The Art of Business: AEG, Las Vegas, Bette, Celine, Cher, Elton

In Business Q and A
John Nelson
Vice president of AEG Live
Interviewed by Richard N. Velotta / Staff Writer

In 2000 some executives with Concerts West, an offshoot of AEG, a subsidiary of the Anschutz Co., had this crazy idea that they could sign a big-name entertainer to a multiyear contract at a Las Vegas entertainment venue and that they could regularly fill the building.

Critics scoffed, but John Nelson and one of his associates, John Meglen, proved them wrong when they signed Celine Dion to perform at Caesars Palace’s then-new Colosseum and in 2003 began an unprecedented five-year run with her “A New Day …” show.

Nelson joined Concerts West – now AEG Live – in 2000 and became vice president of the company that has become a worldwide powerhouse in live entertainment with 13 regional offices and corporate ties to performance venues around the globe.

Nelson, who has a decade of experience as an entertainment producer and promoter, oversees the development of new entertainment business opportunities locally for AEG.

In Las Vegas, AEG operates the Colosseum and signed similar long-term entertainment contracts with Elton John, Bette Midler and Cher. AEG also operates The Joint at the Hard Rock Hotel and will have an even greater role in the Las Vegas entertainment scene with a new 20,000-seat arena being built by Harrah’s Entertainment east of Bally’s Las Vegas and two venues at Boyd Gaming’s Echelon project.

Nelson talked with In Business Las Vegas about cutting deals with big-name entertainers and AEG’s plans:

Question: Can you tell me about some of the history of how AEG became involved in the Las Vegas entertainment scene?

Answer: AEG came to Las Vegas through its participation and production of Celine Dion’s “A New Day …,” which opened in March 2003. Before that, AEG Live and Concerts West, a division of it, were primarily a touring music production company that produced national concert tours and this was the first residency that we produced with Celine in Las Vegas. The business here has grown over the last couple of years after five really solid years with Celine, and we’re branching out and trying some other things.

You also manage The Joint, right?

We don’t manage the operations, but we book the talent at The Joint at the Hard Rock, which is undergoing a bit of a transformation now.

How is AEG’s business plan different from other entertainment companies and why does it work so well?

It’s kind of a three-part plan. AEG Live is our division here in Las Vegas. We’re a division of a bigger company, AEG, which is a sports and entertainment facility company, owning the Staples Center in Los Angeles and operating other venues around the world, including the O2 in London, O2 World in Berlin and the Sprint Center in Kansas City, Mo. Our division, AEG Live, is the live-content production company that provides concert tours, comedy and music entertainment events to venues around the world. So AEG Live produces tours currently with artists like Neil Diamond, Justin Timberlake, Bon Jovi and Tina Turner. When Celine returns to the United States this summer, we’re producing that tour as well. At this outpost in Las Vegas, we specialize in producing resident productions and in booking specific facilities like The Joint at the Hard Rock.

Do you book at other venues or just AEG properties?

We do book into other facilities as well and from this office we market shows that our company is producing the tours for. For example, “American Idols Live” started their tour after the TV series ended and the fourth stop of the tour was at the Thomas & Mack Center on July 5. So we do the local marketing and business operation for our touring events that stop in Las Vegas.

Why does Las Vegas appeal to AEG?

With the unprecedented success of Celine after many people in the music business thought we were crazy to commit to five years of performances in one place with one artist, after the overwhelming success of that venture, we have developed a patient and long-range strategy to try to continue booking resident artists in Las Vegas, which is really not a new idea at all. Of course, after the rich history of Frank Sinatra, Elvis Presley and others who have had long relationships in Las Vegas – especially at Caesars Palace and the Colosseum there – having such a rich tradition of headline entertainers at Caesars is a natural fit for us to continue with this model at the Colosseum.

A five-year residency does sound crazy. Why did it work?

Because of the nature of this marketplace, having 300,000 to 350,000 people in town every night, looking for something to do, looking for entertainment and twice a week turning that population over. The unique nature of the business in Las Vegas makes it so likely for success.

And that’s what distinguishes Las Vegas from the other markets?

Absolutely.

How has the economic downturn affected the entertainment scene in Las Vegas?

We’ve actually been really fortunate and lucky in our specific circumstances of the business so far this year because Celine finished in December last year and went out with a real bang after finishing five years and 717 shows or so, finishing very strong. We had a few weeks within the first quarter this year where the Colosseum was dark in preparation for these new shows. The stage was reconstructed because Celine performed on a sloped stage for five years. Bette (Midler) and Cher both wanted to come into a flat stage that’s easier to move around and dance on. So we had a reconstruction project and we were off for four weeks and then rehearsals for each one of those two shows took up another four to six weeks each. So we were dark for business for nearly half of the first quarter and then both of those shows opened and Elton (John) continued his run here. When shows open, obviously, there’s a lot of interest and publicity surrounding them, so business has been very strong for us in the first quarter. We know there’s a downturn in the industry, some of our touring business has been affected and some of the shows we book in other facilities. We’re prepared for that and we’re trying to be very careful, doing our best to come up with a range of ticket prices for all the shows we work on that are more in line with economic conditions.

Is that part of the equation, to determine the price point to make a production successful?

Certainly. That’s the biggest component in the success of the show: finding the right price.

How has the proliferation of nightclubs affected live entertainment revenue?

It definitely has. The one thing that is really apparent to us is that my recollection of the history of Vegas is that there were a lot more late-night shows and that just doesn’t exist anymore. It’s really hard to sell tickets for even top-headline entertainers for later shows. Our shows at the Colosseum generally are 7:30; Celine was always at 8:30. But it’s hard to get people into the theater later at night than that because, I think, as a direct result of the business the nightclubs do in town. People are more interested in going out to clubs later at night.

Are they doing both, going to a show and then a club?

I think so.

How did the company get involved with Hard Rock’s Joint venue?

The Hard Rock had new ownership a year and a half ago or so when Peter Morton sold the hotel to the Morgans Hotel Group. We had an opportunity to have discussions with Morgans and have developed a really strong relationship with them to the point where we’re already working on some long-range strategies for the new Joint that is under construction right now and opens next year. It’ll be about 50 percent larger than the existing one, but it will maintain the integrity of The Joint’s position as a legendary rock ‘n’ roll facility.

What types of acts do you pursue for The Joint?

I think we’ve widened the range of acts. Historically, when Peter Morton owned the Hard Rock, the property was more focused on emerging and established legacy rock ‘n’ roll acts. I think we’ve pushed the boundaries a little bit and tried to do more comedy there, more Latin music, a few jazz shows and things that maybe hadn’t done much of in the past.

And how has that worked out?

Pretty well so far.

How will the expansion of The Joint change the way you do business?

I think we’re going to continue moving the boundaries and try even more kinds of things. Having that somewhat greater capacity allows us to try some different kinds of things and some bigger acts, too.

How is developing shows for The Joint different from developing them for the Colosseum at Caesars Palace?

The Joint is primarily touring rock ‘n’ roll shows that come in and stop in Las Vegas for a night or two, so we’re one stop on a tour. At the Colosseum, our business is, by far, primarily geared for resident artists in rotation – Elton John for about 10 weeks per year, Cher for about 16 weeks per year and Bette Midler for about 20 weeks per year. So right off the bat, 46 weeks a year are booked with those three artists, so we have very limited opportunities to book touring shows into the Colosseum. We’re starting to try some comedy shows to fill in those missing weekends in between the resident artists, but there’s much less opportunity.

Isn’t there a conflict of interest providing entertainment for both of those venues?

No, we talk to the management of both companies openly all the time and have a great dialogue with the entertainment directors and presidents of the resorts so that they always know what we’re working on. There are few conflicts. I can’t even think of an example of a conflict for a performer that could have played either at The Joint or the Colosseum. I don’t think that Bette or Celine or Cher necessarily would have played at The Joint.

How does one go about negotiating a contract of the magnitude of a Celine Dion, an Elton John, a Bette Midler or a Cher?

It’s generally a long process with a really long lead time. Cher, as an example, wasn’t announced until the third quarter of last year and her show opened in May of this year. But the deal had been done a year or a year and a half before that. There’s a big commitment that artists have to make when they sign on to do a residency in Las Vegas. It’s two or three or four or five years of their life that generally they agree to not tour around the U.S. and around the world, but to either reside here or play 20 or 30 or 40 weeks a year. So it’s a big commitment and it takes a lot of work to convince them to do it, but in the long run, what Celine proved – which hadn’t been proven in a long time here, I think – is that it’s a really viable career strategy for an artist. Entertainers don’t think of Las Vegas any more as a place to go to retire, but they think of it as a place to go do really good business for a number of years and avoid the rigors of being on the road and touring constantly.

Didn’t Bette Midler comment about how great it’s going to be not having to go anywhere to perform for her fans?

That’s right.

Are there very many artists out there who want to go that route?

More and more now. I think Celine made a lot of progress in the effort to convince people that this was a legitimate business strategy as an entertainer or singer to come to Las Vegas and make a living here rather than being on the road. More and more people come to us, looking for these kinds of deals now. Beyond that, we produced last year about a six-month residency for Prince at the Rio and that made it seem very hip to a lot of people. A greater challenge in the music business is to find a consistent stable of performers that can bring in enough fans and sell enough seats over a long period in a residency because the music business has changed so much, so dramatically in the last few years.

Which contracts were the hardest to secure and did any of them balk?

We’ve succeeded with each one that we’ve set out to get so far because we don’t get that many of them. Celine, Bette, Elton and Cher. We haven’t really failed to attract the interest of any performers yet, so I don’t know how to answer that.

Is there anybody out there that your company really wants to get?

There are some artists that still don’t believe this is the right career strategy for them to come to Las Vegas, typically a younger rock ‘n’ roll performer. They think it’s not time for them yet and they have too legitimate of a career touring around the world to want to settle down here yet. And some people prefer being on the road. And in this music business, for singers and performers, there’s so little money in the record business any more. The record business has nearly evaporated now and their income is so heavily dependent on live performances and touring. It’s a very important question for them to ask, whether they want to continue touring the world or the United States or come set up shop somewhere. And there aren’t very many places for them to do something like this, like the opportunities they would have in Las Vegas.

Is there still somewhat of a stigma out there that Las Vegas is a place where people go to retire?

Not any more. I think we’ve broken through that.

Is it easier to have one big headliner – like Celine Dion – with fill-in dates with performers like Elton John and Jerry Seinfeld or to split the dates more evenly as you are with Bette Midler and Cher?

They both have their virtues. Celine is a rare artist who was still in the prime of her career. She was only 32 or 33 when she started this. It’s physically taxing, a lot of work, for somebody to commit to doing 200 nights a year of that and a lot of other work surrounding the commitment to the engagement. So for her, it worked and she was able physically to do it most of the time. For others, they don’t want to work that many weeks and spend that much time here. That model is working as well. It’s a perfect arrangement we have right now with Elton, Cher and Bette each in for their periods of time for the year and they’re complimentary artists. It’s also working well for the hotel, for Caesars and Harrah’s, because it gives them more opportunities to touch their customers with different kinds of entertainment options. Celine, after being here for 700 performances, her show was more dependent on our outreach to new guests and new travelers who didn’t necessarily have a relationship with Harrah’s and with Caesars.

AEG is also on the doorstep to provide entertainment for Harrah’s new arena project near Bally’s and Paris Las Vegas. How involved will you be with the arena?

As the live entertainment division of AEG, we’ll be very involved in programming traveling music and family entertainment events to the arena. I’m not an expert on the development process for the arena, but I’ll try to answer questions about the entertainment there.

I’m assuming you’ll operate in the same way that you work with entertainment at Los Angeles’ Staples Center. Describe how that works.

Staples is quite a complicated model because it has five anchor sports tenants. That’s the one thing I don’t think an arena here in Las Vegas will have, if ever, for a very long time. I think ultimately an arena in Las Vegas will have anchor sports tenants, but not five of them. So it’s quite a feat to manage the booking process for a venue like Staples Center with those five anchor sports tenants with variable schedules at the last minute when playoffs come up, for example, and to try to book traveling family entertainment – circuses, rodeos, motor sports events – and touring music. I think an arena in Las Vegas will have a greater proportion of family and music and comedy entertainers than Staples would because of the strength of sports and programming.

I’m sure that readers are going to be like me and are trying to figure out what the five sports franchises are. Most people know about the Los Angeles Lakers and the Los Angeles Clippers of the National Basketball Association and the Los Angeles Kings of the National Hockey League and many fans know about the Los Angeles Avengers Arena Football League team. Who am I missing?

The Sparks.

Right, the WNBA team. OK, so will it be an advantage or a disadvantage to have similar venues in Los Angeles and Las Vegas? On one hand, I could see you booking talent at both locations since they’re so close to each other, but on the other hand, doesn’t Harrah’s want to attract Los Angeles-area concertgoers to stay in the resorts in Las Vegas?

I think this is another opportunity for Los Angeles residents to come see a show and make a week or weekend of it. Obviously, there’s crossover in the audiences that we attract. An arena in Las Vegas will primarily draw on local residents. But as a strong second or an equal source, it will draw on the tourist population, not just from L.A. – as much of our business is from L.A. and Southern California – but from visitors from around the world. We saw in five years with Celine and even so far with Elton, Bette and Cher, a lot of our business is really attracting new customers from overseas, especially with the state of this economy. We’re getting a relatively high proportion of ticket buyers from overseas.

What can you share about the prospects of getting a National Basketball Association team or a National Hockey League team to play in the new Harrah’s arena?

Like every resident here, I sure hope that happens. It may take awhile. I really don’t know much about any recent discussions in that regard, but I really hope that happens for an NBA and an NHL team.

What are the challenges of working around an NBA or NHL schedule?

Turnover of the facility from one type of an event to another is the biggest thing and they’re expert in that at Staples Center in L.A. They can do three events – three full arenas – in one day for three different kinds of events. Scheduling is the long-term challenge. When you’re holding dates for professional sports teams for potential playoffs throughout the year, it’s hard to schedule other entertainment events on top of that, but they’ve been really successful with that in Los Angeles. One of the newer arenas that AEG owns and operates has quite a different challenge and that’s the O2 under the Millennium Dome in London, which has no anchor sports tenants, but the livelihood of which is dependent on entertainment and family events. The O2 in London has been opened for about a year but has had an amazing, overwhelming record of music events in its first year of operation. Prince, when we finished the run here at the Rio last year, went on to do 21 nights at the O2 in London for 20,000 or 22,000 people every night and took up an entire month in London at the O2. I don’t know the statistics, but they had a record number of people through that arena without any anchor sports tenants. They’ve had exhibition games with the NBA and others, but primarily, it’s dependent on the music business. It seats up to 23,000 people.

Will the new arena also serve as a convention venue?

It certainly could. It’s proximity to Harrah’s, the Flamingo, Bally’s and Paris and all the other properties at this end of the Strip will lend itself to trade shows and other convention business.

What are some of the amenities coming to the new building?

Again, I’m not an expert on the design of this facility yet, but I know the state of design of arenas in the world today and the arena this company opened in London, that will open in August in Berlin and the Sprint Center that opened a few months ago in Kansas City really raised the bar for the level of the guest experience in creating so many dining and concession choices, so many levels of luxury to offer guests, so many levels of price points to reach the audience and to attract them to the arena, with luxury boxes for corporate clients and sponsors.

Any word on the naming rights for the new venue?

Not yet.

Looking toward the future, what does AEG have going with Boyd Gaming’s Echelon project?

A couple of entertainment venues. A small room of about 1,500 and a theater of about 4,000 (seats).

Would you have a similar arrangement with them as you have with Harrah’s and Hard Rock?

We don’t really know what the strategy will be there yet, but there will be some unique opportunities to take advantage of there. The specific programming isn’t clear yet.

Richard N. Velotta covers tourism for In Business Las Vegas and its sister publication, the Las Vegas Sun.