Las Vegas isn’t exactly a Phil Anschutz kind of place.
Sure, he’s got billions to blow, but the 67-year-old from Colorado has earned a reputation as a bit of a quiet type when it comes to his personal tastes. So it was no surprise when Anschutz was noticeably absent from an August 23 news conference at Bally’s to announce the opening of a $425 million arena on land behind the Paris hotel.
Unlike the handful of other arena projects that have failed to materialize, the 22,000-seat venue Anschutz is proposing to build with the help of Harrah’s is being touted as the most realistic to date.
“I think there is a little skepticism because so many of these projects have been proposed, and no one has pulled the trigger, but I would say this one is for real,” said Pat Christenson of Las Vegas Events.
In the past year alone, Anschutz has successfully opened new arenas in London, Kansas City and Newark, New Jersey. He owns nine sports teams, two film studios, three newspapers and a handful of radio stations. Hell—he’s the guy who brought David Beckham to America.
And it now looks like Anschutz will put up $210 million of his own money to do something no one said could ever be done: build an arena in Las Vegas with no attached casino and no taxpayer money. And for now, no sports franchise, either. But that’s okay—Anschutz recognizes the importance of the Strip as a key puzzle-piece in his expanding media empire.
And more importantly—he realizes that this is war.
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Everything changed in the concert industry in 1997. It was the year that a businessman named Roger Sillerman bought Bill Graham Presents, a San Francisco promotion company founded by the legendary promoter of the same name.
Sillerman didn’t stop in the Bay Area. He began buying up promoters in places like Denver and Dallas, essentially purchasing reputations and concert venues. By the time Sillerman’s SFX Entertainment was done, in 1999, it had acquired more than 120 venues.
Practically overnight, Sillerman had consolidated a loose national network of promoters into an entertainment empire—an empire he soon sold to broadcast giant Clear Channel Entertainment for a whopping $4.4 billion. After facing some monopoly charges from the Department of Justice—Clear Channel allegedly used its airwaves to promote its concerts, a big FCC no-no—the company spun off its live-music division into what is now called Live Nation.
It was about the same time that Anschutz was coming onto the scene. The Colorado billionaire made his fortune with his vast land holdings, oil rights and telecom company, but for years had dabbled in entertainment and film projects, including the Christian-themed family hit The Chronicles of Narnia.
Known for being a supporter of conservative Christian values, Anschutz has taken on several political causes and was the key financier of Amendment 2, a Colorado initiative to deny gays and lesbians equal rights. He’s a supporter of the Discovery Institute, a Seattle think tank that advocates for intelligent design, as well as the Media Research Council, a group that monitors broadcast airwaves for indecency.
In 1999, one of his many subsidiaries, Anschutz Entertainment Group Live, had just landed a contract to build, operate and own Los Angeles’ Staples Center, future home of the Los Angeles Lakers and the most coveted concert venue in Los Angeles.
Anschutz wouldn’t just operate in LA—he would run the city. His company purchased competing promoter Concerts West and indie Goldenvoice Entertainment, the company that continues to host the popular Coachella music festival in Indio, California. He would commit $2 billion to the revitalization of downtown in a project known as LA Live. He won the rights to book the Forum, the Lakers’ former home, although the building’s owners later sued him, arguing AEG was secretly redirecting concerts to the Staples Center.
Anschutz became an overnight power broker in the city of angels—and continued to grow as an international force. He began to buy venues in Chicago, New York and Seattle. His team would help construct the Colosseum at Caesars Palace in Vegas and bring Celine Dion to Sin City.
And in an industry where there were once dozens of independent promoters, jockeying for shows with cash, sex and dope—now there stood just two. One, a giant corporation, traded on the New York Stock Exchange; and the other, a private media empire with a billionaire’s money. And while Live Nation’s $1.3 billion in annual grosses is nearly three times that of AEG Live’s $417 million, there’s little doubt the two are in close competition.
“When you look at the top acts, the ones who fill the big arenas and [amphitheaters], there’s a limited amount of talent out there that can pull off those type of shows,” said Ray Waddell, touring editor for Billboard magazine. “There are more buildings in this country than there are acts. That puts a lot of pressure on both AEG and Live Nation to sign the right bands and get them in the right buildings. I’ve heard every type of story about what some of these promoters will promise a band just to steal them from the other guy.”
In fact, the competition is so fierce that Live Nation recently fired its UK director after rumors began circulating that he was trying to get his staff to defect to AEG’s London operation. Live Nation’s corporate headquarters in Beverly Hills, California, put out a September 8 memo, explaining that Stuart Galbraith, who organized London’s Live 8 concert in Hyde Park, was dismissed for “breach of contract.”
Rumors had been circulating that he had been trying to convince top staff to defect to AEG and run its sparkly new O2 Arena, set to host a Led Zeppelin reunion on November 26.
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In the music business, it’s called artist development. It’s a simple concept—young bands start out playing small clubs and slowly build a following, playing bigger concert venues on each tour as their fan base continues to grow. Even the biggest bands out of the gate rarely get to skip this crucial step. Band managers and venue owners know that correctly cultivating new talent is the key to keeping the lights on and building acts that can handle megashows.
Even with this crucial step in the process, very few acts can play a concert at a sports stadium. The Rolling Stones, Kenny Chesney and The Police are the only groups on tour right now who could really pull the huge audience it takes to fill 50,000 seats. For most bands, the biggest they can get is the arena show—about half that size.
It’s obvious then that the person who holds the keys to the arena’s front door has access to the A-list touring talent that stops through Las Vegas. For both AEG and Live Nation, the arena was the missing piece of the puzzle.
“We’re committed to being the largest owner and operator of arenas in the world. We’re going to continue to grow the company,” said Tim Lieweke, Anschutz’s top touring lieutenant and AEG Live’s president and CEO, in an interview in Venues Today magazine. “We think we have a unique model, and I believe in the next two years we will double the number of arenas we have.”
Live Nation owns the House of Blues chain, including its nightclub at the Mandalay Bay, a popular stop for growing bands before they’re big enough to play places like the Pearl theater at the Palms. Live Nation owns the exclusive rights to manage the Pearl.
For its part, AEG manages the Joint at the Hard Rock and will soon build a concert venue at Echelon, Boyd Gaming’s $4 billion development slated for the old Stardust hotel site. It also makes a huge bundle of cash operating the Celine Dion and Elton John shows at Caesars Palace.
“AEG realizes how important it is to be on the scene when the artist first breaks and nurture them up through their career as they grow,” said Waddell. “As CD sales continue to drop, the big moneymaker in the music business continues to be touring.”
By building and owning a new arena, AEG now controls each branch of the touring food chain, from when an artist first emerges to when they grow into a superstar. The company launched a similar initiative in Los Angeles with LA Live—a massive downtown development that includes a 2,100-seat club and the 7,100-seat Nokia Theatre concert hall.
“Hypothetically, an act could start off at Club Nokia, come back and later play the Nokia Theatre, then eventually go across the street and play the Staples Center,” said Lee Zeidman, general manager for the Staples Center.
More importantly, AEG has one more stopover it can offer A-list acts capable of
playing arenas, acts like Justin Timberlake, Beyonce and Maroon 5 that can easily sell 20,000 tickets to a concert. Besides running arenas and clubs, AEG also works as the national promoter for large-scale tours. The company has just opened arenas in London, Berlin, Kansas City and Newark and is slated to open 20 more in the next decade, according to Leiweke.
“You’re talking about a company that wears many hats and has its hands in a lot of different places,” said Daren Libonati, director of the Thomas and Mack Center and a serious contender as head honcho of Anschutz’s new Vegas arena. “The business has changed a lot in the past decade, and there’s a lot of acts with requirements that older facilities can’t handle.”
If you’re an A-list act, why would you go with a different promoter if Anschutz is the man who owns and operates the best buildings in the country? When the new arena opens in 2010, it will become a must-play for the Tim McGraws, Faith Hills and Black Eyed Peas of the world. Picking AEG means a show in Vegas, a gig at the Staples Center and maybe a concert at the new O2 in London. Why risk going with someone else?
“What makes the city so sexy is that you’re feeding the Strip’s high-end market as well as 1.7 million locals. Essentially you have access to every type of customer and a high entertainment dollar,” Libonati said. “There’s just more money to be made in Vegas, and AEG recognizes our concerts can offset touring acts that might not do so well in other markets. Say an act takes a loss in Milwaukee and maybe doesn’t do so well in Omaha. They’re going to be looking to make that concert up in Vegas, and now AEG has all the tools at its disposal to make that happen.”
Dave Brooks is a freelance writer in southern California.