AEG & SMG Merger Create World’s Biggest Facility Management Company

2/7/2019 by Dave Brooks   

for Billboard

So what does all of this mean for the live entertainment business? Below are five important facts to consider when thinking about this historic deal.

‘A Merger of Complimentary Assets’: Bob Newman Announces AEG Facilities Merger With SMG

The AEG Map Now Includes The Greek Theatre, The Superdome And The High-Grossing BOK Center

AEG is adding a number of attractive venues to its network, including the Greek Theatre in Los Angeles, which SMG has managed since 2016, as well as the 10-year-old BOK Center in Tulsa, Oklahoma, Soldier Field in Chicago and the Superdome in New Orleans, one of SMG’s first clients. AEG now has access to more than 300 facilities around the world through ASM, but what that looks like long-term is unclear. It’s likely there will be little, if any, change at any of the SMG buildings in the next six months to a year, but the long-term benefit of having a direct relationship with so many venues around the world presents a number of interesting opportunities for AEG.

Live Nation Is Not Expecting Many impacts To Their Business  

While Live Nation top brass are weighing how to react to the merger, one senior executive tells Billboard the company is not planning any major opposition to the joint venture deal.

“We already passed on buying SMG,” the executive says, noting that the concert promotion giant isn’t interested in real estate beyond needing a place to host concerts.

Live Nation’s lack of concern for the mega-merger speaks to the concert industry’s symbiosis among competitors. While AEG Presents and Live Nation often compete for talent and touring deals, AEG’s facility division still relies on Live Nation for content for the buildings it manages on behalf of the city and local governments.

“They can’t fill all the dates on their own and need to work with all the suppliers,” our source at Live Nation says.

Irving Azoff Calls AEG Founder the ‘Dark Prince of Colorado’ in Billboard Live Music Summit Q&A With Jeffrey Azoff

It’s unclear what the deal means for Oak View Group, but CEO Tim Leiweke will probably be able to capitalize on the upside

Is the AEG-SMG merger good or bad for Oak View Group, the entertainment and development firm first created by Leiweke in 2016? On its face, it might appear to be bad — after all, Leiweke tried to buy SMG from Ajax Capital in 2017 and was rebuffed by SMG President and CEO Wes Westley.

Leiweke’s two largest competitors are now one super competitor, but Leiweke is a pragmatist and seeing his two competitors reduced to one opens an attractive lane for the former AEG CEO to be the more nimble alternative to the world’s largest venue operator.

ASM Could Face regulatory Hurdles Getting Approved

It’s unclear how regulators will approach the merger of the two largest venue operators — horizontal mergers often face greater scrutiny than vertical mergers like the 2010 deal that brought togetherTicketmaster and Live Nation.

Many of the buildings ASM operates are owned by public entities and it’s unclear how regulators will view a company that gives tax-payer owned buildings fewer options for management contracts. Of course, there’s also the possibility that regulators won’t care about the merger between two mid-sized companies in a little-known industry. But even if AMS avoids scrutiny from federal regulators with the Department of Justice, it will still have to grapple with the hundreds of cities and governments it does business with around the world. Untangling AMS’ complex global network of venues will take some time and might force the firm to drop a few clients for compliance issues.

AEG’s Real Estate Holdings Are Not Part Of The Deal

AEG Facilities is a 50-percent owner of AMS, but the deal does not include the company’s owned venues in Los Angeles like Staples Center and LA Live or the 02 Arena in London, or entertainment development in Berlin and Hamberg, Germany. That means that the Phil Anschutz-owned AEG remains a major player in live entertainment real estate, outside of the AMS venture, and gives him a controlling interest in his own real estate investment, while co-operating the company’s building contracts division with the team at SMG.

FOOTNOTE: This article was posted by the City-County Observer without bias, opinion or editing.