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25th September 2012

Vince Power's Music Festivals company goes bust

A dreadful festival season results in a major festival organiser calling in the administrators

Vince Power’s Music Festivals company, responsible for Hop Farm, Feis Festival in Finsbury Park, the Festival Internacional de Benicassim in Spain and Costa de Fuego also in Spain has now announced its intention to call in the administrators.

The company suspended trading in its shares on Friday (September 21st 2012). The decision came after a difficult few months for the company, which only floated on the Stock Exchange last summer.

Music Festivals blamed its problems on weaker than expected ticket sales this year at its two main events, the Hop Farm festival and Benicassim in Spain. Music Festivals said Hop Farm had made a loss, while Benicassim was far less profitable than in previous years.

Industry experts blamed Music Festivals Group's financial woes on the wet summer and competition from rivals – even though Glastonbury and the Big Chill took gap years – and one-off events such as the Olympics.

The Mean Fiddler impresario's return to public life was high-risk. Power owns 23% and, along with relatives, the family stake adds up to more than 40%. Like other investors, they face being left with nothing. Power had also propped up the company with a £750,000 unsecured loan in July.

"Over the last three or four years there has been a growing sense that the market has become too crowded," said Dave Newton, director at the box office website We Got Tickets. "There is a bit of auto-correction going on."

The number of festivals is estimated to have mushroomed to about 700 in the past decade and this year industry figures also complained of the pressure caused by a growing number of free music events such as Radio 1's Big Weekend in Hackney, which attracted 100,000 people.

With the squeeze on consumer spending hitting all age groups, many Britons thought twice about what can add up to expensive weekends away. "Prices have accelerated too much," said Newton. "People are being asked to pay £100 for a ticket that five years ago would have cost £35."

Bad vibes started to emerge from the company at the start of the summer when it told investors that ticket sales for Benicassim and Hop Farm looked disappointing.

In the end, Hop Farm, held in Kent and headlined by Bob Dylan, proved to be loss-making, while Benicassim was hammered by the recession and punishing levels of youth unemployment in Spain. Despite offering acts such as the Stone Roses and Florence + the Machine, the Valencia festival would prove to be much less profitable than in 2011.

By August the picture had darkened with the company saying it expected to make a "material loss" for the year and admitting it was casting around for a financial lifeline from investors. Last week it said that search had proved fruitless and moved for its shares to be suspended.

"The board has in recent weeks pursued a number of different funding proposals but the company has not been able to procure the necessary funding it requires," it said in a statement. Last year the company made a pre-tax profit of £800,000 on sales of £13m and at that time had no debt. With no formal appointment of administrators it remains unclear how much money is owed to its suppliers.

Claire O'Neill, of the Association of Independent Festivals, said its 40 members, who include the organisers of Womad, have reported "mixed experiences" this year but the overall picture was not of doom and gloom, pointing to events such as Bestival and End of the Road, which sold out, albeit later than in previous years.

"There has been a huge increase in the number of festivals and for every new one that have popped up, others have fallen by the wayside," said O'Neill, adding that it was the festival brands with the most distinct identities that were prospering. "Festivals can't be carbon copied and rolled out on a production line ... a successful festival needs a unique identity that people relate to and want to go and see."

Music Festivals’ decision to call in administrators, however, is particularly unexpected: not only did the company make a profit last year of £0.8m, it is also headed by one of the best-known promoters in the live music business in Vince Power, the self-styled ‘king of gigs’ and creator of the Mean Fiddler Group.

What will now happen to Hop Farm and Benicassim — as well as the company’s Costa De Fuego event — is, for the moment, uncertain. Music Festivals says it will make an announcement “in due course” once it has appointed an administrator.

Source: The Guardian - full article here
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