As you hike in through the gates of whichever festivals you attend this summer, you might survey the scene – a miniature city, centred around stages, with its own infrastructure – and imagine that the £170 or so that you and tens of thousands of others have paid is going to make quite a lot of people quite a lot of money. You’ll be paying for the bands, of course, but you’ll also be ensuring the promoter’s bank balance looks an awful lot healthier. Right? Hardly.
The economics of festivals are finely poised. These events wobble on a knife-edge between glorious success and ignominious bankruptcy, and looking at where the money goes is a sobering undertaking.
The first thing to remember is that a chunk of money has been taken from what you paid for your ticket even before the promoters and bands take their shares. There’s an automatic deduction of 20% in VAT, and 3% goes to PRS, which collects the money owed to songwriters for performances of their songs. That means the promoter is down by almost a quarter of their gross from ticket sales before they’ve so much as booked a band or installed a portable loo.
That miniature city (or, in the case of Glastonbury, Reading and Leeds, Isle of Wight or T in the Park, not-so-miniature-city) doesn’t pay for and build itself, either. The promoter has to pay to hire the site, put up the fencing, build the stage, lay on water, electricity and waste management, sort out security – and more. “For a 10,000-capacity festival, your power will cost you between £60,000 and £100,000,” says Gareth Cooper, co-founder of Festival No 6. “We would spend up to £30,000 taking the waste away.”
And the bigger the audience, the greater those costs are. “At the Isle of Wight festival, between security and police, it costs £1m,” says John Giddings, the event’s head. He has to employ around 5,000 people to ensure he can lay on all the necessary amenities and a greenfield site isn’t imediately fit for a festival just because you’ve made it fine for campers and live entertainment. Giddings says he spent £250,000 building roads into the site’s car park. “Parking cars on grass,” he says with the weary voice of experience, “is not the best idea in the world.”
As Jon Drape, managing director of outdoor event production company Ground Control, puts it: “Most festival sites are, literally, green fields. There are no utilities there. There is very stringent legislation that festival organisers need to meet to stage a festival. A lot of the expenditure is around very unsexy items – sanitary provision, showers, toilets, waste management, power, site lighting. All those utilities need to be brought in.”
Even after you have made that investment, it can all disappear. This year’s T in the Park festival, running this weekend, has had to move to a new site at Strathallan Castle, having been forced out of its 18-year home in Balado owing to issues caused by an oil pipeline running under the site. “We are the fifth biggest town in Scotland when T in the Park is on, with all the issues that come with running a major town,” says festival director Geoff Ellis, who estimates the running costs over the years at £1m. Now he has to start from scratch on a new site and get it up to the standard it took nearly two decades to reach at its old location. And even then there is no guarantee he will get planning permission for T beyond the initial council-approved three years.
So you’ve splashed out all that money. How do you get it back? It’s not just from the ordinary punters who are paying no more than the ticket price and bringing their own tent. As with football, they might be the bedrock of the festival, but they also provide the atmosphere that turns a festival into an experience for those with more money to spend. Among them are a group that hardened festivalgoers despair of, but who bring in a load more money – the “glampers”. “[We] probably sell more boutique camping per head than any other festival,” says Bradley Thompson, festival director of Festival No 6. “It’s around 15% of people.”
There is a growing demand for it – glamping enclosures often have their own toilets and showers, and phone-charging tents – and festivals are mustard-keen to provide it. Chris Carey, CEO of Media Insight Consulting, spells it out in harsh fiscal terms. “Against the backdrop of a lot of festivals coming into the market, the big ones are doing a much better job of monetising people on site,” he explains. At Latitiude next weekend, you can get an Airstream caravan for between £2,150 and £2,750 – and a chunk of what you pay for your glamping goes back to the festival promoter.
Aligned to this is sponsorship. “Sponsorship is like a safety net that helps cover the cost of putting on the event,” Giddings says. But it is not just a case of taking the money and running. Sponsors want to be more directly involved, seeking to do “experiential marketing” on the site. Some festivals believe, if done right, this can improve the event for attendees. Others face bigger moral quandaries. “Finding ethical sponsors is never straightforward, so we have never relied on sponsorship,” explains Womad director Chris Smith. “If we were approached by a car manufacturer, it wouldn’t work for us at all. You have to make sure it’s the right motivation behind it.”
Others don’t have the luxury of saying “no” to sponsors – simply because they are too small to attract other offers. “We are interested in sponsorships, but one of our problems is our size,” says Marina Blake, director of the 1,000-capacity Brainchild, which takes place at Bentley Country Park in East Sussex this weekend. “But just reaching 1,000 people is not very exciting for a lot of sponsors.”
You’ve got your glampers and your sponsors. Now you need to work out how to get money from the caterers. Food and drink is a key way for festivals to recoup money, either by selling it themselves or bringing in external companies and charging them rent (or sometimes running on a profit split). Graeme Merifield, director of Wychwood, estimates that ticket sales only go to pay for 60% of running his festival. “The other 40% is made up from pitch fees from traders and caterers, sponsorship money and our bar profits as we run our own bars,” he says. “If we didn’t have any of those other incomes, then we wouldn’t be able to run a festival.”
Hugh Phillimore, festival director of Cornbury, suggests that he would charge a trader between £300 and £400 to have a stall at the festival. “You have to be careful,” he cautions, “that you don’t have too many as then none of them will do any business.” Get it right, though – enough stalls to cater for everyone without massive queues, offering good food and drink – and your food can become an attraction in itself.
Even if your overheads are skeletal, ever-present meteorological risk can be unforgiving. In the wet summer of 2012, a number of smaller festivals went out of business as the costs of addressing flooding or dealing with cancellations were beyond them financially. “When it rains, you have to pay a lot of extra money for straw to go on the mud,” Giddings says. “When the sun shines, you have to pay a lot of money to give away water for free.”
Cooper puts it more bluntly. “You plan for a year and it could all be washed away. That’s not a sensible business. It’s a reckless business.”
Inclement conditions can also affect “walk-up” sales (people buying a one-day pass on the day itself). Phillimore said that, in 2013, Cornbury sold 1,200 day tickets, but the year before, because of rain, it only sold 200 – equivalent to a shortfall of around £80,000. Not every festival can sell out in advance, so walk-ups can mean the difference between disaster and success.
Making the numbers add up is going to become incrementally more difficult as musicians steadily hike up their appearance fees, as a means of offsetting declining income from record sales. Some festivals see that as an inevitable byproduct of market forces while others are refusing to be washed along with such demands since their margins are already wafer thin. “Not only are artists demanding more money, they can command it with the sheer number of festivals out there,” says Drape. For many of the biggest events, it becomes a financial arms race as a handful of headline-level acts know they can play rival festivals off against each other to secure the highest fee possible.
Merifield says Wychwood will not allow the romance of securing big names to overtake financial pragmatism. “We have an idea in our heads for how much we are going to spend on the headliner and, if people ask for more than that, then we just walk away,” he says. “Years ago we put on an act that cost us more than we had ever spent before, thinking it would have a golden effect. But it had no effect at all.”
It is a sobering thought this summer – as you prop up the organic cider stalls, pondering which stage to go to next – to remember you are standing in the middle of one of the highest-risk businesses in the world.
“If festival promoters were better business people, they wouldn’t be in festivals,” says Cooper.
So, why do it? The possibility of making a fortune coupled with the thrill of taking a massive patch of grass and magically transforming it into a mini city where, hopefully, tens of thousands of people will have the best three days of their summer, still holds plenty of appeal for some. While you are having fun, spare a thought for the organiser, sitting in their portable building and sweating over their spreadsheets.
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