How Scale And Smarter Hiring Created A $250M Sponsorship Juggernaut
Over the past few weeks, Live Nation CEO MIchael Rapino has been on the spring conference circuit talking up the company's sponsorship prospects. And there's a good reason for that. Despite reporting a $163 million loss in 2012, the sponsorship business reported impressive growth recording $164 million in profit on $248 million in revenue.
In two of his most recent conference presentations, Rapino has pointed to a couple of key strategies in particular that he hopes will ultimately help the world's largest concert promoter double its current sponsorship profit to $300 million in the next few years.
To understand the company's current growth strategy, it helps to first understand its beginnings. Rapino says that when Live Nation was created execs took a page out of the professional sports league playbook. "Our creative rift at that time was 'How do we label ourselves somewhere like the NFL, NBA? How do we get that feeling that we're the league that manages all these franchises?'"
The first step, as it almost always is, came with hiring the best talent. Live Nation has staffed up over the past few years to a total of 300 sponsorship professionals servicing over 800 local and national sponsors. Finding talent is key to the company's growth strategy and it didn't come from plucking salespeople from other organizations. "We believed if we staffed ourselves properly, not with junior sponsorship people selling a sign at the shore line, but brand managers from Pepsi and sophisticated marketers, who built the global team, we would be able to convince Madison Avenue and Coca-Cola and others that we are the best choice if you want to be in the music business," Rapino recently told investors at the Morgan Stanley Technology, Media and Telecom Conference.
Second, Live Nation's scale and other business lines, while perhaps not as profitable, have made it more attractive to Madison Avenue.
In particular, Rapino says managing artists helps add leverage to the existing efforts of the sponsorship sales team.
"My 300-plus sponsorship people who are out selling every day and meeting with the CMO of Coke, walking into that room and talking about 25,000 shows, talking about our database, but adding on, 'Oh by the way, we manage 200 artists. Would you like to use Kesha for your Pepsi? Would you like to use Britney Spears?' adds incredible power to my sales force," Rapino remarked at the Deutsche Bank DBAccess Media and Telecom Conference.
Of course, the company's growing list of digital assets, not the least of which is Ticketmaster, hasn't hurt either. "We're now in with the Madison Avenue RFP process," Rapino says. "So that if a brand says, 'I want young. I want music.' They're going to call VEVO, they're going to call Spotify, they're going to call Pandora. They're calling us now."
And that's why Live Nation, and its investors, are bullish on the company's sponsorship prospects.