Dear Andy and Tim

I hope you had a grand day out at Co-op Live, but can we talk?

The new Co-op Live Arena is currently under construction next to the Etihad Stadium in east Manchester. Regular readers may be aware that I previously discussed the need for such new arenas to financially contribute into the ecosystem that creates the talent that is essential to the future health of their own business. After I made that point, the company that is creating Co-op Live went to the press with a statement to counterpoint that position, making a range of claims about how the arena would help the ecosystem, and about their interactions with Music Venue Trust. Separately, I also received angry emails from Oakview Group (OVG) fiercely objecting to us discussing these issues in public. So, fully expecting a positively overflowing email box full of stuff telling me that this isn’t the way to do things, let’s revisit what those plans are, who Co-op Live are making them with, and why.  

When it opens, it claims it will be the ‘largest’ and ‘most sustainable’ indoor entertainment arena in the UK. Yesterday it had a ‘topping off’ ceremony attended by the Mayor or Greater Manchester Andy Burnham and the CEO of the company driving forward the new arena, Tim Leiweke of OVG. This ceremony was covered in glowing and effusive tones by the Manchester Evening News, providing a number of bits of useful information about the plans for the new arena alongside quotes from Tim and Andy about what it will achieve.

Here’s some facts and figures that you could surmise from this latest press launch:

Co-op Live aims to host 120 events per year. It has a capacity of 23,000, resulting in an aim to sell 2,760,000 tickets every year. The average cost of an arena ticket in the UK in 2023 is £84, resulting in a gross potential ticket income of £231,840,000. Applying average ticket booking fees standard for arenas would generate circa £25 million in additional income. Average processing charges per ticket would generate a further £4 million, with additional potential income from other fees such as a Venue or Maintenance Levy (estimated £8 million) and ‘Print at Home’ Levy (estimated £4 million) creating a total ‘additional charges’ income likely in the ballpark of £41 million. The total income from tickets plus charges will be in the region of £270 million per annum.

The arena will host 32 bars and restaurants, with the intention of creating a rounded night out - the destination is the arena, which services all the customer needs. There isn’t any specific study on the spending habits of arena concert goers, but let’s be generous and assume that the average will be somewhere in the region of two drinks per person at £8 per drink, generating a wet sales total which I am low-balling in the region of £44 million - just for clarity, it would be astonishing if it was this low, I’m just trying to give you a sense of the economics without being contentious and to hopefully avert the need for OVG to do a press release announcing that I’ve overestimated the financial picture. Assuming that only 20% of the audience attending, again, deliberately massive under estimate, chose to eat at the arena at an average of £25 per head, that would generate another  £13,750,000. The total income from food & beverage will be a minimum of £57 million. 

People like to try to pick holes in discussion of the economic impact and contribution of new arenas, so just to be completely clear - everything above is deliberately low-balled in terms of potential value. My personal view is that OVG probably have a target of in the region of at least £500 million a year in gross income to justify the price tag of the build - £365 million. They have a 15 year operating agreement, so at a 10% profit margin would repay the investment in just under half that time. Across the 15 years, my guess, which is about as good as anybody else’s except probably OVG, would be that they forecast to make somewhere in the region of £400 million in net profit. I’d welcome anyone responding to this piece with their own prediction of what the profit forecast looks like, and feel free to argue for higher or lower income predictions. 

Let me state this incredibly clearly; I am massively in favour of OVG aiming to make that profit. Because when OVG aim to make a profit, the music ecosystem benefits. Artists earn, sound engineers have work, crew have jobs. The arena will undoubtedly create work for our industry and that is a good thing. However, the question is what is the actual size of that benefit when taking all elements into consideration. For a simple example; is that 2,760,000 people who weren’t going to go out who now are? If there are 120 additional high value shows in Manchester, is that just 120 new opportunities to work and earn, or is it simply displacing fans from one activity into another? Are the 1000s of jobs the new arena claims to be creating actually new jobs or are they displaced jobs?   

Let’s consider some of the claims being made. Let’s go back to the Manchester Evening News article and discuss some of the things Tim and Andy are quoted as saying within it. And let’s start with a biggie. 

The statement is that this new arena will “put Manchester back where it deserves to be, as a global entertainment powerhouse.” This assessment by OVG is based on the concept that Manchester is not currently a global entertainment powerhouse because it isn’t in the top 3 cities in the world for selling concert tickets. Obviously I appreciate that it’s important for OVG messaging to talk up the arena, and this is just part of that campaign, but to be clear; the top 10 cities in the world for concert tickets is not an indicator of which cities are ‘global entertainment powerhouses’. That would be the cities which produce music, not consume it. Manchester is already a global entertainment powerhouse because it produces significant amounts of the music that the world consumes. The third ranked city in the US for ticket sales in 2015 was Houston. The fifth was Charlotte. Does anyone think Houston or Charlotte are global entertainment powerhouses? Portland and Indianapolis are rated as the second and third best music cities in the world in 2022 by List Clever. Are they global entertainment powerhouses? Andy Burnham then doubled down with this assessment of what makes a world leading city, offering that “Look at the size of this place, this is going to make us the music capital of Europe”. You already are one of those cities Andy. And it’s because you have Band on the Wall, Matt and Phreds, and multiple other grassroots music venues which are the breeding ground for Manchester talent. Not least of which, of course, is Night and Day, which is, incredibly, still embroiled in legal proceedings with Manchester City Council over a noise complaint created by historic planning decisions after more than a year of ridiculously stressful negotiations. 

To be fair to Andy, who I’ve genuinely found to be a supporter of grassroots music venues, he does go on to recognise that with his next statement, which is  “Obviously, we’ll have venues of all sizes, right from the smallest to this place, the largest in the country, one of the best and biggest in Europe”. He then goes on to say “What I like so much about it is that it won't just have the biggest names and the biggest acts in the world here on stage, but instead space is being created in the concourses and in the venue to put on the new and emerging acts from the region.”. Now, I don’t actually know if that’s true, because despite requesting it OVG haven’t shared their operating plan with us. But what I do know is that if that is genuinely the intent, then OVG’s plans aren’t based on the central proposition of building a new arena that recognises and integrates with the existing grassroots music ecosystem. Instead, they contain within them concepts which would directly compete with the existing cultural offer in the city seeking to hopefully replace it; a methodology which frankly is not that unlikely given that that’s pretty much OVG’s approach to the existing Manchester Arena. Manchester doesn’t need to create alternative spaces in massive arenas where new and emerging artists can hone their skills and try to reach new audiences, even if such an untried and untested method was actually a way to create new arena headliners. Manchester needs to protect, secure and improve the spaces and opportunities it already has - a central point we have been trying to make to OVG for over a year. 

Tim Leweike than lays out how Co-op Live plans to support Manchester with the following statement: 

“Co-op Live (will be) donating at least £1m a year to help the Co-op Foundation deliver on its new youth-led strategy and Co-op’s vision of ‘Co-operating for a fairer world’. This collective effort will be known as ‘Gigs that Give Back’ emphasising the venue and partnership’s commitment to making a positive impact.”

Now, this sounds good, doesn’t it? And surely I’m going to roundly applaud a project called ‘Gigs that Give Back’? Well, of course I applaud anybody who is recognising that arenas have a responsibility to the local community that they wish to exist in. But arenas have an equal responsibility to the cultural community they exist in, and despite MVT repeatedly trying to have a meeting with OVG to explain that to them since June 2022, and despite OVG having put out a press release in January 2023 stating they would be meeting us about this point ‘very soon’, we still haven’t actually been granted an audience. Apparently the reason they won’t meet us, despite telling the press that they are going to, is that we are ‘being difficult’ and ‘unhelpful’ and that ‘this isn’t the way to speak to them’. Although I should note that this sort of public discussion gets more reaction from them than asking for a meeting every month and simply being ignored. 

What’s the value of the ‘£1 million donation’ when compared to OVG’s economic model of operating the new arena? It broadly equates to about 0.3% of their potential gross ticket income, or 4% of the ticket service charges they will make, or 25% of the money they will charge for printing your own ticket in your own home, or about 10% of the money they will charge to keep their own venue going with a Venue/Maintenance/Restoration levy. As you’re undoubtedly reading this as a red mist descends, OVG, not that you can always prove me wrong by not making any of those charges. The money will be raised by factoring it into the final price point of the ticket, either as a specific charge or buried within the show cost. It won’t hit OVG’s bottom line at all. 

MVT suggested last year that every ticket sold to a new arena in the UK, of which there are planned to be eight, should contain a financial contribution of £1 back to the grassroots music ecosystem that creates the talent on which those arenas are being built. For the Co-op Live arena this would represent a contribution of £2.76 million a year. OVG haven’t offered that. They’ve offered £1 million, equating to about 36p per ticket. And they haven’t offered that to the grassroots music ecosystem, they have ringfenced it for the Co-op Foundation. 

It’s obviously hard to look at philanthropic actions like this and not greet them as a good thing. I bet Co-op Live Foundation will do brilliant things with that money, and I believe Andy Burnham and Manchester City Council have done a good job in persuading OVG that they need to support the local community. Now we need Andy Burnham and Bev Craig, leader of MCC, to do the same job explaining to OVG that they are going to need to financially support the grassroots music ecosystem, and that this must be an essential part of their financial model. 

And if they don’t feel they should do it for any reason I’ve yet provided, if they don’t think that the future sustainability of the UK’s grassroots music venue circuit is a justifiable cause on its own which should place a demand on OVG to respond to it, then let me give them a selfish one which will have a direct financial impact on what they’ve already achieved: 

If there are no grassroots artists coming through the pipeline to fill Co-op Live Arena in 10 years time, it isn’t just the grassroots music artists, fans and communities that will have lost out. The only way OVG can continue to donate that money to Co-op Foundation in 10 years time is if there are 120 events to present on the stage, and 2.7 million people who want to go to them. If we don’t don’t take coherent action to make companies like OVG recognise that, and financially respond to it with real cash, that stage will be empty in 10 years time and the Co-op Foundation won’t be getting their donation. 

Be annoyed as you like by me publishing articles like this OVG. The solution is not to bury your heads in the sand and hope these problems and challenges will go away. You will stop being called out on this when you do the right thing. For the grassroots, for fans, for artists, for the ecosystem.

But most of all for yourselves.