An article on the Lloyd’s web site (www.lloyds.com) analyzes the stepped up need for insurance coverage when mega-rock bands like U2 go on tour.
The Irish band is slated to begin its latest series of concert dates, named the “360 Tour”, in Barcelona on June 30. The event has “created a storm of expectation among the band’s fans,” said Lloyd’s. “Details of the band’s mammoth globetrotting trek give a revealing insight into how music tours have changed dramatically in the past 20 or 30 years.
“The tour, sponsored by handheld electronic-device maker Blackberry, will see U2 play 14 stadiums in Europe, including Cardiff’s Millennium Stadium and Ireland’s Croke Park, before rolling on to numerous dates in North America.
“It may allow the band to reclaim its crown of the highest-grossing tour, lost to the Rolling Stones, whose ‘A Bigger Bang’ tour raked in an astonishing $558 million, shattering the previous record held by U2’s Vertigo Tour, which made $389 million.”
Lloyd’s also notes that tours, such as U2’s, “not only earn bands as much money as medium-sized companies,” but also “have a similar sized workforce, employing a small army of technicians, crew, dancers, backing singers and musicians.”
Times, moreover, have certainly changed since the 1970’s and 80’s. “The dynamics of touring have changed completely. Now there’s an awful lot of money involved,” stated John Silcock, CEO of Robertson Taylor, a unit of Lloyd’s broker Oxygen, which specializes in placing cover for musical events.
“Back then bands would often lose money on tours. It was an opportunity for them to go wild,” he explained. “But with the decline in CD sales, performers now rely increasingly on their earnings from touring, a trend known as ‘gigonomics’.”
David Taylor, Director of Hyperion Claims Specialists, an expert loss adjuster for music claims, explained: “The demand for insurance has gone through the roof because of the value of tours that now go on the road.” The biggest claim he has dealt with was for £55 million [$82 million], when a performer was forced to miss a number of concerts.
“With bands now signing ‘360 deals’ worth tens of millions of dollars with a worldwide promoter, giving it rights to the band’s performances recorded material and merchandise, all parties look to insurance to protect their investments,” Lloyd’s explained.
“Insurance is now prerequisite for touring,” Taylor stressed, indicating that most of the business will make its way to Lloyd’s, which is the acknowledged center for underwriting cancellation and non-appearance insurance for the music business.
One of the perhaps unforeseen consequences of having huge sums riding on their appearance, is that “performers have had to tone down their rock and roll lifestyles,” said Lloyd’s. “Acquiring a reputation for unreliability could prove very dangerous for performers, as insurers would simply steer clear of them.”
Silcock added: “”If an artist became uninsurable they would almost become unpromotable. Promoters simply wouldn’t commit a lot of money to acts if they weren’t able to get some kind of financial security.”
One result often requires performers to “undergo medical tests or provide underwriters with medical records as a condition of being given cover.” Sometimes it’s the case that underwriters need to be persuaded some artists aren’t quite as wild as their image suggests. “Often the biggest issue for us is overcoming what people read in the newspapers,” Silcock explained.
“Some may be perceived as having health issues when in fact they are extremely fit and healthy. Remember these guys have to go out and put on a really good show maybe two or three times a week, sometimes more for certain artists,” he continued. Often a broker can show that despite a performer’s hedonistic image they have a good track record of performing shows over a long period without cancellations.
Today’s top performers are consummate professionals. “For well-established older bands those individuals might be in their fifties, even sixties—they have to be in really good condition to put on a good show,” Silcock added.
Lloyd’s also noted: “Though shows are no longer cancelled because an artist drove their Rolls-Royce into a swimming pool, performers can fall victim to bizarre events. Silcock cited a case where “on the eve of a tour the bass guitarist of a band shut his fingers in a car door and the tour had to be called off”.
Even more bizarre was Taylor’s recounting of a claim concerning a band’s cancellation of a gig in a US city. The reason? The band didn’t play cities that began with the letter M. “The lead singer said it came to him in a vision,” says Taylor. Unfortunately, non-appearance insurance only covers circumstances outside the performer’s control.”