Live Nation Entertainment, Inc. (LYV) Earnings Call Transcript & Summary

So very excited to have Michael Rapino, CEO of Live Nation here. Obviously, having you here ties into our note this morning, our summer project, our deep dive on live entertainment was like an ode to Live Nation in a way. But in any event, you guys just touch every bucket. So let's go through the business. And starting with, live entertainment industry has experienced tremendous growth over the last several decades and obviously, the last several years as well.

Can you tell us some of the key supply and demand tailwinds that you think will drive the next leg of growth for live music over the next, I don't know, whatever period of time, 5 years, 10 years.

First of all, I thought your report was great. We can just cut and paste that first paragraph on supply/demand. I think you hit -- forget Live Nation agenda, the industry is -- it's having its moment right now. Well, maybe other medias are going through their own disruptions. First and foremost, this is a category where on a kind of product basis, it's not that disruptable. You can't duplicate the live show. So for all the other industries who have some of those challenges, there's nothing like being at that Taylor Swift show. You may then eventually go watch it on a movie theater or you might have some other things. But it's a really -- it's a product that is non-duplicatable, consumers love it. They -- recent report, 67% of customers said it was the most important, memorable moment in their life. So that concert has always been and now more than ever with social media, 70% of our fans that they go to a show to make sure they have a social post. So it's that important of a badge in their life to make sure that they can tell people they were at the Beyonce show. So it's -- that artist and what they're able to drive with that relationship with that fan and coming out live is just a bond that we've never seen before, now that, especially social media. So the artists, the supply side, more than ever, there's more artists on the road. We talked earlier, there's more artists saying, "You know what, I got 100 million followers and 30 million are from Brazil. I want to go play Brazil now." That didn't happen before, they always didn't have that data. They played America, they played Western Europe. So they want to play more markets. They want to get to more markets. And then you see more of these international artists, if anyone watched the VMAs last night, it's just a demonstration of it, I mean Latin, Colombia, K-pop, the world is globalized from the outside in now, meaning these artists are popping up anywhere. And because of social media, my 13-year-old knows that K-pop artist dropped a single last night. It didn't happen for 50 years. It was an old system built by gatekeepers. So social media, globalization of the artist. More than ever, the pie is growing. We don't see that stopping in any way. They're still making 90% of the revenue on the road. So it's financially important to them. They make fans for life on the road. So we see the supply side stronger than ever and continuing. On the demand, again, the consumer as of this weekend, so the data, we're still seeing on sales for next year, bigger than ever. I mean Zach Bryan went on sale last week, Luke Combs went on sale last week. I mean, these sold out stadiums in presales. That's middle of America, everywhere, not just New York. So we're seeing 24 on sales, stronger than ever. Last weekend at our on-site, we're still seeing double-digit growth happening. So there's no pullback from the consumer when they show up. Secondary is on fire, good or bad but it certainly shows that no matter what we're pricing it at, still a big market above that on demand. So the supply/demand side of our business seems stronger than ever. It doesn't -- it's not a pent-up demand. It's not a onetime because I had some stimulus money from COVID. This is a structural global change around experiences, magic moments that make a difference. And I'll end on this one is, the concert continually ranks in the top 3 of kind of where I want to spend my money to have a memorable moment. And even though you read press every now and then about the ticket price at $400 and it seems expensive, it's nothing compared to their other magic moments, right? So it's still a very affordable magic moment compared to going on Vegas or Disneyland or on a trip. So we think this is a business that's going to continue to grow on a global basis as an industry and consumers are going to do, continue to want to say, that's different in my life. I'm a digital consumer but going live, bonding with my fans and friends is how I have those magic moments as a consumer. So we think there's a great run ahead of us.

Right. And what do you think is driving the growth in the artist pipeline?

Well, the artist still continually -- we said this many years ago, the artist is a media company on their own now, as you know. They went direct. So that artist now has 20 to what does Taylor have, 300 million followers, they're media companies. But they figured out the #1 way to make sure that media company has a really strong heartbeat is to go play live. So you can feed up content, you can sell them some T-shirts, you can stream new music, that's all very important. But when you show up live, you make lifetime fans. You don't do that on Spotify. So that artist as a businessperson is very astute. They're all very astute around their global audience and how to make sure that global audience maintains for a long time. So they want to get on the road. They know that's the way they're going to grow their global audience. That's the way they're going to ultimately figure out what their [ skims ] is or their product line, their product expansion. So as many corporations and brand architects, they know that live is the heartbeat to all of their ancillary revenues and their fortune long term. So we see them wanting to go on the road more and more. And we now see this, as I said, just this, the TikTok moment for live music is just the gift from life, right? It unlocked every 13-year-old, 17, every kid in the world that wakes up and says, Drake dropped a song this morning. Not, I'm in Milan and I didn't know because the record company didn't buy a spot on the radio. I mean that was the 50-year model, right, that you would have been force feed a single eventually in your market. And by the way, only in Western Europe and America. So now whether it's Cape Town or Milan or Colombia, the social media has unlocked that fan direct to their customer and that's made new global fans. And then the opposite has happened, that artists in that market drops a single and my kid now at 13 knows this super big artist from India overnight. Again, never would have happened historically. So this back and forth of a consumer/artist relationship on a global basis in real time is making real fans instantly much bigger discovery, as you alluded to in your note. So for us, it's just the gift of life. I mean not to mention 70% of those fans are posting from that show that night telling the people that's their magic moment. And I got 70 more shows to sell, that's the best marketing one could do, right? So it's just great kind of complement to our core experience that doesn't actually duplicate it or take anything away from being 2 hours live.

And does the -- I mean, one of the things that's been happening more and more in last year are these artist collaborations, where you have the very established artists like Elton John, collaborating with some of the new artists. And it's not just him, it's a million people. How is that affecting -- is that affecting your business?

No. It's -- I think the artist is going through their own transition on what is their so-called record, what's their art. And the full record is becoming maybe less important to some artists, dropping singles ongoing. Drake taught everyone that, have lots of content. So Shakira is a master at it. So drop a collaboration and it doesn't have to be a big fanfare record release event. It's drop new content on a Thursday. By the way, I got 100 million followers, they're going to listen to it. I don't have to go chase media and have an event. So I think they have all figured out more content, ongoing relationship with their fans is a good idea, cross collaborate with whoever is good for both of those artists. So you'll see more and more of that happen.

All right. Just feel like more up and coming artists are getting exposure. But one other thing I want -- touching on like some of the stuff that you -- you talked about the younger generation. Has there been a change in the demographics? Like your...

We haven't seen it yet net overall. We track average age of the buyer. Our fear has never really been that the average age goes up or down. It just was ultimately over time, were there enough youngs coming in the pipe to make sure the business continued, right? Everyone's had a theory over time on, oh, there's going to be no more Rolling Stones, just old people go to shows, young kids are going to play video games or whatever. None of that has transpired. We're seeing that 12-year old. I mean, Taylor Swift, god bless her, what a machine that she's able to bring in, having 6-year-olds crying in the stand, singing songs, right? So proves it over and over, that these artists and I got a 12-, 10- and 8-year old, 3 boys, they live on music. They know -- I mean when I drive them to school in the morning, I'm amazed every morning when they play DJ on whether it's the Eagles that they found on a video game or the latest artists I've never heard of. So music is just as important to the young generation as it was to everyone in this room. They have their Beatles. Maybe it's Taylor right now. So that's the most important thing to us. All -- everyone in this audience still wants to go, wants to bring their wife, maybe their high school buddy to the AC/DC show for a reunion. But the 12-year-old is saying, it's just as important to me as the Beatle days and I want to go see live. And that's, I think that's a pretty important fact given my 12-year-old probably doesn't have any other media habits that I had, right? Because at 12, he's got social, he's got video games, he's got so many other digital experiences. And he is not dying to go to Disneyland but he wanted to meet -- I had to take him to Lollapalooza in Chicago and I had to go take them to a Latin show at the Greek. So I'm -- we're very thrilled that our data will say young consumers are just as thirsty as every other generation has for live.

Right. So break it down a little bit and let's talk about the fan growth. Your attendance growth is, I think it's 8% compounded over the last decade. I think you guys have mentioned. Joe, who -- I don't -- like now, Joe said it recently and you may have said on one of the calls that you sold 128 million tickets, but you'll likely end the year somewhere in the high 130s, maybe 140 million range for fans, which is kind of approaching, not quite but approaching your target of 175 million. How should we think about your fan growth over the next couple of years?

Yes, going to my earlier point, I think this is an industry that's going to grow, for 30 years, this has been about almost a 10% compounded business. It was 1 year and I think 2009 recession that we had a decline in the industry. It's been fairly recession-proof. And I don't think you could find another industry that's had 30 years of this kind of compounded growth continually. And I would say, let's just, in simple terms, that's a U.S.-driven business for the last 30 years. That's before internationally really started. So we're very confident for the next 30 years, this industry is going to grow maybe not from America but from the rest of the world who is just starting to build infrastructure, become professionalized and wants to see Beyonce. So we think this is an industry you should invest in overall. It's going to have great tailwind for a long time to come. Our business, we've always been somewhere 8% to 10% annual growth. We've had a couple of rocket years, the last couple. We think that '24 looks like another rocket year. That isn't pent-up demand. That's just new secular growth. So we think we're going to -- we think our 175 million is a great target. I'd say every year, over the last couple of years, we've realized the pie is growing faster than we even thought as an industry. So I think the 175 million will grow because the industry is going to grow and we'll continue to capture our piece of that pie.

So let's turn to -- you just mentioned international. On your last earnings call, you mentioned there's 2x more international artists or X in the top 50, just over the last 5 years or so. What is driving the international artist growth?

Yes. It's similar. Just the -- we used an example, for 50 years as an artist, you probably toured 90 dates. That was kind of the -- I'm going to go on tour next year, tell a promoter, your agent, I got 90 dates, that's a year, probably put 60 in America, 30 in Western Europe. It's really the only place you could go play Wembley's, play arenas in those markets or in America to get the proper price, the gross to pay for the show. When these artists go on tour, they've got a big start-up machine. They got big weekly costs, 32 transport trucks, crew. So they've got to go play those 3 shows a week that have a certain gross that can cover the cost of their start-up. They're moving city of 300 people. So you really couldn't go anywhere else. You couldn't go play Latin America, you couldn't play Eastern Europe. You couldn't play Asia, take you 2 weeks to [indiscernible] there, you gross [ $200,000 ]. You said, "You know what, give me another night in L.A." And that's where you toured and you didn't have the demand. And going back to it, now when TikTok and social media and YouTube unlocked that consumer and that artist said, "You know what, I can go to Argentina and I can still charge the same ticket prices because the demand is there." We put 10 shows on sale last year in Argentina, in the middle of hyperinflation with Cold Play and sold 10 stadiums out in our sleep at the same gross that you're going to get in Detroit. Well, that didn't happen 10 years ago. 10 years ago, we would have looked and said, you can't really go to Latin America. Maybe you play a couple of vanity shows but you can't make a business out of it. Now you can go to Latin America and play 20 dates and get the same amount of money as you could in America. So you can bring the machine, you can bring the proper tour down there. You can do that now in Pacific Rim. You can go to Japan, Hong Kong, Australia, you can now get the same grosses, same ticket prices. So overnight, the globalization of the fan base and demand says I can show up and the consumer pricing now has followed that they can charge similar prices so they can pay for the show. So we now look at an artist that says, "Boy, I got this global audience, I got 90 dates. Maybe I'll play 50 in America." Tell you what, I don't want to play 90 anymore. I'll put 110 because I see a wider audience. I want to get 10 more dates in Eastern Europe because I've never been to the Middle East or haven't been to Africa and South. So they're really -- every artist that is talking to me every day now about what about, can I go play down in blank markets and do 10 dates. And you can now, we can make the math work, which you couldn't before. So they're curious. Their audience has expanded. They want to get to these markets and build fans and now we can mostly get the same gross and the same pricing.

And then the growth of the orders that come from outside the U.S., you mentioned like right off the top, Latin music, Bad Bunny, K-pop, I think you mentioned -- I don't know if there are -- like Africa seems like there's a lot of artists coming out of there. What is driving them to not just play in their local markets? Is it just social media or is there...

Just social media. I mean you just -- again you, if you are that artist in India, breakthrough artist in a market like that, you just had no apparatus to get to a fan in Toronto. Today, you're on social media and like you said, maybe you collaborated because artists are smart and they want to tap into an afro beat or they want to try something different. So a Lil Wayne or a Lil Baby says, let's do a mix and all of a sudden that African artist or that Indian artist or someone from Korea has got 20 million followers because he's been on someone else's social and the song popped and boom! He's got an audience and my 12-year-old in L.A. says, "Wow, dad, have you heard of, I want to go see and he's playing at the Greek." So this audience that the artist owns now, when you think about it, it's unheard of, right, the athlete doesn't have the audience. The actor doesn't have the audience. The movie does or the team does. But in this case, the artist is it. And everyone wants to be -- everyone wants to build that audience, they want to own their audience. And they want to go play for that audience.

Did the growth of the DSPs like Spotify going more global, more countries, has that been a factor or...

Let's -- got to give Daniel credit for legitimizing everything he did in that space. But I think the challenge that -- or the opportunity right now is, if you have young kids, you just got to go see what they do. They're on YouTube and TikTok. They might end up at Spotify. But they're discovering in video games, on YouTube, TikTok, Instagram, social media is where they're seeing it, Snap, where their friends and where the community is sharing and seeing that. That's where they're discovering it. Where they listen to ultimately is kind of almost the second step. But YouTube is -- I got 3 kids, they live on YouTube. I mean there's a new version of game watching, someone has got great music in the background. It's so integrated into their world now. That's what's driving it.

And what parts of the value chain do you see the most opportunity for Live Nation internationally?

Live Nation, we've always had a kind of a small to-do list and a big don't-do list. We've stayed very focused on what we think we can do right. We started this -- we went public 16 years ago when we were basically a small U.S. amphitheater company and we kind of had 1 revenue stream. We looked at that and said, "We're actually an advertising company and we got to legitimize that." Today, we're the largest advertising agency sponsor company in the world in live music and big part of our business. Along the way, we said we got to be global. We've got to grow faster and be global, while no one is looking and we have 100 offices in 40 countries. And we can offer that artist that global opportunity. We also looked at and said we got to look at the venues. That's a big part of being vertical. Everyone wants to use a Netflix analogy but we're kind of like Netflix, right? We do a lot of shows and some of them are Beyonce in the MetLife Stadium, which we don't own, a lot of them are our own content, where we're putting them on our own festival or our own venue. So we learned a long time ago, we have to have that combination. We want to be vertical in our own real estate where we can but also make sure we grow our global market share and venues. And then sponsorship became kind of the icing on the top of all that as well as our ticket strategy. So we just look at that model and we replicate it. There's 100 cities. And when you look at the way we expand, you're probably going to see a press release on one of those stools kind of getting in place. So maybe we're going to launch a venue in Sao Paulo or maybe we launched a promoter first and then we're going to launch a festival we did last week, The Town Festival in Sao Paulo. First year, we've done it. So 100,000 tickets and wild success, launched it on Ticketmaster in Sao Paulo after we brought the festival there. So we'll look at cities around the globe, Sao Paulo, Milan, you name them, you know what they are. And our job is to do what we did well here, is let's make sure we got a great promoter. Then from there, let's make sure we get some real estate, whether it's a festival or a venue. Let's drive -- launch our ticketing platform there. Get a little bit of scale, then we can start getting sponsors and that wheel starts to happen in that city. If you look at Chicago, where we got Lollapalooza right in the city. We have a good market share as a concert promoter. We've got a nice venue portfolio, an amphitheater, a club, great sponsorship. And that could be a $50 million, $60 million, $70 million AOI market. So we kind of look at that model and say, when we get in a major market, if we can get 3 legs on the stool and build our model, we can unlock that market and kind of have those returns. So in every kind of press release, you might see of a festival or a promoter or a venue it may even look random. It's just a stool on a leg trying to build within that Milan or Cape Town or wherever that market that we think has a huge potential.

So 90% of artist income is generated through touring, which is not the traditional way they made money. You've already said they are -- artists are adding tours and they're touring longer. Could you talk a little bit about how that impacts the economic -- just the economics overall? And why artists choose Live Nation?

Well, I'll go to the second, I'll say. I think we -- when we built Live Nation, we really always said from day 1, we work for the artist. That sounds simple but it's very different than maybe the way they thought about their other relationships. So we worked for Beyonce. We want her to employ us for those 100 dates. We want to get repeat business from her. So we're a service provider in that sense. We got to convince Beyonce that we have a best-in-class operation. A lot of what -- a model of touring and to win an artist, is all the preplanning. So when an artist comes to us and says, I want to go and tour next year, what do you think. That's where our data and our depth of expertise comes in place. Do you place 60 shows or 40 in America? Do you play a Thursday or Friday, do you charge [ $190 million or $160 million ] to play, how much in Europe, do you go to Australia or not? So mapping out that global plan for them, having real data to talk about pricing, where they can find that fine line on maximizing the gross but not feeling like they're an outlier within others. How do we make sure it's the most efficient use of their time? Can we sell tickets in South America? Or do we do 6 more dates in Florida and Texas. So really having that global data-driven expertise, analytics, all of that, that says we professionalize, we kind of say like, we're like UPS logistics, right? We got to be the best logistics player. We got to be able to say that artist, we can help you make the most money, sell out every ticket. And when you come home, it's not what you gross, it's what you take home, right? Because you're going to spend a lot of money on the road. So we want to make sure that, that artist has the best return for their capital and their efforts. We're the best in the world of that. We've been doing it long. We've got a great database analytics. And then 2 is, after all that, the second is, who's going to sell through. I want to make sure that every ticket gets sold. I mean you do not get fired if you sell every ticket. It doesn't matter how much money you pay them and that artist gets on stage and it's 40% full, someone's getting fired. So then you've got to do your job. You got to make sure you planned accordingly, you priced it accordingly. And then on that on-sale you want to be able to be on that text exchange, e-mail exchange with that artist saying, we sold out today. We left a few waiting at the door when we found that right tension or we sold 80% and we'll sell the rest in the next 3 weeks. So marketing, having all of our data to reach those customers, deliver that sell-through, make sure that they sell those tickets. And then third is, what I talked earlier, is being able to say that artist, listen, when you show up in Milan, Pittsburgh or Cape Town, we have a local office. We understand the market well. We have all the permits, it's safe, we have insurance, we have the right vendors, you're going to get paid. We're going to pick up at the airport. We're going to make sure you leave. So having a global business, global service provider analytics and the best marketing sell-through in the world. We focus from day 1 on building that machine that says we know how to build your business model. We're going to gross the most for you and we're going to sell the most tickets in the most safe and secure environment. And we work for you. And we're very proud that 16 years later doing as many global tours, as many dates as we have, we have an incredible high renewal rate, right? Because that's how you kind of judge your business. We've been touring -- most of these artists tour after tour, once you deliver for them. So we tend to think that's why we're the best solution, regardless of our agenda, right, the biggest challenge you have is make sure that artist feels it, understands that it's his agenda, her agenda. We want them to win, them succeed. And ultimately, our business model provides our return through the platform but first and foremost, win the artist, they should make all the money. If I could sing and dance like Beyonce, I'd want all that money at Met Center. So we kind of thought our position always was different. Other gatekeepers kind of owned IP and lots of fights on who gets paid and don't get paid. We don't get that debate, right? We get to say that artist makes all the money and we're happy. We built a business model that can pay them that money and find ancillary ways to support our business model. So we've got an authentic business model on the place the artist cares the most about in terms of financially and our trust and proof has over the years had delivered. First one was more, can't remember.

The touring, the touring [indiscernible]...

Yes. So that answered the thrust of it.

You answered most of them and then I have a lot of more questions. So you've been successful in monetizing the fan relationship through on-site spending and more recently with the premium experience business. What are some of the ways that you're actually improving the fan experience and how does that impact the economics of your business?

I think the -- we talked about this earlier, I think sports has done a much better job, one, because they control the environment. So you look at the new arena being built or the new stadium, every owner is building that $1 billion arena or multibillion dollar stadium. They're thinking differently. They're not building a round bubble with 3 layers of suites, right? They're building hospitality, one-off experiences, upgradable experiences, lot of zones. You look at the Masters, right, $400 per head. They know how to pile them high and watch them buy. I think they've done a great job. Concert business was always a little way behind. One we were playing in someone else's venue, we're the secondary player or the current music venues you probably go to, they were pretty generic, right? A lot of GA with a few little VIPs, kind of like Southwest Airlines with maybe some peanuts upfront. But we weren't taking advantage of truly this new experience the customer wants. I think that's what you're going to see us kind of be our next phase of real growth. Our biggest opportunity isn't that we need more fans, that's going to be part of our growth, it's going to be that we can upgrade and upsell our current base. And we're just in the first inning of that. And you look at that customer, this is not like other consumer segments. This isn't, I buy a Gucci bag or I shop at Target, this is about, I -- it doesn't matter what income level I come from, when I want to go see Bad Bunny or Beyonce and I go to 2 shows a year, I want to spend and have a great experience. I don't want just a $140 ticket in the third level. I want to buy something. I'm bringing my wife, my girlfriend, my buddies, I want to -- is there a entry? Is there a special access I can get? Is there a special bundle? I want that magic moment just like you all done. God forsake, I did it recently when I went to Disneyland and all the c*** I bought, blazers and all the stuff you buy on the way out at a crazy price because your kids want that moment. That's what they want, right? They don't just want to show up at the show. They want that magic moment enhanced. We have not done a good job. We don't -- we've kind of -- 99% of our business is GA and 1% is VA. We use an example in BottleRock, we have an incredible festival in Napa Valley. We love these guys. We bought, when they presented to us, Joe and I, they said, "Oh, we're going to build this great experience. We're only -- we're going to cap it at 30,000, we don't want anymore. And 70% of our festival is going to be VIP, 30% GA. When you look at La La Coachella, you look at a traditional festival, it's 99% GA and 1% VA. BottleRock is our -- one of our most profitable festivals we have. Our per heads are incredible. That's where the business is headed. We're thinking that every day in every new building we're designing. I keep saying to the architects, the same thing. Why are we building a GA building with few VIPs? Let's build a VIP building with a few GAs. We've got a lot of room to move this experience better. So we're in the first inning, second inning. We're growing at on-site every year or launching premium brands but we're still, even look at the bar business. They're much, much ahead of us on -- whoever invented bottle service, god bless them, right? We don't have bottle service in our billing, we should, right? You walk in, you should have to buy a bottle service. We haven't thought of that yet. But -- so we have a long way to go. We know the fan and it isn't just the high-end fan, any fan that's come in twice a year. If we could provide a better experience, they will buy it. And we spend most of our energy looking at our festivals, our venues in the manifest now and saying, how can we provide a better upgraded experience from just a face value ticket but real, not a fake cocktail in a [indiscernible] room, how do we really give an ongoing sustainable value proposition. And every time we do it, we see it win. So we're -- we've got lots of case studies and we think that's the biggest growth opportunity as this industry will look at, is upgrading the experience.

And let's move on to venues. So what does the pipeline look like? And how do you identify these opportunities? Can you talk about the typical return profile of the projects you're involved in? Is it build versus buy kind of...

We've always been in the venue business, amphitheaters in America was the easy entry point for most promoters back in the day. And we have a bunch of theaters and clubs and incredible businesses. They drive huge returns for our sponsorship, our ticketing, the vertical machine. So we love [indiscernible]. We love the venue business. In COVID, we started to change our strategy slightly and merge all of our businesses under this venue nation because we started to really see that every developer in town wanted a live venue. They didn't want a movie theater anymore but they wanted a live venue. Any developer, they wanted to build that L.A. Live. And every rich billionaire that had a sports team wanted to take his arena and build retail and do it, Atlanta did, right? They come to us and go. But up until then, we were kind of the tail on the dog. We'd be the dumb guy that would like let the developer come in, maybe SMG built the building and we'd come to the final pitch and say, we'll put a 100 shows in and get a rebate. We started to realize, is our content was really valuable. We should have stepped that middleman and we should have built the venue. We should operate the venue and fill the venue. That's the best return on our capital. When we do that kind of triple win. So then you just got to look at white space. So America was always a bit complicated because there's so many great NBA, NHL NFL owners that have their own stadiums and arenas, you really couldn't look many opportunities. Austin was that rare market where there wasn't an arena. We built an arena. It's a home run with OVG. It's a 30-plus percent IRR. And we look at that model and to give you kind of capital ideas, you looked at a model like that, what the banks love about a model like that is there's this really long-term committed capital. So we're going to launch in Austin arena. It was about $350 million to build, $75 million equity check. Banks love that there's a 10-, 20-year committed revenue around boxes, name and title, premium seats. So you look at a model like Austin, we're preselling sponsorship and name and titles 3 years out. We actually never even wrote our $75 million equity check. We had more revenue come in, self-finance the building, open up the building and you get a incredible return. So I say that because I know there's some panic sometimes in building and capital allocation. So we look at models like that and where we see the white space, obviously, is international. Every market, city that we look at probably has a beautiful soccer or football stadium for their local team but they don't have an arena. There is no NBA, there's no NHL. It's probably been an old arena or a rusty arena. So we have arena now in Dublin. We bought a arena in Amsterdam. We bought 1 in Lisbon. We looked at something in Germany. So we're looking in these markets where there are major cities, probably either have an old arena that we can upgrade or we could build a new arena and really propel our market share and our return by dropping that in there. So we've got probably 75 of these on the pipe at any one time. they kind of take a couple of years on permitting, you're bidding against others. You win some, you lose some. Some you decide it's too expensive. So we kind of really started that Venue Nation department just a year before COVID, where we really developed a development team. And in the last year, we've seen it. We've been in that pitch in that foreign market where CTS is pitching, SMG, kind of the traditional, OVG venue developers and us. And we're winning because we get to walk in and say, "No, we know how to build a $300 million, $400 million arena." And by the way, more importantly, we're going to fill this thing through content. So kind of being in that front seat as the developer and operator owner over time. We think there's great returns here. We typically look on our capital allocation. Now there's 2 ways we look at capital allocation. At minimum, we want a 20% return. They can be up to 30% on some home runs like Austin and even up to 40% on some of our rev-gen in capital. So if you look at our current model, now 80% of our [ rev cap ], we're going to spend in CapEx this year, that $450 million is going to be rev generating. Joe and I will go through the next month, where we probably have 100 opportunities where our operators will come to us on [ rev gen ]. Hey, I've got the amphitheater in St. Louis, and I got a crappy room like this but if I get $400,000, I can turn into the VIP Club and sell a new 1,000 members. We did this in Toronto this year, where we had a room like this that was going to be given away to sponsors. We said, no, let's make it a membership club. We sold out 100 members at $5,000 overnight, spend $200,000 to renovate. So huge opportunity in all of those. Anything we're doing on site is probably because we got a room that's selling a face value ticket for low and we think we can upgrade it or upgrade this concession stands because we can sell more food and beverage. So we're always looking at ways we can make money, where we've already got our investment, get a good return. Those can be as high as 40% return because we already -- we really know if we're going to go develop that. We got the market. We got the customers. We just don't have the product. So those are kind of proven well. We like those. And then we balance. How many can we afford to do in any 1 year? And then we're always balancing how many new venues are on the pipe, do you have 2 or 3 a year that you're looking at. All of those are financed by your current cash flow, current balance sheet, no change to our balance sheet to keep adding these 1 or 2 big venues a year as we start to get rolling out. So that's kind of our focus. We think having a global platform will be a big, big propeller for our international growth. If you look at America and you really look at Live Nation and say, what was its kind of core strength on what we built this off, it was our 40 amphitheaters. We were able to have a platform where we can build our ticketing. Our sponsorship. We didn't have that in international. When we buy a promoter or a festival, it's a slower entry. When you roll into a market and buy and build an arena, you kind of propel all those other pieces really fast. We weren't able to do that in America because like I said, there's MSG. The main market was already probably covered. Internationally, we think we can actually excel our growth because you can have that 1 pinnacle venue that really excels your bottom line and your entry.

Okay. We don't have a lot of time and so I'm going to skip over other areas of opportunity, including, these are the questions I can't. I don't have time to ask ticketing, sponsorship. So -- but let's touch on maybe a more touchy subject, which is regulation.

We can do sponsorship.

I know that [indiscernible] upside. We just like don't have a lot of time and I want to not touch on the 1 thing that seems to be maybe be a little bit of overview. I mean you've been pretty proactive from a regulatory perspective, rolling out all-in pricing. You're working with legislators on this, to draft the FAIR Ticketing Act. Can you just talk a little bit, not a lot about the initiatives that you're addressing speculative ticketing, just how you're positioning with some of the regulatory scrutiny that you've been under? And if you could also touch on like where are we in the DoJ investigation. It's been almost a year. How much longer can it possibly last?

Okay. [indiscernible] you leave this for the speed round.

Should I have asked 1 more question. So it gets speedy on the last one.

Okay. So listen, regulatory, believe it or not as painful as this year has been through the launch of Taylor Swift, it's actually helped us. There's -- any time that you're in this kind of transition, this noise ended up being helpful. One is because in the kind of pre-Taylor Swift, we were on our back foot. We didn't spend a lot of time convincing people that venues charge most of the service fee or that artists take most of the money, right? Those are not popular opinions when you're a B2B business. Thankfully, when this all came out, we had to start explaining and Joe and I spent a ton of time with legislators and regulators. And once they get past the, oh my god, you must be big what happened and you go, well, let us explain it. There's huge challenge in the marketplace right now, it's called secondary. So that on sale that's going to happen, here's what's going to happen. There's going to be a whole bunch of on-sale bots trying to steal those premium tickets and they're going to instantly put them on SeatGeek. That fan, they can't get a ticket, is going to jump to Twitter and be mad because they couldn't get a ticket and they think they're all sold. If you want to fix the system tomorrow, we outlaw secondary, you clean up the system overnight. Not going to happen in a regular marketplace like America, other countries have it. But it's been valuable that we've been able to have lots of great conversations, most of you end up seeing, once they get their staff working on it, they kind of end up where we are on the FAIR Act on, hey, let's have some regulation around secondary. They'll never get as far as we'd like because there's too much good lobbyists and other protections around it. But we'd like some regulation around secondary and bots and spec selling and bad websites. We think that's all coming to life. We love all-in pricing. We're leading that. We're seeing that come to life. So I would say most regulators, most legislators, most state laws, there's worse battles all the time. Most of them all end up where we are already and where we think the market should go. We'd like more but we're happy where it all ended up because we think we've done a good job, not just us but the industry in general, educating the marketplace and the legislators around, let's explain the challenges. Most of them realize it's a really thorny problem with secondary and they can address it and back away. But at least they leave that room going, "Oh, it's not you. I understand now there's a systemic issue around secondary." And when you have a $10 billion industry fighting to get Beyonce tickets, that's a problem. That's not a Live Nation or Ticketmaster problem. That's an industry problem. I can't solve it on my own. And that's the big win this year. As we moved to our front foot, we started being more progressive on what we think is right for the consumer, FAIR Act, all-in pricing. We have more to come. And we think that's been a big win on opening up the dialogue with those that can make decisions. And that's been our best move. DoJ, I wish I had some new news for you. We're still -- in my opinion, we don't believe that this is about the merger. We think this is more about business practices and things they want to drill down on. We've been doing this for a long time with [indiscernible] and having them in last 5 years with moderators and et cetera, we think we run a very pro-competitive, pro-business model for the artist, the fan, ticket venues. We compete hard. We don't think we've done anything that doesn't make the venue better or the artist better as we've talked about. So we think that it's going to come down to some business practices that they're going to want to probably narrowly look at. And when we're ready, we'll be there to have that discussion. We're very, very confident in our practices. So we'll be there like the other companies are to talk about how we move on.

Okay. I know we're out of time but still 1 last one if I can just get it in. And you alluded to some of this but on a recent podcast, you said there's a next chapter for the company. Can you talk about your -- like summarize your top priorities and what you think is next?

Well, listen, I think the good news is, there's a great consumer experience economy, all that stuff we talk about. So that's a good place to be. I'm glad I'm in an industry where we've got some tailwind. We didn't have it 16 years ago when I launched. So it's nice to kind of move into an industry where you got a consumer tailwind pushing the industry. So we're happy about that. We spent a lot of years building the infrastructure. I think we have a great opportunity. You can imagine what we do is a lot of brainstorming around what would you do if you had 175 million live customers in your database going to your store. What could you launch? What could you do? What products could you build off that? I think our first 10 to 12 years was just build the business globally, scale it, run it efficiently. I think the next 10 years is going to be how we -- how this business doubles and triples because of what we did with our scale and what products and innovations came from that. I won't even bore you on AI and how that's going to help ticketing and bots and a whole bunch of unlocks we've had in the last while there. But we think most of those 900 brands that come to us in our sponsorship division, they look at our distribution and are in awe of our customer base, right? Oh my god, you have 130 million customers on a Thursday and a demographic that we want to talk to. And so we think we have great opportunity to harness and harvest our audience and be more innovative. I'll leave it -- vague enough there but you can understand.

Thank you so much.

Thank you. Appreciate it.