The weekend before last was supposed to play host to one of the biggest electronic music events in the UK, Baselogic Productions’ Bloc Festival. Following 6 successful annual events and despite a move from Butlins holiday park to the London ‘Pleasure Gardens’ the festival sold almost 15,600 tickets out of a capacity of 18,000. Replete with techno godfathers Richie Hawtin and Carl Craig it looked set to be the event of the summer. However, it was not to be.
The chosen site in central London, which saw the festival spread out over venues including a ship moored at the Royal Victoria docks, was not equipped to handle the crowd capacity, with most punters spending the first evening queuing rather than watching any bands and those who entered the separate venues not being able to leave due to too few exits. Ticketing was handled by the unfortunately named ‘Crowdsurge’, who maintain the site was under capacity The plug was pulled at 12:45am Saturday morning, with 15,000 festival-goers informed that the remainder of the festival was cancelled.
Interestingly, as the dust has settled, BP have gone into administration. Unable to honour their debts to the artists due to the obligation to refund 15,600 tickets, BP find themselves in a position not faced by any other festival organiser before in the UK. After a mere 2 weeks of lectures on the Glasgow University LLB course on corporate administration, this raised more questions than I can find answers to, from a legal perspective, given how different a festival organisers business is compared to a company that trades all year round. At face value, if they are obliged to refund all tickets for the events, this would mean their liabilities (artist payments for the artists who either played Friday night or were in London prepared to play their time slot) exceed their assets, so administration would be unavoidable. But even trying to organise thoughts on the consequences into a logical order is proving impossible, almost as hard as trying to fathom why so many people like techno….
How does a ‘festival’ trade throughout the year?
How are the administrators, appointed under the Insolvency Act 1986, going to continue trading as BP? Administrators are tasked with rescuing the company as an ongoing concern, but BP only host one event a year. A festival organiser such as All Tomorrow’s Parties host events worldwide every couple of months and have a steady stream of revenue all year long, whereas bloc presumably take in ticket sales in advance of the festival and a percentage of catering /onsite entertainment/drinks/merchandise sales for only one weekend of the year. The amount that currently remains from the proceeds of ticket sales will depend on money already expended on upfront costs – venue rent, live music and alcohol permits, flights for performers (which some insist on in advance) and other attendant costs of putting on a festival. Assuming they have the credit facilities to last until a new festival can be organised, how will BP be able to put on another festival successful enough to recoup the money lost on the 2012 fiasco and cover the costs of the make-up festival? Do the electronic artists that travel from all over the globe have enough solidarity with the genre and festival that they will perform out of charity? How will BP convince administrators that this could even be accomplished? Do they have financial reserves built up from previous years?
How are ingoings and outgoings handled for a festival?
Organisation starts almost immediately after the end of the prior year’s festivals. Live event permits have to be paid upfront as do the costs for renting the venues. Organisers must take a wage, either monthly or following the completion of accounts for the previous festival. The online records available for BP’s financial year ending 31/3/2011 put ‘cash at bank’ (the same value as ‘total assets’) at £167,636 and their ‘total liabilities’ at £140,886. In short, BP look roughly £27,000 in the red. Bloc 2011 took place on the weekend accounts were filed. Whether this means all bands fees are paid out of ticket sales prior to the festival commencing and all other percentage cuts are handled after the festival, I don’t know. This puts BPs theoretical reserves at £27,000. As a small festival, it would stand to reason that BP as a private limited company lease rather than own, which would explain why total assets are the same as cash assets in their accounts. Suffice to say, their reserves do not look substantial.
Do the festival attendees and performers both rank as unsecured creditors?
BP have not announced how ticket refunds will be handled, but affirmed that they will be. Is the consequence of administration that festival goers rank as unsecured creditors? If so, where will they rank? There are also the performers (that actually performed, those who found out about the cancellation may have been able to mitigate their losses and avoid unnecessary travel and expense) and security staff (provided by agencies). And before this, the administrators fees have to now be satisfied, which as witnessed in the ongoing Rangers administration case can reach up to £130 per hour per administrator. Someone has to lose out. The bulk of the costs will be non-recoverable: permits, venue rent, alcohol licenses etc. If ticket sales went to satisfying those costs, where will refund money for 15,800 disappointed festival-goers come from? It doesn’t exist anymore, which suggests Bloc’s audience will bear the brunt of the affair. Festivals thrive on reputation and regular annual attendees, which Bloc had up until this weekend. The shame of it is that with the disappearance of Glade festival and Barcelona’s Sonar being a more expensive affair, Bloc has always represented an excellent festival for a cheap ticket price. It begs the question, how could something as fundamental as crowd capacity and control be handled so terribly in the festival preparation?
UPDATE: – Since starting this blog, The Guardian has revealed that BP have gone into voluntary liquidation. Sean Michaels reports that BP’s assets are going to be sapped by liquidators fees and claims of other creditors. Refunds for ticket-holders look increasingly unlikely, but I can’t imagine 15,800 ticket holders are going to techno for an answer….
