"The small room has been the key, the bread and butter," says Attal. "The outdoor venue isn't something to live and die by, it's gravy. If we didn't have it, we'd still be here and able to survive."
Actually, the small room has to keep Stubb's alive, because by the nature of being an outdoor venue too, Attal can't book shows into the Amphitheater from the end of October through late February. "There's a big hole between their outdoor and indoor capacity," says Pratz. "It's very hard to shut down and not take acts for four months and then try to re-establish yourself with the agents when everybody else is buying all winter."
To what degree the marriage between Liberty Lunch and Stubb's affects O'Connor's Direct Events is tough to determine so early in the game. Besides, there's been talk both locally and amongst national agents that the union could be inherently flawed -- and therefore short-lived -- because Pratz's building up Stubb's might eventually mean he loses shows for his venue.
"Both those clubs have filled niches of their own," says O'Connor, "and I think you'll see that our flexibility and diversity will allow us to be successful without having a great effect on the other venues' business. Down the road, I don't think you'll be hearing that Tim O'Connor and his `Multiplex Machinery' has been hitting agents over the head and stealing five shows away from venue XYZ. Agents are very hip to the markets, where to place their acts within them, and where they can make the most money."
If there's one thing all local clubowners that buy touring talent agree on, it's the power of agents. "They call all the shots," says Attal succinctly. How so? Agents, filling the middleman role between the artists' management and the venues, research trends in local markets and secure deals with available venues that address pre-determined management issues -- from ticket price to room size.
As Pratz explained earlier, once an agent announces a tour, he can go directly to a single venue and cut a deal or open the date up to bids, which typically raises the club's "guarantee" (what they must pay the band) and ticket prices. And dealing with agents comes down to two things: money and relationships. Obviously, agents are out to get their clients the most money possible while still assuring venues they routinely deal with that they're not being set up with a show that's unprofitable. Given this scenario, however, it's not unusual for a low bidder to win a hot show because of a long-standing relationship and/or the expectation this venue will later book developing or less desirable acts the agent brings to the table.
"It's often the smaller agents, with only one or a few good acts, that try to play everyone against each other and unreasonably drive up prices," explains Pratz. "The good ones, the bigger agencies, tend to do a better job of both establishing fair relationships and spreading their shows around."
For agents, spreading shows around a scene is perhaps as important as any one relationship or any one show's bottom-line money. Why? Simply because agents that represent a wide variety of clients need a wide variety of clubs to suit those clients. In fact, this could be the single factor that makes the "war" theory unlikely and allows all three mid-size venues to survive. "Agents see value in competition," says Pratz, echoing Greenbaum's earlier assertion. "Rather than eventually getting dictated to by one venue or one promoter as to how much they'll play for and where they'll play, they can spread their shows around and keep opportunities open at a number of venues."
By most accounts, Pratz probably has the advantage when it comes to longtime relationships with agents simply because he's been around so long. "Mark Pratz certainly has relationships," says O'Connor, from whom the same could be said, and who makes no secret that he has met with Pratz several times over the years about different forms of partnerships, including one that would have brought the two together on La Zona Rosa. "I respect him and those relationships. In fact, most of the things he already does, he owns. But there are always new things."
Initially, those new artists may constitute the bulk of Direct Events' bookings. Pratz says he was told straight out by an agent that Duncan Sheik would be offered to Direct Events alone, because he's a new artist and a good La Zona Rosa testcase. Generally, though, O'Connor downplays the theory that La Zona Rosa will have a hard time attracting established talent simply because it's a new venue. "We're not going to be starting over," says O'Connor. "We're not newcomers. We buy a lot of talent for our other venues and hopefully those agents will be offering us talent for this room as well."
Interestingly enough, PACE Concerts, the giant Houston-based promoter that has a five-year agreement with O'Connor on the Austin Music Hall and Backyard, will not be officially involved in La Zona Rosa's operation. Both O'Connor and PACE officials adamantly assert that there's no financial ties between the two parties in regards to the club, and that PACE will not be pursuing artists on the club's behalf. Moreover, both parties deny a widespread rumor that PACE effectively cut a blank check for La Zona Rosa, advising them to spend what it takes to build up their venue and redefine the club's previous reputation as a singer-songwriter venue catering to an older demographic.
"As they've been tied up with the renovation, I've tried to act as a conduit between them and the agents I work with, telling them about the venue and listening to what they have available," says Brad Roosa, a talent buyer in PACE's new Austin office. "We've simply been passing that information on to Direct Events, because this is fully their operation, with no real ties to us."
On the other hand, both O'Connor and PACE acknowledge that La Zona Rosa could eventually serve as a "farm system" for the Music Hall or Backyard. That said, some have wondered whether La Zona Rosa's wildcard might be the promise that it can move bands up through its ranks to bigger, more profitable venues and therefore offer better relationships to young bands and agents than Liberty Lunch or Stubb's. "That's not likely to be a consideration," says CAA's Greenbaum. "The reality is that if something's hot and is going to make money, O'Connor or PACE are going to want it. By the time it gets to the Music Hall, Backyard, or Southpark Meadows, whether it moved though La Zona Rosa's ranks or not isn't going to be a concern."
Show Me the Money
Perhaps no issue is of greater potential concern to Austin's live music fan than the effects of the increased competition on ticket prices. As a general rule, agents are looking for deals that offer the highest guarantee and the lowest ticket price.
"Agents today are very sensitive to ticket price," says Greenbaum. "We understand that there's lots of artists for the ticket buyer to choose from and that raising prices only shoots ourselves in the foot. We have to stay aware of what the market will bear and keep shows priced accordingly."
For the clubs, the checks and balances come from the fact that agents who continually overprice shows by soliciting bidding wars run the risk of burning clubs financially and therefore burning bridges. In practice, clubs determine what they offer agents by calculating the number of tickets they need to sell in order to break even. A bidding war can narrow that gap, and according to Pratz, the local concert market is soft enough that even cheap tickets don't always amount to crowded shows.
"It's not the way the industry is heading, but occasionally you'll get a young, hot band for an $8 ticket and still have trouble," says Pratz. "Cheap tickets are nice, and we've been conscious to keep things low to the point where for us a $15 show is a premium show, but a cheap ticket show that doesn't sell is still a failure."
Ironically, it's O'Connor and PACE, who many feel could spark bidding wars simply by entering the midsize venue field with La Zona Rosa, that say they're most afraid of competition driving up ticket prices. "Most costs don't trickle down," says PACE's Roosa. "But it's not uncommon that in a competitive field it's the consumer that ends up holding the bag. I don't know each local buyer's modus operandi, but when you raise the guarantees you often have to raise the ticket prices."
You do the math, says O'Connor. "If you have X amount of capacity and an act costs $15,000, you work backwards and come up with a reasonable break-even point -- the cost to cover that event. But while your costs can be driven up by competition, your capacity can't. And in most cases, the consumer will be affected immediately."
That said, it's obviously in O'Connor's best interest to keep prices for the midsize venues low, because there are always more midsize shows that can fit into the Austin Music Hall, and the money consumers spend on the smaller shows comes from the same wallets and bank accounts that he'd like to see dole out money for his bigger shows at the Music Hall. At the same time, local clubowners agree that their own lack of communication with each other is ultimately what allows agents to play them against each other and raise the guarantees.
"What should happen," posits O'Connor, "is that the potential buyers in town get together for a roundtable and come to some agreements so there's communication as we buy things. We should be able to agree as a group that once a show gets beyond a certain dollar figure or percentage, we'll back off. We should, at the minimum, discuss putting a ceiling on offers as much as possible. Then we can control the marketplace from within, rather than the agents controlling us from the outside."
What? Me Worry?
Nobody, from the agents to the clubs owners, is denying that things could get ugly overnight. A single heavily-contested show could kill any existing goodwill between the clubs and spark the open warfare everyone is trying to avoid. And there are other variables as well. Jim Ramsey, once a heavyweight promoter here in Austin, has recently moved back into town. Where will he pop up? The fabled Aquarius, perhaps? Can a relationship between Pratz and Attal really fly? And what about O'Connor's idea of all the owners getting together? How likely is it that they could sit down at a table together and agree to a ceiling for ticket prices? Nobody knows, and if they do, nobody's stepping forward and saying. More certain is the fact that La Zona Rosa has only just begun aggressively pursuing shows, and that O'Connor admits he has to turn around his investment in the club quickly. How quick, and at what cost to other venues in town are yet another pair of questions.
Equally hard to evaluate is the matter of how far the local concert dollar can stretch. Live music fans will no doubt embrace the notion of more shows and more choice, but how many can they possibly afford it? And even if all three midsize venues thrive on roadshows, what's left over for the Tuesday night $5 Hole in the Wall show featuring three local bands? And what about the smaller roadshows that routinely stop at the Electric Lounge, Antone's, Emo's, the Continental Club, and the Back Room? Will there still be as much interest in those shows, and even if there is, will the midsize venues begin pursuing those shows just to fill their calendars and keep their rooms active between bigger shows?
Many of these same questions were also raised four years ago when O'Connor opened the Backyard and then the Austin Music Hall. The same flurry of speculation swept the local community at that time, and just as many queries went unanswered. In 1997, though, there's hindsight, and hindsight tells us that both the Backyard and the Austin Music Hall revitalized the local market for 3,000-seat roadshows. You don't hear locals complaining about the opportunity to see Bruce Springsteen, Ozzy Osborne, John Fogerty, and Alanis Morrisette -- opportunities not nearly as abundant before those venues opened.
What does the revitalization of La Zona Rosa ultimately mean? Impossible to say, other than it will certainly have some type of ripple effect. Should you worry? Depends on your attachment to Austin's live music scene. One thing's for sure, however: One man may be worrying enough for everyone. "Sure, we're still worrying about it," says Pratz, "even if we haven't yet seen the effects [of La Zona Rosa's revitalization]. This time next year might be a whole different story."