Creating a Budget for a Concert Tour

Performing live is expensive for the artist. Budgeting for the concert tour is therefore a vital part of the planning for the activity. An artist’s booking agent and management may agree on a proposed set of dates for a tour, or a run of open-air festival appearances, and someone on the artist team must determine if the artist can afford to undertake the tour or festivals.

The term ‘budget’ is used to describe the list of expected income and expenses. The artist manager may draw up a budget or ask the concert tour manager (CTM) to look at the logistics of the touring period and then draw up a list of predicted expenses.

The Tour Budget

Completing a budget serves two purposes. The primary goal is to show the artist their potential profit or loss from the planned live performance (a loss is a shortfall). The artist can then decide whether they will undertake the activity and where to find additional revenue to cover a shortfall.

Secondly: A tour budget also serves as a to-do list for services and activities to be rented, purchased, or planned. CTMs (including me) create and change a spreadsheet template based on their experience with concert tours. The CTM will add services and activities that are necessary as part of the touring planning process to the template. Working through the budget template reminds me to enquire or plan the service or activity. Seeing a line item about ‘rehearsals’ reminds me to organise that activity, for instance.

I have embedded an example of a completed tour budget here:

What is Tour Support?

This budget shows the tour will lose money. However, the music artist in this case has a record deal and so can apply for tour support. Tour support comes from the record company and is money made available to cover the shortfall in touring income. The artist must repay the tour support from streaming, downloads, and physical sales income.

The record company will want to see the budget/list of predicted expenses with the application for tour support. Touring may be in the record’s interest company (the traditional activity of touring to promote a new recorded release) and the record company will be careful in deciding how much money to provide for support. The company will already have invested significant sums to bring the artist to market and will want a return on their investment. The IFPI, a trade body, suggests that tour support investment to break a new artist would be $100,0001.

The Shortfall

distribution of tour support from live music business

In this case the shortfall is just over £30,000 for a 14-date run over 22 days. This is not an efficient tour – there are eight days with no income (travel or days off). Still, the record company will hopefully approve the predicted expenses and the amount of tour support required. However, the record company’s fund transfer isn’t automatic. The artist will have to invoice the record company for the tour support money, and payment of the funds can take up to 90 days. The record company does not pay the total tour support in full. They conventionally pay tour support in two instalments: artists can invoice for 75% before the tour starts and the remaining 25% after the tour ends and they submit their completed tour accounts.

Budgets for Hard Ticket Shows and Promotional Activity

An application for tour support applies to an artist undertaking hard-ticket concerts or festival appearances. The artist earns money from ticket sales (indirectly with festivals).

The artist will also undertake live performance activity purely for promotional purposes (not for a fee) and the record company pays for the costs of such activity. These costs are non-recoupable. The record company views them as a direct marketing cost and picks up the bill accordingly.

Common live promotional formats include:

  • ‘Sessions’ on radio – the artist performing live for a particular radio presenter
  • Special guests on television shows
  • Televised awards shows
  • ‘In stores’ – intimate concerts in record stores
  • Album launches – performances in unusual locations as a way of drawing attention to the release of new material by the artist

These are all examples of ‘promo’ activity. The record company pays all costs directly for this type of activity.

The Artists Costs When Performing Concerts and Festivals

the four categories of expenses in concert touring from live music business

You may wonder how is it that touring is so expensive that music artists lose money. Concert ticket prices seem to go up all the time and artists are still on record saying that costs wipe out any profits they may have from ticket and merch sales.

Consider a ‘baby band’ performing at a bar in a town in the next state. The band are self-financed with no record company support. A list of expenses for this upcoming show might include:

  • Renting a rehearsal room for two nights before the show.
  • Buying new strings and drum sticks
  • Gas and oil for their van.
  • Three rooms in a cheap hotel
  • Buying breakfast the morning after the show…

…and so on. Now think about a more complex arrangement with an artist performing in >1000-capacity rooms, with sessions musicians and a handful of professional crew. Refer back to the budget above for an example of what I mean. Concert touring and performing live at any scale will incur a myriad of expenses in the following four categories:

  • wages
  • transport
  • accommodation
  • ‘production’ – audio, lighting, video, backline, set and stage.

Look again at the embedded budget. You can see the four categories (and the sub-categories for ‘production’) specified in the budget. This budget is based on my template and not all CTMs are as specific about these categories.

End

That’s my quick guide to budgeting for concert touring. I hope you found it useful. Please let me know in the comments below!

1IFPI, 2019. Global Music Report 2019. International Federation of the Phonographic Industry, London