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Next stage for post-Covid festivals looks positive

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A summer staple for UK partygoers for decades, the festival circuit has struggled to turn it up to 11 since the pandemic. However, ICONAC’s Stephen Pell is confident that the show will go on.

2nd Aug 2023
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Over the years, the humble British festival has grown to become a multi-million pound industry fuelled by music and tepid cider. However, the industry has faced significant challenges over the past three years. 

Since the beginning of the pandemic, more than 100 UK festivals (1 in 6) have closed their doors, citing high costs and staffing issues as major stumbling blocks for organisers, even with ticket prices rising by 15%. 

A tough period

Founder of  ICONAC, a firm that works specifically with clients in the music industry, Stephen Pell has seen the challenges the industry faces up close over the past few years, citing a perfect storm of already razor-thin margins and Covid. 

“For festivals, you’re looking at a 5% margin if you’re lucky. So when margins are so low, it only takes one single mistake, like a problem with the production team or an issue with ticket pricing, and costs can spiral out of control,” Pell said.

These obstacles have since been compounded by the recent cost-of-living crisis pushing prices up across the board on essential components such as insurance premiums and ticket prices. All of this has affected everyone from the festival organisers, battling it out for big-name musicians, to the attendees hoping to get their festival fix.

“With festivals looking to make up for lost time, it’s been make or break for the past few years,” Pell added.

Unique challenges

Acting not only as an accountant for festival organisers, but also aiding them via business management services, Pell noted that a unique approach to these clients was necessary, with factors such as cashflow becoming “ultra-critical”.

“It’s no longer a monthly or quarterly cashflow, you need to have weekly updates when it comes to running a festival, compared to running the business of an artist more generally,” said Pell.

From a business perspective, the liabilities involved with running festivals also posed unique challenges for Pell and his team, with the Covid era instilling a higher level of sensitivity when it comes to ensuring people are paid. 

“Covid has made everyone aware that things can easily shut down. Not only are festival goers less likely to part with their money, artists themselves are asking for deposits really early, which has put further pressure on the organisers,” Pell said.

Data is key

Due to the unprecedented challenges Covid brought to the industry, ICONAC had its work cut out to ensure its clients stayed afloat, saying that for a time, much of their work was to “simply get costs underwritten”.

“We had to galvanise the team during this time and really focus on budgets. I guess at that time we had to reassess costs and how things were structured,” Pell added.

Thinking back to this time, Pell also noted how important analytics was and continues to be when supporting their festival clients in making prudent decisions.

“We have invested heavily in data collection recently. We’re setting up ways to automate different data touch points like ticket sales, finding ways to benchmark them and presenting that back to our clients,” Pell said, noting that recent tech developments have made creating such datasets much easier.

“Now that we have APIs [application programming interfaces] that connect with accounting software, as well as Open Banking and ticketing software, we’re able to do this with scale and efficiency. And that’s something that we want to build on going forwards as accountants.”

The times they are a-changin’

While the past few years have been undoubtedly tough on festivals, Pell struck a positive tone when asked of the industry’s future, arguing that many events are roaring back to life in the wake of the pandemic.

“I think we’re back now, I really do. This year has been no different to what it was before the pandemic from my perspective. Our artists are doing well and are growing their earnings. There’s also a lot of festivals booking fees in, which is looking good,” Pell said.

Pell also explained that there are exciting opportunities for new events to emerge, as well as for accountants willing to jump into the festival circuit as the industry recovers, adding that the “future looks bright” for this UK summer staple.

“There’s definitely an opportunity for innovative festivals. People are loving the bespoke niche festivals and will pay a premium to go. So I think there’s opportunity in that rather than having the big Glastonbury-style experience, which is great,” Pell concluded.

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By Hugo Fair
02nd Aug 2023 20:12

I know this is an accounting forum, but a whole article about Festivals with no sense that the music matters?

Early warning that an old hippy is about to open his mouth ... from '68 to '72 I attended over two dozen multi-artist outdoor events (only some of which were tagged as festivals) . I doubt that any made a profit which wasn't their purpose ... music being the sole experience sought (well actually it was the primary aim although Ian Dury famously later combined the other two components in just one song title).

There's no particular point to this rambling ... but I find it ineffably sad that a natural type of event (celebrating a conjunction of music and hopes with new friends who had been strangers a few days before) has become a homogenised method of entertaining the masses (in that sense like the roman circuses) with a solitary focus on maximising profits.

The article is interesting in its allusions to the mechanical components required to fiscally control these behemoths ... but the 'events' could be flogging beer or religion or bread & circuses without changing the tenor or content!

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By martha67
04th Aug 2023 07:03

However, it's important to note that the situation can vary by location and is subject to change based on public health considerations. Event organizers are likely to implement measures to ensure the safety and well-being of participants, such as vaccination requirements, testing, and crowd management.

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By victormarcel
18th Aug 2023 12:21

The combination of already thin profit margins and the impact of Covid has created a perfect storm. Festivals, in particular, operate on razor-thin margins, typically around 5%. This means that even a single mistake, such as a production issue or ticket pricing problem, can quickly escalate costs and jeopardize the success of the event.

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