The concert tour manager (CTM) should help the artist manager prepare a budget for the tour or festival performance. The budget will inform the manager about the loss or profit of the tour.
The budget also acts as a checklist of activities and items to prepare, as well as being a blueprint for future touring campaigns.
So, my first job after being hired is to prepare a detailed budget (or list of predicted expenses, LPE). A budget will be based on your tour income, but where there is no income (promotional activity, for instance) a list of predicted expenses will be appropriate.
There are the obvious activities and expenses that everyone should know: wages, transport, accommodation, etc.
My experience and expertise obligate me to highlight expenses you may not have anticipated – rehearsals, for instance.
Production rehearsals
Production rehearsals are time-consuming and far more expensive than most people budget for. You most likely manage a solo artist. You need musicians and perhaps a playback system to reproduce your artist’s music live. Getting all the people and the equipment together in one place for production rehearsal will cost a great deal. These costs will inflate your overall predicted expenses and look bad on paper. I therefore budget for rehearsals as its own budget category, with relevant wages, transport, and accommodation itemised within that category. That way you can review the costs as a proportion of total spend and hopefully make rehearsals cost-efficient in the future.
Tour support
I have helped music artist managers prepare budgets as part of applying for tour support. Anticipating cash flow is always a consideration when requesting tour support. It’s good to get the money, and when exactly will it arrive so you can pay the suppliers? I reflect this in my budgeting for you.
Promotional (‘promo’) activity
Your artist will also undertake live performance activity purely for promotional purposes (not for a fee). The record company usually pays for this activity directly. These costs are non-recoupable. The record company views them as a direct marketing cost and picks up the bill accordingly.
Since the tour budget doesn’t pay for this activity and an application for tour support doesn’t cover it, I must prepare separate budgets for promo. I would create a separate budget for promo even if your artist’s not signed to a label or eligible for tour support. The activity may be abroad and confuse the process of exemption from withholding tax.
Foreign currency exchange (FX)
You should lock in exchange rates (FX hedging) to protect against profits being eroded by currency rate swings. Companies such as Centipp and Chorus TM will assist you with this.
Withholding tax
Finally, the tour income will be subject to taxation in most countries. I build that into the budget so you are aware.