Business News Live Business Top Stories

Bloc administration – what might it mean for the UK live sector?

By | Published on Thursday 12 July 2012

Bloc Festival

As Bloc Weekend went into administration yesterday, many in the live sector began to wonder whether the collapse of the popular dance event could have ramifications for the wider live industry, especially at the grass roots. As previously reported, although Bloc Weekend promoter Baselogic used CrowdSurge technology to sell tickets, payments were made to the festival company directly, meaning there is no ticket agent standing between punter and promoter.

This means ticket-buyers looking for refunds will now have to join the queue with Baselogic’s other creditors, and with most artists having already been paid 50% of their fees upfront, and most of the festival’s logistical costs having already been incurred, added to the fact that the 18,000 capacity festival had not sold out, it seems very unlikely there will be enough to give ticket-buyers full refunds (indeed, if there was, it is unlikely the company would have gone into administration in the first place).

Many now expect ticket-buyers to see no return from the festival company at all, meaning customers will have to look to their credit card companies for compensation (assuming they bought with a credit card, those who used debit cards may be less lucky). While hopefully as many of those affected by the Bloc cancellation as possible will be able to get their money back via their credit card companies, that’s going to piss off the powers that be at Visa and Mastercard, who could force banks to stop providing smaller entertainment promoters with merchant accounts that can accept credit card payments. And that could have a catastrophic effect on independent festival promoters.

Mark Meharry of UK-based direct-to-fan e-commerce platform Music Glue told CMU: “There is going to be a significant knock-on effect [from this] and it will affect the entire live industry. Online payment gateways started getting really nervous [about live events] when Michael Jackson died, because of the scale of the risks involved with online ticketing. They began to clamp down on the risks and have recently forced ticketing companies to guarantee that funds for high-risk events are not passed to the event organisers until after the event happens”.

“Because most festivals need ticket money up front to bankroll their events, a technical solution to get around this has been to set up the festival as the merchant receiving the funds from customers directly. In this scenario the ticketing company does not receive the revenues from sales and therefore are not exposed to risk. Apparently this technique was used by CrowdSurge with Bloc Festival”.

“If Bloc do not refund the money to customers in a timely manner, the payment gateway will be forced by the credit card companies to refund every customer in full and the shockwave through the financial services industry will impact all of us. In plain English, going forward this convenient loophole will close and the festival merchant accounts will be immediately frozen by payment gateways; the money tap will stop and festivals will not receive ticket revenue until after the event”.

He concluded: “Some of the larger ticketing outfits are well known for taking risks and handing the cash over in advance, however I doubt that in 2013 the CFOs of these companies will allow this practice to continue. I may be wrong, but [for music festivals] 2013 is going to be very different beast to 2012”.