Live Nation’s Loss Is U2′s Gain
The Wall Street Journal and other financial news outlets are reporting that U2 has cashed in on their 1.6 million shares of Live Nation stock to the tune of $25 million. The trouble for Live Nation is that the stock was only worth $6.1 million. U2′s contract with Live Nation stipulated that the 1.6 million shares would be guaranteed to be worth $25 million. The only other artist with the guaranteed stock price contract provision is Madonna.
The WSJ’s article quotes Paul McGuinness: “We’re very much in business with [Live Nation] and we’re planning to tour in 2009.”
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Wow… That certainly is cold-hearted, but a very shrewd business move by the band. Can you imagine getting that phone call/email/letter? “Good morning, Paul here… We believe your stock will never regain its original value – even after we release our album and launch our tour – so we’re cashing in all our shares for the agreed-upon $25million. Oh, and by the way, we’re still ‘tweaking’ the record, sorry for the delay….” OUCH!
Paul McGuinness is very much in the business of giving Live Nation the business:-) He’s certainly earning his 20%.
Reminds me of the scene from Goodfellas (narrated by Ray Liotta as Henry Hill):
“Now the guy’s got Paulie as a partner. Any problems, he goes to Paulie. Trouble with the bill? He can go to Paulie. Trouble with the cops, deliveries, Tommy, he can call Paulie. But now the guy’s gotta come up with Paulie’s money every week no matter what. Business bad? F you, pay me. Oh, you had a fire? F you, pay me. Place got hit by lightning huh? F you, pay me.”
But will Live Nation be in business in 2009 so that U2 can tour? That’s the real question. I wondered why they hooked up with them, and clearly the chance for a free $25 million must be the answer.