HOW WILL THE ECONOMY IMPACT THE LIVE EVENTS BUSINESS FOR 2023?

Hello, this is Les Goldberg, and welcome to The Road Ahead. The Road Ahead podcast is dedicated to the future of the live events business, bringing together industry experts. Hello, production world. This is Les Goldberg and The Road Ahead. Today, I have three amazing guests. I have Julie Jackson. She is the COO of DEVLINHAIR Productions. I have Erik Johnson, who's the president of Catapult Events. And I have Joe Mertz. He's the president and executive producer for Mertz Productions. Everyone, welcome to the show today. Thanks for having us, Les. Thank you so much. Thanks for having us, Les. Hey, I'm super excited today. We're going to talk about 2023. It's around the corner, and I'm very much interested in all of your thoughts, all of you, as the world is cranking along here, and as the live events business has been returning, and we have some, let's We turn on the news. Sometimes it's not all positive. We've got, we just finished an election. We've got what's going on in Ukraine and in Europe and the energy crisis. We've got, maybe some people are opining about a downturn in the economy and maybe a recession. All of these things are happening right now. And we've got a business to run and live events to do for 2023. So I want to know how all of you feel about all this. So I'm going to throw the first question to Julie Jackson. And Julie, where are we in the live events business as far as the return? Are we full throttle? Are we still coming back? Where do you feel like we are right now in that return to live? I think in that return to live, we're probably somewhere between 80 and 85%. The first part of 21, I think is what really kind of messed us up a little bit with the Omicron wave and because a lot of clients were ready to go full throttle and to go live. And just out of health concerns had to, you know, go back to virtual. But certainly, you know, I've seen since June on, we've had clients that have been, you know, wanting to do live, they're still doing hybrid just, you know, maybe out of safety precautions or just out of budgetary precautions. And we're really back into that space of, I really want to do a show in January, but I can't find a venue anymore. So we're kind of getting back into that old school space of, we really have to plan sooner because everybody wants to go to the same warm places. They, you know, they're trying to keep their numbers, I think at a space that's going to make sense budgetarily because there's so many changes to the balance sheets. But, you know, everybody has enjoyed seeing people in person. It's a very different experience when you're interacting with somebody for 30 minutes live, even then if you're doing a one-to-one on a Zoom call. So, you know, I would think for 2023, we're probably going to push even further to get closer to that 100%. I just think they may look a little bit different. All right. The quote of the day is they may look a little different. Erik Johnson, will you opine for 2023? Will any of these global issues impact your show schedule and the kind of shows you're putting out? Well, I think that what I see happening is the events are busier than ever. Our clients want to have all the events that they had pre-COVID. We just have a couple of clients that still do a hybrid, but it's back to live in the industry we serve. They want their people in the seats. And when you think about the global and the economy and the global events and things like that, that you're talking about, what we see is they're already starting to need to reduce their budgets in 2023 a little bit. I think that might have something to do with global events, maybe not the war directly with Ukraine-Russia, but those things affect the economy, which affects the executives, or I guess you could say my director of events' boss, that is reducing the budget, but still has the expectations of an all-star event that they've had in the past. I think that is going to be a 2023 challenge. So you're saying they want more for less? At least they want just as much but refreshed as they've ever had, but their budgets are reduced. Come on, production partner, you can do it. Wow. Okay. Joe Mertz, would you please opine? 23. Do you agree with Erik? I mean, what are your thoughts? Yeah, I would say I definitely agree with Erik. They want to do the events. All the events are back, and now it's just there's other pressures on the budgets, like these types of things. So we're just starting to finally hear, all right, this is the budget ramifications, these are the budget ramifications. So I think the quantity of events are there, they're coming back, but they're finally pulling the reins on how much they can spend. And they're getting those budgets. Previous budgets didn't exist because of COVID, and the whole world was all up. Now they're finally, I think, settling into these are what our sales goals are. We can't lean on COVID as our excuse as to why we weren't making money. They're finally getting budgets, and they're finally landing on back to normal business practices of this is how much money we have, and this is what the event has to fit inside. So it's interesting. When you turn on TV these days, you don't hear the word COVID every day. Our lives have got back to some form of normal. When you go to the doctor's office, a lot of places don't make you wear a mask. And gosh darn it, I like being normal. And so I hope our shows are normal coming into 23. So this question's to Julie. Julie, so producers are putting shows together. You have a team of producers. And the costs haven't really changed dramatically. If anything, they've gotten more expensive. Nothing's getting cheaper. And so on the theme of doing more for less, what are the factors that are impacting putting a show together right now? Is it location? Is it the cost of flying the crew and the attendees there? Or what are the elements that are really kind of the forces that are working against each other to put out a great show? I think part of it is timing. Clients want to start producing a show in January that's happening in August, and they just don't have the money to support a team that can sit around and talk to them for four months about ideas. So we're really having to try to go back to the old school production schedule and sticking to it and showing them, okay, we're going to do a video, but it's got to be done by this day because if we start making changes last minute, we don't have the budget to make those last minute changes anymore. So it's really kind of us, I think, putting up more, I don't want to say barriers, but having more boundaries as far as what we're going to be able to do to deliver to them a flawless show that's going to be at the level that they expect and we want to deliver to them at the dollar value that they have. So it sounds like you're going to set constraints and say there are so many days of production, so many days of editing, and they get one set of revisions on their video editing or their thematic ideas. Is that kind of the thing? We're going to try. I think we all know that the clients always get more than what the budget says that they get. So we're going to make sure that they're happy. But as far as the producers putting shows together, nobody wants to get caught in selling them one bag of goods and then delivering them something else. We don't want to tell them that they're going to have this huge LED screen and then they get there and it's a site with projection on it. And they're like, where's the LED? So I think it's having real conversations with them about they have to kind of pick and choose what's going to be the most important part of the meeting that's going to have the biggest impact and what's most important to them. If image mapping is what's most important to them, great. That's going to cost X amount of dollars, but that means that we may have to lose something or change how we do something else in order to give them that piece that they feel is the most impactful. Got it. So Erik, what's your thought on this? Are you going to have your clients with fewer number of days of pre-production? And how do you approach this, all the challenges? Yep, we've already started talking about it. Our theme is focus your budget. We, like I was saying, we have all these clients that want to do all the same things they did across their convention week. And we look at everything that they're doing from their big general session to their expo to their little leaders meeting. And I try to go to them and say, with your current budget, let's not do everything we did in the past and half-ass it. Let's focus, maybe we can drop that very low attendance first expo half day. That could actually save you a lot of money if the first day is not till the next. So we try to figure out how you can still have your entire convention, but focus your budget on what really brings the ROI. Our people want butts in seats at the general session, which sells their product. Got it. So on that note, Joe, do you think, like Erik just mentioned, our show is going to be compressed a little bit to meet the budgetary guidelines? What are your thoughts? For me, it's lock it in. You got to lock it in early. You can't sit there and waffle. Are we doing 2.6 millimeter or 3.9 millimeter and try to waffle on your budget? Because if you decide, oh, you know what? We're fine with 3.9 millimeter. Well, that ship may have sailed because that equipment is not available anymore. So our focus is this is what we've got. And we try to get way ahead of it. And then we got to make them make those decisions earlier so they can lock it in. And when they try to pivot or adjust, sometimes it's probably the first time in my entire career where I'm like, no, we can't do that. It's not available. We can't adjust at this time, which would have been normal timelines before of being able to pivot and adjust. The stuff is not there. It's not available for them. So our focus is this is what we're doing. You guys have to lock in early and agree to this. And this is what we're going to do. And you can't get into that. Oh, I think I've changed my mind at this point. You can change your mind all you want. The equipment's not available for us to change our mind. Joe, you're spot on. I mean, it's like I'm surprising my own clients where I'm now responding to an RFP and giving a tighter you've got to approve this deadline than ever. And they come back to me and say, why? I'm like, because I only can hold that gear from my vendor for so long. These A-list contractors that have done your show with me for years, they get calls. And I only if they get a call and want to release that hold and you haven't committed, we're going to lose them. And so the supply and demand of the resources that we need to put on these events is really tight now. So, yeah, I've definitely had to hold that crunch down. And a good point, because it's not just equipment. It's human resources as well. The personnel just doesn't exist in the depths and the benches that we used to have don't exist anymore. People have moved on. People have gone other places. So to get that quality contractor to be able to execute that high profile event that you want, we got to get those people locked in early. That's exactly what I was going to say, that they're just the people who used to be there aren't there. They went and found some other professions that they're into. And even when we came back, they found that they've got a new passion into something else. And it may not be lighting design or audio design that it's roofing or they're arborists now. They started to explore all these things that they never thought that they ever would. And it would have been your first call. So it's becoming even more difficult to make sure that you're getting your A-list team and you're able to hold them and to have them so that you can deliver the client what you want to deliver. It's interesting what you all say. First, I applaud you all for mentioning LED screens. We love renting LED screens. We have like 40,000 tiles of LED. And clients now, there's an expectation that we're going to have some type of cool display because our shows are all about the message and displays are how we help communicate the message. But I'm starting to hear some bits and pieces. And I really want to throw out the subject of what do you think are the best practices that you could share with your client for doing events in 23? And I think Joe mentioned, lock them in early. There is a supply imbalance right now. During the busy times, there's not enough gear and people to do all the shows. So whoever is last to the dance might put their show at risk. It might not have the right competent people. We have noticed this and everyone seems to be busy at the same time. But of all three of you, what are the practices that you will tell your client? We have to do this or that to have a successful show in 23. We can't vacillate. What other ideas that you could share with me that anyone listening in the audience would want to know as a producer or someone in the industry? I think that they have to learn how to be a little bit flexible with their timing. That if for budgetary reasons or scheduling reasons, they can't do a show normally that they would do in Florida in the third week in March, that if it has to be in Florida, then they have to consider other months that they can do it in, or they have to consider other locations they can do it in, or they have to consider audience size and making it hybrid if they want that many people to do it. They, you know, some things can't be done the way that they were before because the spaces aren't available because everybody's, you know, snapping them up. And at the last minute, you can't say, oh yeah, we want to do a show in three weeks at the Fountain Blue and we're going to have 1,200 people. And of course it's available because why wouldn't it be available? And it's, well, you're the 15th hold for the Fountain Blue for that week. So, you know, what else you got kind of thing. So I think that it's them being flexible. And also, you know, one thing that I always found very interesting with clients even pre-COVID is that they never really wanted to share with us where we were going or, you know, what room we were going to be in and what we were doing. And no matter how many times we tried to tell them, the more information you give us, the better development of a program we can provide for you. It just never sunk in, but it's kind of like now where we say, okay, you're looking at these three hotels. Don't go here because if you go here, you can't have an LED screen. Don't go here. If you go here, you have to have ground support. Don't go here. If you go here, then you're going to need X, Y, and Z. So I would say that there needs to be, I guess, even more partnership and transparency between both sides in order for everybody to get what they need. I think 2023 kind of, I mean, 2020 rather showed us, you know, we're all a lot more similar than we think. We're all going through a lot of the same problems, but we're not talking about it. And now it's okay to talk about it because it's not a big secret anymore. We all know it's there, so let's just solve the problem together. Got it, okay. Joe or Erik, do you have any thoughts on what you would advise your clients to do to deliver an amazing show? Well, to build on what Julie said, I try to encourage at least our most longstanding clients to get us involved before they even sign the venue contract. Let us go site visit with you. I go to them and say, getting me involved is only going to save you money. I'm not charging you much more money to be involved much earlier, but once you sign that venue contract, all your leverage is gone. So if you agreed to all these exclusives, they're going to impact the AV budget, and you've already signed with the convention center, and then you bring me in, well, now that's what we got to work with, and your slim dollar goes even smaller. Another practice, and I don't know if this is, will translate across multiple industries, but in the industry I serve, a lot of times I'm dealing with the mid-level management, the director of events, and his boss is the chief marketing officer. And I have relationships with them because we're putting them on stage for the last few years. And sometimes the director of events can't really translate to the CMO that the sooner we get involved, the sooner we make a budget, the better. It just sounds like internal pressure. And I say, cool, let me talk to him. And as an outsider, when I come in and say, hey, Joe, the CMO, listen, man, hey, what so-and-so is telling you is correct. As you know, last time you took your family vacation, airplane tickets are up 30%. Well, when we do your show, I got to buy 60 of them. And then you can go on down, because he may not understand what a lighting director costs, but he understands what a plane ticket costs. And when I say to the CMO, I know you're still figuring out your budget, but every day that you wait, whatever that number is, has less buying power. So it's like a double whammy that you need to figure out your budget yesterday. Not for me, but for your event. Joe, your thoughts? The double whammy is the quote of the day. I love that word, double whammy. You don't hear it very often. I'll add on that. The in-house AV is starting to come up with, you know, they're just constantly changing that. I have an event next year where we're not allowed to use tape. They're not allowing gaff tape on the floor. We have to use Velcro floor mats. I had to ask what it meant in their production guidelines. It said floor mats. And I said, what are those? And they're literally like Velcro things that are attached to their rug. So the things they're coming up with to try to really pigeonhole and corner that client into using them for all these different, but you know, ground trusses is a thing now. It used to be motors and truss. Now it includes the ground truss as well. And you know, so they're coming up with all these different. I agree with Erik. You got to get us involved early on, make sure we understand what all that means before you guys sign the deadline, because when you sign, well then there's nothing we can do about it at that point and we're locked in. So absolutely, that's an old mantra, but they're just, they keep continuing to pivot with new ridiculous ways to try to nickel and dime the clients. And you know, and it makes it difficult for us to put on a good show. The other side of it is I push for a lot of digital. I like LED screens. I try to do digital sets because that allows us to adjust early. You know, when they want to do a big themed set, like a cowboy set or anything like that, like that's just so much more lead time. So I've been trying to keep us in the digital realm for this time period while we're in this unique phrase, you know, and then maybe we can get back to cool, unique, super themed sets and building sets and doing that stuff. But the lead time is so big right now. It kind of makes it, it just adds more layers on top of it. When I say, let's do LED screens. I love the LED screens less and make sure you have a big inventory for those because we're going to keep renting them. And that's where I'm at right now is that that lets us do all kinds of unique. Duly noted, duly noted. Exactly. So I did an event in Las Vegas for an association I was part of. This was about four or five years ago. And I went to the venue, which was one of the Las Vegas hotels. And it was an event for a hundred people. So not a big event. And I went and said to the hotel, all I need is power and a room and I need nothing else. And they signed a contract with the hotel, which refers to some production contract guidelines. So that's buried in there. You have to follow all these guidelines. And then in the production guidelines, then it refers to another contract, which is these exclusives. And by the time they're done with you, I don't believe any contract that anyone signs is really in the best interest of any client. They've got a lot of gotchas. And I think that's kind of what you all are referring to. The gotchas cost money. And if you negotiate them out before you sign, then you got a fighting chance. And if you don't, then you're kind of a victim in this because you didn't buy right. Okay, I'm changing courses here and we're moving in a different direction. Julie, are there better cities to work in versus are there certain cities where you'll say to your client, I think we should go to this city or that city, stay away from this city because of lots of reasons. What are your thoughts there? Always. Usually Florida. Is it a good city or a bad city? Orlando is a good city. Yes, we love Orlando. Dallas is a good city. If the clients will allow them to go there, Las Vegas is a good city because it's got a lot of space. Viva Las Vegas. And Phoenix tends to be a good city just because it's pretty easy to get to and the climate's usually okay. The cities we tell them to stay away from, San Francisco, Chicago, New York, and Boston. All the cities that things are so inexpensive, like everything's so cheap in those cities. And also so is the union labor. I mean, there've been so many times where we had a client that really wanted to, they had people all over the country, they really wanted a central location and we were like, okay. And we were trying to think like maybe Nashville because that's a hot spot for people to go to. And they were dead set on wanting to go to Chicago in the middle of February. And- It's so warm there. It's so warm in the middle of February. I was like, okay, so it's cold and the airport's probably gonna be closed so nobody can get there. And the AV support is gonna be half your budget and on and on and on. And they were just, were doing it. And we went, okay. And sure enough, half of them couldn't get in and we had to somehow, some way, we were able to extend the show. And at the end of the day, their budget ended up being something like 75% more of what it was supposed to be because one person, I still don't even know who it was, just wanted to go to Chicago. Well, maybe they could go on a vacation. Erik, are you doing the same thing that Julie's talking about? Are you helping guide your clients to the certain locations that are advantageous for them? Oh yeah. I think that it's a mixture of, to be transparent, it's a mixture of what is advantageous for them that is also where I may have existing relationships to lower the amount of headaches that I'm going to have. Somewhere I know I can execute a show better equals the client's dollar going further. So yeah, Vegas, Houston, I'm a Southern guy, but if I have to go North, I might go to Columbus. But I steer clear of a lot of the big unions. Les, you talked about agreement to agreement. I have had to read some very long union agreements that are 52 pages. And I'm constantly, as the general contractor of the show, I'm concerned that I'm about to make some union violation and it's going to be a $25,000 problem or whatever. And so I try to steer clear of those just for the sake of my blood pressure. Well, blood pressure is important. Joe, how do you do it? Do you help your clients find venues and direct them in some cities that'll be more advantageous or how does it work with you? Absolutely. Julie named all the ones I would have named for where to go and where not to go. So I was kind of set it right with her. The other thing that like Erik brought up earlier is travel is expensive. So if they go to cities with good human resources and crew, I can usually save them some travel costs as well. So I can use local crew in Orlando. I can use local crew in Las Vegas for all my leads. So that also helps their budget as well as it's not only a great city to do these events in, but we could also help a little bit on the bottom line by not traveling every person in there. But if you're going to go to Columbus, then you're going to go to Columbus or somewhere where you might not have a deep bench of crew that you're going to run into that. So I want to ask one last question to this group and I'm going to start with Julie. Julie, what is it something that you're looking forward to in 2023? And how are we going to make amazing shows in 23? And how, you know, what's that one thing you're looking forward to? It's been, you know, that COVID thing is over. It's time to go back to putting on the amazing shows. And it sounds like we may have some challenging budgets, but we still have to put on amazing shows. So what are you looking to most advantageously for 2023? Honestly, I'm going to sound strange. I'm looking to have the opportunity to work with new clients. It's been very difficult to develop relationships with people through Zoom. So you can't talk to, you know, you can't have that relationship where you're able to get to the point of the RFP and actually have an opportunity to win it because they don't know you, you don't know them. You know, we've got a lot of strong relationships with our existing clients, which, you know, we love. But I think as everybody knows with there being so many people being displaced and changing jobs and changing companies, in order for us to stay in business, we have to consistently be making new relationships. So I'm looking forward to people being open to actually meeting people and developing new relationships and, you know, feeling safe about it. I think that is awesome. And I share your feelings about meeting people in person. I'm a big face-to-face guy, and I love to go out and meet the production teams and show new technology and things. Erik, same question. What are you looking forward to most? I mean, we're going to host in 2023. We're back to this, doing amazing shows. Well, I'm going to follow up on your comment right there because I'm looking forward to you and LMG showing me some of that cool new tech that I should be selling to my clients. Sometimes I don't know what I should be showing off. We have a couple of new clients that will be doing their first shows next summer. So that's exciting. We do very digital sets, like Joe was talking about earlier. And I want to stay digital, but I'd like to get into some more odd LED screen shapes, make some complicated pixel maps, almost stuff that looks like projection mapping, but stay in the LED space. Just want to get a little edgy. I'm telling you, today we're doing a show that's about 200 million pixels, the largest display show we've ever done in the history of the company. It is incredibly crazy. And I think people are using more digital and they want to have more visual screens for bigger audiences, different portrait orientations. I think the sky's the limit. And instead of putting your money into wood and bolts and nuts, putting it into digital content, that's very dynamic. And the production process, I think that makes a lot of sense. Joe, so tell me, 2023 is, let's see, it's 22 days away. What are you looking forward to most? Mine's not as exciting as theirs. I'm actually looking forward to having a comparison of business to non-COVID. You know, like we're finally, I feel like 2022 is a little bit back to normal. Is 2023 going to continue the same? So I'm just looking for little metrics to go. We're doing better than we were. We're doing a little less, but, you know, officially COVID's behind us. We can start planning and projecting and looking forward to the future with a little bit of metrics to kind of feel confident about this is the direction the business is going and we can keep focusing on that. Well, I am looking forward to a really good year next year. I don't care what the doomsayers on TV say about how the world's going to end. I believe the live events business is strong and there's a lot of demand. And I think our goal is to put on some amazing shows next year. I want to thank Julie, Erik, and Joe. You all are incredibly awesome people, producers, production people. And I look forward to shows that we're going to do next year and have lots of fun. This is Les Goldberg and The Road Ahead. Thank you all so much. You did a great job. Thanks for having us, Les. Thanks for having us, Les.