Spring Awakening 2022 Was Sacrificed for Profitability, Owners Say

Spring Awakening 2022 Was Sacrificed for Profitability, Owners Say

It was the Midwest’s biggest dance music party for most of the last decade and the crown jewel-turned-Kryptonite of Robert F.X. Sillerman’s EDM empire — but on May 17, Spring Awakening’s current owners announced the festival’s highly anticipated return was being delayed to help shore up the company’s bottom line.

The 2022 Spring Awakening scheduled for July 8-10 is being pushed back to 2023 so that its owners, LiveOne, can keep their promise to investors to deliver “positive adjusted earnings” in the current fiscal year, chairman and CEO Robert Ellin explained during a May 19 investor summit — two days after officially announcing that the event was being postponed until 2023. Adjusted earnings effectively means profitability, with adjustments made to account for costs and expenses.

It was disappointing news for fans eager to celebrate the return of the festival created in 2008 by React Presents. A 2022 version would have marked the 10th anniversary of its move from Chicago’s Congress Theater to the much larger Soldier Field in 2012 with a lineup that included Skrillex, Afrojack, Diplo, A-Trak, Benny Benassi and Dillon Francis.

Several major artists from the 2012 show had agreed to play the 2022 festival, but achieving profitability, Ellin explained, had to take priority this quarter as interest rates rise and Wall Street’s appetite for speculative growth stocks cooled (LiveOne’s share price is down 51% in 2022).

“We plan to bring the Spring Awakening Music Festival (SAMF) back in 2023. We love the brand and the fans! Chicago has always been its home, and we look forward to returning,” a company spokesperson told Billboard in an email. “We are confident that next year’s SAMF will be a success both creatively and financially. In addition, LiveOne continues to consolidate its operations and remains focused on capitalizing upon its significant revenue growth over the past two years.”

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LiveOne purchased Spring Awakening in exchange for $2.4 million worth of LiveOne stock in late 2021 and then lost $3.5 million staging a test-run event in October 2021 ahead of what was supposed to be a big 10th anniversary bash in July 2022.

LiveOne — formerly LiveXLive — is a streaming platform for music, live events and podcasts, and while the company does broadcast festival content to its users, festival promotion is not LiveOne’s core business. That is a major disadvantage in today’s competitive festival market where it is difficult to achieve scale without owning and operating a half-dozen festivals. Going forward, Ellin said, the company will only focus on events that are demonstrably profitable, either through presale tickets or sponsorships.

“If we don’t feel comfortable enough the event can either be break-even or profitable, we’re going to pass” for the year, Ellin told Needham analyst Laura Martin during the May 19 investor conference.

Spring Awakening’s poor performance is an anomaly when compared to other SFX properties spun off by SFX’s senior creditor Andrew Axelrod of Axar Capital. SFX filed for Chapter 11 bankruptcy in early 2016 after Sillerman failed to secure financing to take the company private. The company’s assets — EDM festivals, concert promoters and technology platforms like streaming service Beatport and ticketing company Flavorus — were reorganized under a new music brand called LiveStyle led by former AEG Live CEO Randy Philips, who was charged with their management and sales. Early on, Axelrod and Philips sold Rock in Rio to Live Nation, signed a deal to sell both the Paylogic and Flavorus ticketing systems to Vivendi-backed See Tickets, and signed a company-wide agreement to sell tickets for all LiveStyle events through See Tickets. In 2020 the company sold James “Disco Donnie” Estopinal back his company Disco Donnie Presents, and last year it sold Dutch promotion company ID&T to Superstruct Entertainment, a fast-growing European concert promotion firm led by former Live Nation Electronic president James Barton with financial backing from Providence Equity.

LiveStyle is also close to selling off New York promotion company Made Events, which owns and operates the Electric Zoo festival on Randall’s Island in New York, sources told Billboard. When that deal closes, LiveStyle will have successfully and profitably closed out its North America position, although Axelrod got much less for Spring Awakening than he had hoped.

Axelrod orginally reached a deal with Ellin to sell React Presents and Spring Awakening to LiveOne in 2020 using a funding mechanism known as convertible debt. Axelrod wanted $2 million in cash for React and Spring Awakening but knew that growth-media companies like LiveOne were only able to make acquisitions using their own stock.

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To be flexible, Axelrod agreed to sell the React assets to Ellin for convertible debt, meaning that Ellin could take over the festival immediately and would have two years to pay Axelrod back in cash, with an option for Axelrod to accept LiveOne stock instead of cash if shares of the company hit certain price targets.

Unfortunately for Axelrod, the deal didn’t work out that way. A month after the deal closed, COVID-19 hit, and Spring Awakening 2020 was canceled. After LiveOne lost $3.5 million on the 2021 event, Axelrod agreed to accept $2.4 million worth of LiveOne stock from Ellin instead of cash. Five months later, the value of LiveOne’s stock had fallen 70%, dropping the value of Axelrod’s LiveOne shares to approximately $700,000.

Ironically, the $1.7 million haircut Axelrod took pales in comparison to the $5.8 million loss React Presents took when Sillerman filed for bankruptcy protection before React’s partners received their full earnout from SFX’s acquisition of the company. React founders Jefferey Callahan and Lucas King did, however, have a signed personal guarantee from Sillerman covering the 2014 sale of React to SFX, stipulating that if SFX was unable to pay the React Presents earnout, Sillerman would be personally liable for any outstanding money owed to Callahan and King. The men sued Sillerman, won a $7 million judgement against him and pushed him into personal bankruptcy months before his death on Nov. 24, 2019, at age 71.

Today, King is a partner in the North Coast Music Festival, one of about a half dozen EDM-specific festivals and special engagements that take place each year in and around Chicago.

Ellin says he plans to bring Spring Awakening back in 2023, if it makes financial sense or complements one of the many new ventures he’s been working on this month, like his idea for a reality show where social media influencers live together and train for a series of boxing matches. He’s offered TikTok influencers the Island Boys $1 million to star in the series and plans to announce the fighters lineup for the series soon.

Spring Awakening 2022 Was Sacrificed for Profitability, Owners Say It was the Midwest’s biggest dance music party for most of the last decade and the crown jewel-turned-Kryptonite of Robert F.X. Sillerman’s EDM empire — but on May 17, Spring Awakening’s current owners announced the festival’s highly anticipated return was being delayed to help shore up the…