How much does Download cost...

[jump]

I read an interview with Coppng yesterday in the Evening Standard, it was mostly boring but he did mention Download costs £15m to run with half of it going to the acts playing.

Probably doesn't deserve it's own thread but I couldn't see any where else to post it.

[Go_Go_Tonymon]

I read an interview with Coppng yesterday in the Evening Standard, it was mostly boring but he did mention Download costs £15m to run with half of it going to the acts playing.

Probably doesn't deserve it's own thread but I couldn't see any where else to post it.

[Old Mosher]

What's the attendance at Download these days ? 50k, 75k, 100+k ?

It's interesting that the number seems to be kept a bit quiet, I don't mean a big secret, but its not eactly widely publicized is it ?

[Go_Go_Tonymon]

2010 was pushed up 85k and i believe the rest of the years are stuck at 70k but they can increase the capacity if there is enough damand

[Dan R]

2010 was pushed up 85k and i believe the rest of the years are stuck at 70k but they can increase the capacity if there is enough damand

Edited March 31, 2012 by Dan R

[t8yman]

plus the money they take from stallholders, and the bar take, and the sponsorship from zippo, pepsi max, jagermeister, locker rental, car parking etc.

[Dan R]

Im sure all the sponsorship and other sources of money would add up to 1or 2 million. Would be interesting to know how many tickets need to be sold to break even.

[AcademicPistol]

This is just my estimate but if they sold roughly 75,000 tickets at £180.00 that would equate to £13,500,000 and the money from the stallholders, bars, zippo, pepsi max, jagermeister, locker rental and car parking etc should be enough to keep everyone sweet.

[luckysalt]

Dont forget the price of some of these RIP packages, some of them are £10k or whatever, that makes a huge difference im sure, and campervans, all their most expensive tickets sold out straight away this year, they gotta be pleased with that

[neilloggie]

I bet they will be lucky to make 10% profit after all the bands,infrastructure,security,rent for land,electricity,licenses etc are all taken in to account.

[t8yman]

I doubt its as low as 10% net profit. i dont think that leaves enough room for allowing for poor ticket sales and "acts of god".

[eFestivals]

I bet they will be lucky to make 10% profit after all the bands,infrastructure,security,rent for land,electricity,licenses etc are all taken in to account.

not forgetting that there's 20% VAT on all of that to be paid.

[gary1979666]

But if they're VAT registered, then they claim that back, so no impact to the P&L for that - only a cash cost.

10% net profit is pretty low - would expect an established business like that to be making 25%+, plus leaving enough of a buffer in case of low ticket sales.

[eFestivals]

But if they're VAT registered, then they claim that back, so no impact to the P&L for that - only a cash cost.

10% net profit is pretty low - would expect an established business like that to be making 25%+, plus leaving enough of a buffer in case of low ticket sales.

if you think that VAT is an ignorable cost, that explains why you're not running a big successful business. Or even a small successful business.

It's not a 20% net cost admittedly, but it's still a very noticeable expense, and a far from insignificant percentage of income.

[jump]

I bet they will be lucky to make 10% profit after all the bands,infrastructure,security,rent for land,electricity,licenses etc are all taken in to account.

[gary1979666]

if you think that VAT is an ignorable cost, that explains why you're not running a big successful business. Or even a small successful business.

It's not a 20% net cost admittedly, but it's still a very noticeable expense, and a far from insignificant percentage of income.

[eFestivals]

It's not an expense which would impact their profitability

you're utterly utterly wrong.

20% of all the money they get in is VAT.

It is not the case that 20% of everything is spend is spent on VAT. There's no VAT on wages for a start, and every non-EU (or perhaps even non-UK? I'm not sure) act that they book will not have anything that they can reclaim for VAT - and in the area of live music and particularly with rock bands, an awful lot of bands are outside the UK.

Metallica will not include reclaimable VAT - so there's £200+k of VAT that they can't claim back.

I very much doubt that Black Sabbath count as from the UK for tax purposes - so there's another £200+k of VAT that they can't claim back.

And who knows, it's quite possible that The Prodigy are outside the UK for tax purposes, which would be another £200+k of VAT that they can't claim back.

And that's just the headliners. There'll be another £200+k of VAT that they can't claim back over the rest of the bill as well I'd guess.

So just with the most simple guessing at it, there's the best part of £1M of VAT that is lost just there. If you don't think that's enough to impact on profitability I suggest you never get a job within accounts.

For the record, I run an accounts dept for a successful company and that's how we do it.

PMSL - then you need to start engaging your accountancy brain a huge part more than you are doing.

[jump]

Something Neil said has made me curious, could a band be treated like a company so they can can claim travel expenses etc by having there employes (band members) claim it when touring the same way an employee does at a company?

I also remember something about bands getting into debt at festivals (at least in the US) as they have to pay the fest if they want their mech stocked at the stalls, I remember Set Your Goals couldn't play R&L as they went on the Vans Warped Tour and they lost loads of money and couldn't afford a flight over.

[gary1979666]

you're utterly utterly wrong.

20% of all the money they get in is VAT.

It is not the case that 20% of everything is spend is spent on VAT. There's no VAT on wages for a start, and every non-EU (or perhaps even non-UK? I'm not sure) act that they book will not have anything that they can reclaim for VAT - and in the area of live music and particularly with rock bands, an awful lot of bands are outside the UK.

Metallica will not include reclaimable VAT - so there's £200+k of VAT that they can't claim back.

I very much doubt that Black Sabbath count as from the UK for tax purposes - so there's another £200+k of VAT that they can't claim back.

And who knows, it's quite possible that The Prodigy are outside the UK for tax purposes, which would be another £200+k of VAT that they can't claim back.

And that's just the headliners. There'll be another £200+k of VAT that they can't claim back over the rest of the bill as well I'd guess.

So just with the most simple guessing at it, there's the best part of £1M of VAT that is lost just there. If you don't think that's enough to impact on profitability I suggest you never get a job within accounts.

PMSL - then you need to start engaging your accountancy brain a huge part more than you are doing.

[gary1979666]

Something Neil said has made me curious, could a band be treated like a company so they can can claim travel expenses etc by having there employes (band members) claim it when touring the same way an employee does at a company?

I also remember something about bands getting into debt at festivals (at least in the US) as they have to pay the fest if they want their mech stocked at the stalls, I remember Set Your Goals couldn't play R&L as they went on the Vans Warped Tour and they lost loads of money and couldn't afford a flight over.

[eFestivals]

Note to Neil - cash is not profit.

Income - the for the money they receive for each £200 (say) they take in from a punter, only £166 of it will actually count as sales and form part of the profit. The rest is VAT and sits on their balance sheet to pay back to the HMRC and has NOTHING to do with profit.

Expense - For most expense where VAT is charged, then a similar thing would happen - e.g. for a £120k tent hire (I know it's not right figures) - then £100k will be the cost and go to the profit and loss and the £20k will go to the balance sheet to be claimed back from HMRC.

Non UK Expenses - e.g Metallica, their invoice won't actually charge VAT, as they are not (I think) a UK registered company. So not sure how they can't claim back that £200k, because they haven't been charged any. That isn't to say they haven't been charge GST or HST, but neither of those are VAT. So if Metallica charge £1m, then that is not £1.2m including VAT, as they can't charge it - is most likely £1m (including an element of GST).

There are expenses where you can't claim the VAT, such as if AC took his team out for a post download drink and as this is employee rewards, then the vat paid is a business expense, not to be reclaimed.

Get you facts right before you shoot me down - especially with a double utterly!

I know my facts. ... and not only do I know my facts, I'm able to join up the dots into a coherent whole, which you've completely failed at.

If download takes £24M in tickets and other sales, then £4M is VAT. That's £4M that you said above (at the point I came in) which was ignorable within the P&L because they get it all back.

Yet ... if they booked Metallica 24 times at £1M for each time, they get none of it back, and they've lost £4M on the event.

£4M is not an ignorable amount, and it very definitely is "an expense which would impact their profitability".

The VAT cannot be ignored in the way you've suggested. The chances are - if they're an average business - that around half of what they take in VAT has to be paid over to the VAT man as VAT. For download that's likely to total up at around £1.5M to £2M.

That's still "an expense which would impact their profitability", especially when what they are taking in VAT is being counted as takings (as it was being when I posted to bring people's attention to the fact that VAT is within those takings).

[eFestivals]

Something Neil said has made me curious, could a band be treated like a company so they can can claim travel expenses etc by having there employes (band members) claim it when touring the same way an employee does at a company?

yep.

Anything which is a valid cost of doing business is a valid business expense.

[AcademicPistol]

Yup - I would have thought a lot of bands would be set up as companies, so they can pay lower tax rates (like Ken Livingston) and business travel would be a deductable expense.

[devilman]

VAT is VAT. If you run a business then you are just an unpaid collector for HMRC. Neil you think like a punter rather than a business owner and that's a worry, does someone else run your books? I hope so! VAT hurts when you see it leave your account as does corporation tax but if you aren't making a profit you won't be paying any. <kept deliberately simple>

[gary1979666]

I know my facts. ... and not only do I know my facts, I'm able to join up the dots into a coherent whole, which you've completely failed at.

If download takes £24M in tickets and other sales, then £4M is VAT. That's £4M that you said above (at the point I came in) which was ignorable within the P&L because they get it all back.

Yet ... if they booked Metallica 24 times at £1M for each time, they get none of it back, and they've lost £4M on the event.

£4M is not an ignorable amount, and it very definitely is "an expense which would impact their profitability".

The VAT cannot be ignored in the way you've suggested. The chances are - if they're an average business - that around half of what they take in VAT has to be paid over to the VAT man as VAT. For download that's likely to total up at around £1.5M to £2M.

That's still "an expense which would impact their profitability", especially when what they are taking in VAT is being counted as takings (as it was being when I posted to bring people's attention to the fact that VAT is within those takings).