Investor Update Transcript - LYV 2026-11-10

Michael Rapino, CEO

Hello, everyone. Thanks for coming. We've got about an hour, 45 minutes of slides, presentation from my management team, Q&A, so hopefully by the time you're done, you continue to believe in long-term our stock and our story. So I'm going to start off the easy part, convince you that the consumer-artist supply side is strong and healthy, then division by division, my team will get up and tell you about what they're doing to maximize that. So we talk about, since I started this company 21 years ago, we went public. I think my pride has always been we say what we're going to do, deliver what we say we're going to deliver. We're not going to overpromise. We're going to be consistent with you time after time. So a year ago, we sat here. We talked about what we were going to get done over the last year. These are kind of the benchmarks, our grade, our scorecard on how we've done over the last year in terms of the five or six core areas of development that we said we'd deliver against, and we delivered all of those. We grew the audience, we grew concerts, grew the AOI at 10%, grew sponsorship. Talked about Ticketmaster, and it continued to grow globally, sending 23 million new customers, and a year ago, you met our new head of Ticketmaster, who started to take the product side of TM to new levels and integrating with AI and et cetera, growing that business. So we've had a successful, credible 26 record years, you know, from last week, but more importantly, laying all the foundation, all the divisions, growing their products, their innovations, and their core business for continued long-term growth. So this year, we flipped the format slightly. We started with the usual format of by division. But when Joe and Matt and I go through this and we kind of run all of those analyst reports and everything you guys write about, we kind of thought we'd do the opposite. Instead of trying to talk about five divisions and what we do and hope we answer the six or seven core questions you keep asking, we'd flip it and say, this is what we looked. And we looked at all those analyst reports and we put them all into chat. You spit them out and say, what do they all want to know? These are the eight things. Maybe concert margin from last week will add to this, but we're going to address that today. Make sure we walk away knowing this is a good long-term business. So we're going to approach it this way. We're going to make sure today these are the six questions that you've been asking over the last couple months in terms of the market as a consumer. Are we feeling anything about inflation, gas prices, you name it. You've asked about the market. We'll address that. You asked about concerts, international growth. Can we grow America? Where's that concert business margin and all those stories we talked about? Venue Nation, please tell us when you're going to drop the AOI versus the operating costs. So hopefully we'll give you some of that long-term view today on how that's ramping up. Ticketmaster continue to show you why that's going to grow. Sponsorship, the unsung hero, Russell will show you why that's got great double-digit growth ahead of it. And then Joe will bring this all together in terms of raw ongoing. Here's the six or seven levers to grow our business. So I'll start with the easy one. Is demand holding up both supply and consumer side? So if you look at global business, continues to be a strong industry, continues since the beginning of when this kind of was tracked globally to what we see now, still growing on a global basis about 8% annually, 10, 12 plus percent, maybe international, 6, 7 in the U.S., but continues to be a great global industry. Not a lot of industries could sit here from the year 2000 onward and give you this kind of ongoing growth. And as you know, we've talked about it last year and this year, because there's a billion customers out there that haven't even gone to a show, this is going to continue in this pattern for many more years to come. This seems like an old story. I do pride myself that I think there's two things I invented, and Brandon will know that. I invented the flywheel, which every company uses now. We no longer use. And number two, we invented live is not duplicatable. Live, live, live. Everyone's talking about it now, but many more years ago, I sat on this stage and talked to you about why was live special. This shows you again, since COVID, consumers continually pick live, even over sports, as much as sports. You can own the Lakers for $12 billion, or you can own Live Nation, a whole global business, for a much better price. So entertainment is still number one by far. And this, I thought, was just a fascinating slide. If you look over the last 20 years, it kind of says it all in AI world. They're doing everything less than social except concerts. And yes, even sports is there. You may watch it, but you might not go to it, go into a home. I mean, anything that has been kind of growing historically for 40 or 50 years and considered a social outing has been on a decline in this digital world. The only exception of the rule is a concert, which is just on its own why you should own this stock. This is a rare piece of earth of gold right now that is many more years to come. Question we always get is, well, what about the young generation? I have a 14, 12, and 10. They're driving me crazy because they want to go to Flognog this weekend to see Tyler. Not my show, but we'll make it happen. But kids today want to see concerts as much as we all did in this room or more. It's probably even got a whole other level of FOMO and social and cultural currency, as we call it. As you know, being at that show, letting people know you're at Noah Kahn or whatever show you're at on your Instagram or your TikTok is a huge currency. So we see this young generation just as excited more than other generations. So we've got a great farm team coming up. Ticket prices, lots of talk always on the top end. This industry is still incredibly affordable. 43% of tickets are still under $50. So this is not just a luxury item as it gets reported. If you look at all the shows we sell, average ticket prices, how many tickets available at the low to mid range. So still a very accessible entertainment option on an overall basis.

David Joyce, Analyst — Seaport Research

And the supply side.

Michael Rapino, CEO

So we know there's more consumers globally. We talked last year about a billion customers outside of North America that haven't been to a show. So we know the demand supply is growing. Supply side is equally growing. There are more bands today than there were before. More bands that are sitting at home, that can put a song on TikTok themselves, can put a song on SoundCloud, onto Spotify from their computer. So there is no gatekeepers. Anyone can be a DJ. Anybody can be an artist. If you have talent and you have the tools in your bedroom, you can be an artist. And if you are any good, that'll get noticed and you can tour. So you see our pie. There's more artists today on the road. They're coming from every corners of the earth because the globe is flat. And if you're a great artist in India or Peru, you can be on TikTok and be playing the Wiltern Theater very fast. So more artists, more artists at both the lower level. We always talk about the high end in our company. We're doing 8,000 or 9,000 club shows a year and growing. So there's a big bottom kind of spring training league that's happening every day. So that's why you see us invest in these 2,000 or 3,000 seats, or we have some historic 1,000 and 500-seat venues. So the lower end is still growing. Most cities, 10, 20 years ago, those live venues were being converted. Now they're all gold now. People are looking to try to find those great live venues and if they exist. So we think this business is both top to bottom and geographically, supplies growing strong. And most importantly, so after this incredible record year, always the challenge of our comps year after year. We had a record year in 26, record stadium year. If you look at what we got on sale right now for next year, we're thrilled that we're sitting here at this time of the year and can say we're up year over year in terms of ticket sales and shows on sale. So even as strong as this year was and strong as last year, we're looking at 27 to be another great year. So overall, industry is on fire on a global basis. We think that the consumer from top to bottom around the world wants to see these artists and think that there's more artists on the road. So the pie is growing, and we'll continue to capture our share of that pie. So now we'll take you through the most asked question recently about concerts from Omar.

Omar, Other

This is the US market done growing. I sure hope not. And I'll prove it to you. But the US market is still growing, and we have room to run. If you just look at the numbers. We had a 7% increase there from 22 to 26 on an annualized basis. We're forecasting that number to just be 5 or 6%. So no real drop from what we saw of this big post-COVID tailwind that everybody talked about. Didn't really turn out to be tailwind. It actually turned out to be structural. You could see that continued growth from 26 onwards. How have we done that? Three main drivers, more artists, as Michael said, younger, international, new content types. We'll look into that a little deeper as we go. Higher sell-through using our AI products and more large venues leading to more fans. Looking at that, one of our big opportunities is we still have 20 million empty seats to sell. So as well as we're doing, as much as we're record-breaking year after year, we still have 20 million seats to sell if we just have our existing supply base. So that's one of our big drivers is increasing sell-through, leveraging both our data and our AI approach that we're now using with Live Nation All Access, which you'll see in a second. Supply continues to grow. The next wave of headliners, as you can see, is younger and more global. It's also going deeper, and even just deeper in America. If you look at Noah Kahn, for instance, he played 30 stadiums last year, sold over a million tickets, really successful tour. He's on sale this morning. He sold over 700,000 tickets in the United States and Canada for next year, already well on his way to duplicating his results from last year. So we have artists not only... They're touring bigger venues younger. They're also touring them more often. Don Tolliver's out on his second leg. After the success of Harry Styles, you would say, okay, he did 30 shows at Madison Square Garden. He sold almost 600,000 tickets. What does he do for an encore in America? He puts a bunch of stadiums on sale and sells every ticket. And then we're also picking up these non-English artists, right? Big K-pop, big Spanish language. But now we're seeing as we go deeper, you have artists coming out of the Middle East, you've got artists coming out of Southeast Asia, you've got artists coming out of other parts of Latin America, not just Puerto Rico and Colombia, which are the historical places that we got artists coming from. So these younger, more global artists continue to drive our North American numbers. All Access, it's been about a year since we launched All Access. We already have 14 million members. And those 14 million people went to 34% more shows than they went to over the last three years. So now that we really know our fan, can talk to them, can start to understand where they go, where they want to go, we can market to them more efficiently, and they're going to shows at a bigger rate than before. And if you think about it, if you're signing up for All Access, you're already an avid concertgoer, and now you're even more of an avid concertgoer. So we think this unlock will be really how we get to the 20 million unsold seat opportunity. We're also investing in the creator space. You saw our big announcement in the creator economy with Creator Nation. And the thesis here is, as we're starting to see more non-traditional, non-music artists coming from Influencer and the user-generated content space, we'll have that management company in-house start to develop those touring relationships earlier. And they'll lead to things like the Giggly Squad, who've sold out three nights and will shortly be sold at a fourth night at Madison Square Garden. This relationship started because of our innovative relationship that we have with Netflix, with our Netflix is a joke festival that we do them in Los Angeles. We promoted this at the Wiltern. It sold out right away, gave us confidence that it's much bigger than that. And there's more of these examples. But just to say, you know, two women with a podcast with a really engaged audience can sell out four nights at Madison Square Garden. So not only are we getting talent from Asia and Australia and South America, and of course, America and Europe, we're also getting talent that's not music driven. And as we drive all that, we need more venues to play. So we continue to look to put venues in places that need them. We opened 10 large venues in the last two years, places like Minneapolis, which hadn't had a major amphitheater in many, many years, had a fabulous start to the concert season. Same with Kansas City, large boutiques in Birmingham, Alabama, Richmond, Denver, all places where we needed more venues, and the fans have shown up to that. And that gives us... Another 6 million additional fans are shown by 2031 with the new venues in the pipeline and the maturation of these venues. So we're also investing in not only the supply side, but also in helping fulfill the demand by building new venues. Which leads us to the next big question. If we're doing so well in America, why are we focused on international growth? Paul, Antonio will join us, runs Europe to discuss.

Amy Yong, Head of Investor Relations

Thanks, Omar.

Paul, Other

Thank you. So, yeah, why bother with international? So, I'm going to take you through a few slides here. I'm going to try and explain the scale of the opportunity. We'll try and show you why we think it's sustainable, and then we're going to try and show you how we think we can address it. So, first slide. This just looks at our artist penetration, our fan penetration, sorry, around the world at the moment. So, this is Live Nation fans per population. We then index that to make it comparable. I think what you can immediately see is that outside of the UK and Ireland, international markets are way under indexed on this measure. If we were to simply grow our share by 50% or bridge that gap by 50%, we'll unlock 185 million tickets. And to put that into perspective, if we were to sell an extra 45 million tickets, we'll generate an extra 250 million of AOI. It's a significant opportunity that exists right now in markets in which we are currently already operating. Next slide. Deal economics. You know what? Global touring actually works. We had a look at some AAA artists that have been out on the road this year, and we've looked at average gross box office around Asia, around Europe, around Latin America, and we've compared that to North America. And what we're finding is those numbers are comparable. Europe and Asia are actually slightly ahead, LATAM slightly behind. So we've got a fantastic product here, which exports at the same kind of price points that other kind of goods and services do not. Spotify, Netflix here is an example. The thing I think that's really important here is this goes to the point that explains why more artists are doing more shows in more places than ever before. The deal economics work. It's financially viable. It's financially sustainable. Next slide. Big gap for us, big opportunity. We've looked at the top 75 international cities around the world, and we've assessed them for arena adequacy. So do they have an arena? Do they have great capacity? Are they of an international standard that we want to engage with? And what we're finding is a staggering 61% of 46 cities do not have adequate arena capacity. So massive opportunity here for us. These are not secondary markets, to be clear. These are the Madrid's, the Munich's, the Tokyo's, the London's of this world. There are gaps in the market that are ready for us to fill, and we're in a position to do that. Final slide from me. We talk a lot about development, but we've also got a really active mergers and acquisition pipeline as well. The slide shows some of the deals that we've done recently or over the last couple of years. So perhaps a little bit too early to start talking about how well they are performing on a long-term basis, what I can certainly say to you is that they are performing on plan and really well right now. We'll generate 90 million of AOI from these buildings this year, and that's going to ramp to 190 million over the next couple of years as we get on a proper run rate basis. So we're in a really, really good place with the mergers and acquisitions that we're currently undertaking. And with that, I will pass over to Jordan, who's going to explain when the AOI comes in.

Jordan, Other

Thanks, Paul. Hey, everybody. Nice to be here. Good to see you, everyone. So clearly, demand is there, right? Growing for concerts, particularly international. That is why Live Nation is investing to build these venues. Your question constantly is, we know you're building, we know you're spending. When are we going to see the AOI from that? So today, we'll get into it and show you the growth. First, why us? Live Nation. Live Nation is the only platform who can source, design, build, operate, and then ultimately fill these venues. There is no other platform that can do that. We have a music-first strategy led by Blueprint, our in-house studio, that's pushing the industry forward. It's giving fans and artists the best-in-class experience. Things like premium product, where we now target 20% is driving experience, but also profit. We've been doing this for years in the amphitheaters. Over the last 10 years, this investment has yielded a doubling of APF on site. And we have boots on the ground in every single market. Why is that great? Because when these venues come online, we can fill them. That's our ultimate competitive advantage is filling the venues we're going to build when they open. So looking at the last two years, as Omar and Paul mentioned, 23 new venues already added to the pipeline. Acquisitions, places like Lisbon and Bogota, filling venue gaps that didn't exist before, Minneapolis, Nashville, Kansas City. This right now is 11 million fans from this strategy, which will continue to grow. That investment is reshaping our portfolio, and this is critical. You look at 2019, our owned and operated portfolio was basically amphitheaters. It was about the summer in the U.S. and outdoors. You look today, not in the future, today, we are 61 percent. Arenas and stadiums. That means global. That means year-round. When you look international versus domestic, rounding, we're basically already 50-50. And you'll see that international grow, and we'll hit a lot of the trends that Paul referenced. Two case studies that speak to this music-first design extraordinarily well. The amphitheater in Kansas City we opened Morton this summer and Mystic Lake in Minneapolis. Clearly, we needed these. 83 shows in the first summer alone. 900,000 fans from those two markets came through the doors. Clearly, it resonated. Those 900,000 fans came through the doors, and obviously, the design worked. Our premium revenue in these two venues was 80% higher than our average amphitheaters. F&B, which is hard, 15% higher. And the bottom line to your question? Two times the AOI in these amphitheaters versus the traditional amphitheater in our portfolio. So in year one, which has already wrapped a 13% annual yield in these two buildings on cash, and we are clearly on track for a project IRR of 24%. Critical to that story is food and beverage. For those of you who are in person today, hopefully you enjoyed some of our on-site tastes. We were serving the lobby. We are hyper-focused on quality and meeting the consumer where their tastes are. That means every show, tailoring menus, it means investing in product. What we saw this year... Critical to product was serving fans RTD, ready to drink. Those were up 43%. When we picked up on that early in the season, we doubled down and it significantly improved our APF. Improving flavors. We have a team that is focused on exact cocktail flavors for every show, which means our shaker cups on units, not gross, but units was up 16% this summer. In terms of providing quality food, we talked about last year building our own brands, investing in those brands, which you tasted. We saw the fans show up. The spend on their own brands were up 14%. Not only is product important, but value is critical. So we want every consumer, no matter what you want to spend at our show, to be able to eat and drink and enjoy. You can see our $2 hot dog highlighted here, which is a particular fan favorite, but we have a full menu of value items. This year, we had 1 million value items sold. And interestingly for our business, over 50% of people who showed up to the register for a value item bought a full price as well. So we're driving units through this strategy. So what does this mean for a pipeline? More stages, more fans. So the 11 million fans we referenced earlier will grow to 33 million fans by 2031. This is 38 new venues we've highlighted for you today, which are all large. So that means more than 3,000 in capacity. You can see a focus here with arenas and large indoor venues where we believe there's a particular opportunity. And of those 38 venues, half are overseas, so 19 domestic and other investments through Latin America, Australia, New Zealand, and of course, Europe. One interesting point that I think is critical for the former flywheel is that 65% of the fans estimated in these buildings are coming through Live Nation concerts, which means our investment in venues is actually growing the Concert Business. So here's what you guys really want. So we'll share this, but you don't have to take pictures. This is what we believe our AOI opportunity is across the venue investments. So this year, $125 million in AOI from the investments we've made already. Targeting in 2029, growth to $525 million. That's through a few venue openings, as well as acquisitions that have come online and improving them, such as Paris. And then $850 million from this investment strategy by 2031, which comes with the maturation of our openings as they grow, as well as some really exciting buildings we're building across Europe, places like Dublin and Sao Paulo. And lastly, I just want to highlight to everybody, this is a deliberate capital allocation strategy. We talk a lot about our IRR. We are focused on a project-by-project basis at delivering that 20-plus return on capital. Every year, that includes a low-teens yield on cash that contributes to that 20%. The pipeline right now is a total of $5.6 billion of capital, $1.9 billion of which is funded through Live Nation Cash, $2.1 billion from third-party debt, and $1.7 billion through partner funding, either equity partners or municipal partners. We are investing. So as some have noted, you'll see pre-opening costs for this pipeline, which is building through 2027 and 28. But the reason we're doing this is profit per fan. We know that profit per fan in these buildings will be two to three times higher than what we typically see. And that's why we're going to drive growth. Thank you for everyone's support. We look forward to building the future of life. With that, I will introduce you all to Salmo Mehta, who's the president of Ticketmaster.

Salmo Mehta, Other

Okay, great to be with you all. Thank you. So let's talk about Ticketmasters, growth drivers for the future. Just to ground everybody. We've historically grown at mid-single digits. You can see a consistent growth pattern going back all the way to 2012, exception of COVID. And we believe that that growth is sustainable into the future for fee-bearing tickets. In 2026, we're on track to do 360 million fee-bearing tickets, and we expect a long-term target of 490 million on that 6% CAGR. There are multiple growth drivers to help us get there. The organic expansion in concerts, which Omar and Jordan and others have talked about. The ability to actually sign more clients in existing markets. We have a long runway of being able to sign clients in existing markets. Of course, international expansion. I'll tell you a little bit about that. And finally, the ability to drive sell-through through product improvements and agentic commerce. So let's describe a couple of these in turn. Let's talk about Brazil as an example. In 2023, we followed Live Nation into Brazil. We launched in 2023 as a way to support Live Nation concerts and festivals, things like Rock and Rio or The Town or Lollapalooza. In 2023, we had fewer than 1 million fee-bearing tickets. 76% of that came from Live Nation Concerts. You fast forward to 2026. We're going to do 9 million fee-bearing tickets. Only 26% of that is Live Nation concerts. And this is the pattern because we enter with Live Nation, we support the Live Nation promoter, and then we expand outwards. And we do that through a combination of targeted acquisitions like Ballot App or through signing clients directly. This year, we've started to have We have success with signing Brazilian Premier League football clubs, for example, which has a high amount of volume, builds the brand, gets us deeper into the market, and helps us grow fee-bearing tickets for many, many years into the future. This is just one example. But the newer example is Japan. We're very excited to note that we just went on sale in Japan for the first time, and so Ticketmaster is live in Japan as of November. And again, it seems like the same story. So Live Nation acquired HIP, the promoter, in April of 2025. And since then, we've been focused on launching Japan as Ticketmaster, which we just did. We expect 2027 to be focused on scaling with HIP, supporting HIP. And then we fully expect that we will expand outward from there on out, which we're super excited to do. And the next driver that I want to talk about, which I'm sure is on everybody's mind, is agentic commerce. So here's the thing that you all know, which Omar also talked about. When we do our consumer research at Ticketmaster, we realize that one of the core reasons people don't attend more shows is they simply didn't know about it. That's a very common pattern. I'm sure you all have experienced this as consumers. Well, why is that? Because consumers are busy and may engage in infrequent searches. This is the classic kind of commerce paradigm. They search on Ticketmaster, they search on Google. Even ChatGPT is mostly used as a Google search replacement by many consumers, but that happens infrequently. And the other thing that most commerce organizations do, including us, is we have these targeted blasts, right? So you have a CRM lifecycle system, you send them push notifications. That's fine for what it is, but we believe that there is a new paradigm emerging with agentic commerce, with personal agents of the sort that you've started to see emerge specifically this year. The unique difference with these personalized agents is that your relationship with your agent is completely individualized. The recommendations you get are going to be quite different than the recommendations I get. The recommendations you get are going to be deeply rooted in your individual context because it has access to your specific context. And finally, agents are proactive and can take actions on your behalf. We believe the combination of these factors is a new commerce paradigm that has significant opportunity for Ticketmaster into the future. So, in 2026, what we've been focused on is opening up the platform to have partnerships with all the major agentic providers. Muse is the latest one, but we've been working all year on major partnerships with Claude, ChatGPT, and all the other vendors listed here. We feel that this is great for consumers. We meet fans where they are. It allows us to provide the fan agentic discovery. It allows us to provide clear-cut presale information or semantic search, and that's great for what it is. But we are going to launch our own TM fan agent as well. And we believe that these are complementary. The TM fan agent is going to have additional capabilities because it's going to be deeply integrated with the Ticketmaster UI on web and app both. And it will be deeply rooted in Ticketmaster context of all of our history with the fan and all of our domain knowledge and expertise with venues and knowing how to sell tickets. It will provide things like an on-sale concierge, it will provide specific pre-sale information, and of course, it will provide agentic discovery and personalized fan support as well. Here's a small example of the Ticketmaster concierge. This is just a prototype, but we've begun work in earnest. And so you can imagine going to the Ticketmaster app and loading up the concierge. It already knows some of your interests. You can enhance it by adding your own interests. And then, just like any other personal agent you use, it will send you occasional and highly targeted recommendations and help you with agentic discovery, semantic search, checkout, and support. So take a look at this example. So, it welcomes you into the concierge. It already knows some of your interests. You can keep those. You can change those. Then you can add additional interests or categories that you might like. You can engage with it much like you would with a chatbot, but completely Ticketmaster integrated, deeply integrated with our UI. And then once you're done with the enrollment, you get a very personalized push notification. It gives you seats and events in your specific price range because you pre-specified the price range. It's fully integrated with our capabilities like a seat map or reservation or checkout. And through these efforts, we believe that this is a highly complementary to the existing agents that are out there, but very personal to you and very specific to Ticketmaster. So we're excited about this, we're starting work on this, and we look forward to showing you more when we have more to say. With that said, I will hand it over to Russell.

Russell, Other

Thanks so much, Samuel. So last but not least, and yes, simple answer. The continued double-digit growth. I know it's really boring for you guys, but me and my team will continue to nail that. Our strategy around the double-digit growth, there's a few things to think about. But first and foremost, right now, with all the conversations around... AI and devices. There's never been a better time for brands and IRL. In my 20-plus years, I've never had more brands engaging us for more categories because they know how important it is to connect with consumers. There's no better way to do that than Live Nation. And our strategy is pretty simple. One, bigger partnerships so that million-dollar-plus. And key point, we're different than a lot of media businesses. Our partnerships, the majority of our partnerships and revenue is driven by multi-year deals, minimum for the most part, three years up to six years. And then when you talk about the venue strategy, naming rights and things like that, those deals are a minimum of 10 years. So we've got an unbelievable path forward. We've got, as you can see, 85% renewal rate, and we call it renewal or replace. The reason we say that is we do a great job renewing our partners, but we look at every deal everywhere in the world. Every category, every market, what's changed over the last couple of years, and we make that tough decision. Is this the right partner to continue with long-term, or do we see a new opportunity, new category, or potentially new partner? And so that, again, gives us the ability to grow those partnerships when we renew them. So how are we going to continue to grow revenue from every fan? So there's a few different ways we go about this. One, new products. So what are some adjacent things that we can do to our on-site business? Things like content, apps, creators. So all of these new products are part of new advertising opportunities that we can deliver to our brand partners and that they're paying for as great ad platforms. New categories. So consumer goods, you know, the traditional stuff, the soft drinks and things like that have always been strong for us. But we are now doing great in a wide range of non-alcoholic brands. Brands like Heinz is now working with us in multiple countries around the world. Beauty brands is a massive new category for us, cosmetics and things like that. So we're exploring new consumer companies as well as doing a great job with the old ones we've always worked with, the Cokes and Pepsis and things like that. Travel. So from working with Trip.com in Asia to Marriott in Canada to Airbnb around the world, we're able to work with a wide range of travel brands, United, and we're looking at this right now as a market strategy where we'll take Mexico, the UK, the US, and we can work with multiple travel brands in every one of those markets. And then finally, in categories, Coming like media, where we work with people like Snapchat, we're live streaming a number of our music festivals on the Disneys of the world and the Amazon Primes, Globos in Brazil. So we continue to see that as a big growth area. And then you saw from Jordan, these new venues, it's all about brand new inventory for us, whether that's for venues that we've acquired, That we're now investing in and creating new clubs and things like that. We can sell. And for all of the new venues, it's the naming rights. It's the founding partners. It's the new clubs. It's the premium. All of those things are wildly important and exciting for brands to kind of continue to grow that per fan. And then right now, as we look at where we are this year, Compared to this time last year, you could see at 15%, we're having a really strong early sales cycle for 2027. A few reasons for that. We had some big renewals in 2026. We'll start to get the benefit of that in 2027. Folks like Verizon and PayPal. You've heard about our Spotify partnership. It's really launched this year in the U.S. We'll be expanding that into 2027 in EMEA and Australia. And then a host of others that, you know, are on this list that we're growing in multiple markets around the world. And that's part of our strategies, taking our best brand partners. And as we build and create new assets in other markets, we're able to take our biggest partners and put them into opportunities, whether that's festivals or venues in other parts of the world. And with that, Joe.

Joe Berchtold, CFO

Thanks, Russell. All right, just to wrap everything up for you guys now, the page that you guys are always looking forward to, you don't have to take a photograph of it, you can get it downloaded. How are we building this double digits over the next several years? So this is just putting together the pieces that everybody has already talked through. Obviously, the biggest piece coming from Venue Nation, what Jordan talked about in terms of the venues in the pipeline, the venues that are recently opened, and what we're driving there. That, just as a reminder to everybody, that's AOI that's generated across concert sponsorship and ticketing from those incremental fans, all that incremental activity. But then beyond that, half of it is just continued execution that Omar and Paul and Russell and Samuel took you through in terms of each one of our businesses, how we're even beyond the venues that we're adding, how we're continuing to grow in all of our key markets. So collectively, this is our roadmap now for the past several years. We have more confidence in it today than we had in the one we did a year ago, which was more than the one we had before that. So I think it's still a very exciting time, very early in the days of our opportunity from everything that you guys have seen about just how big this global opportunity with the next billion fans are. Then one more thing. Just wanted to have a follow-up point. After the feedback we got, the 19% growth for the quarter, that was great, but as Brandon said, but your profit per fan, that's flat. What's going on? How is this all coming together? Wanted to give that a little more context. First of all, just looking at a little bit of history, we've driven the profitability per fan from just over $2 a couple years ago to $4.30 last year. We absolutely are looking out over the next several years with a strong belief that we're going to be able to grow this to over $6 as we deploy our venue strategy, heavily driven by the fact that our operated venues are going to have a substantial shift to larger venues. Those larger venues drive more premium, more on-site spend through a longer dwell time, more ancillary activities. So we believe that we're going to continue to grow that profit per fan. This year, and in any given year, you get impacted by some one-time events. So if I just look at that pre-opening costs that we've been talking to you about all year, that's the start of the ramp-up of what Jordan's doing with the pipeline. We add into that some of the marketing expenses we expect to hit this year because of our... A large number of shows on sale for next year. That alone, if you backed out, would give us about 40 cents per fan on our 2026 number. So if not for those two things, you'd be growing around 10%. I would argue both of those factors are great problems to have as you look at the long-term potential of the business and growing towards over $6 per fan. So we'll continue to provide more transparency on this so you guys understand what's going on. We ask that you do understand that it's going to bounce around some because of these one-time things that are big in the context of our growing the overall business. But we absolutely continue to have great confidence in the ability to grow our perfam profitability, to grow our overall profitability, and for each of the teams that you've heard today, to execute. And with that, I think we'll take a handful of questions from some folks as a group, and then from there, we can have cocktails and get more questions.

Stephen Lasik, Analyst — Goldman Sachs

If you have to state your name, your firm, that would be great.

Operator

We'll go with Ian first.

Ian Moore, Analyst — Bernstein

Hello. Hi, Ian Moore from Bernstein. I had a couple questions, if I could. I'm over here, sorry. A couple, if I could. First, for Michael, you've been right about... Number of things over the past 20 years, but I think the two most important would be globalization and then venues. And you're obviously doubling down on the venue piece today. What's something about the next 10 years of live entertainment that you believe that you think that the rest of us in this room might not? And then I had one for Sommel as well. It seems like from everything you've presented today, identity is becoming a real core product of Ticketmaster and more important as a core product going forward. How do you see your identity product driving? Conversion in the future.

Michael Rapino, CEO

Yeah, it's... Listen, great strategy is transparent, so you try to be. I do always go nuts this week when we're doing this because it's the only public company in Live. You're basically shopping for every competitor and private equity on their version of what to do with this. So, you know, we're always trying to find that fine line on give you what you need to trust what we're going in the future. Don't give the complete roadmap out for competitive reasons. So, listen, I think you're right. I think we nailed three things at Live Nation over 20 years. I think we nailed, we were the first to go B2C in an industry that was B2B, right? Back then, every record label, movie studio, everybody was B2B, and I was obsessed with being B2C with the Ticketmaster deal back 15 years ago. We then nailed globalization, and we also nailed sponsorship, which most B2B companies still don't do. They don't have 700 people working as a real division with equal power. But I do think the – listen, I think the only part that we would talk about out loud that we're showing you is that I think AI is going to be, although scary for so many other companies, labels have their own challenges. For us, Joe and I and Small have a weekly AI conversation as we're talking to everybody, and it's just really exciting because for such a great industry, discovery sucks so badly. We've never nailed it at TM, Google, CitySearch back in the day. No one has a great job if you want to say, I'm in New York for the weekend. What do I do? No one has solved that forever. I'm going to New York in three weeks. What shows are available? We have it, but if it's not a TM venue, maybe we don't show you. So I think discovery, given the biggest problem in the industry, so while everyone else maybe, you know, I talk to Chesney all the time at Airbnb. I love them. Well, many of these others are worried about what that will do to their front end. For us, we want to embrace it. That's why we ran out fast and said, no, no, we want you all to go out there and discover what shows are happening. We're not going to chat our funnel. We're not going to give you your checkout. We're not going to give you our inventory. We're going to make sure that's the unique part for us versus secondary, is we have 600 million pieces of unique inventory called those tickets, so we can control it. But to be able to unlock AI discovery for an industry like ours, for everybody, I just think all of those unsold tickets, all of that inventory has great whole new potential. So I think between our agents that we'll launch at TM and that, the big boy agents that will be out there discovering, I think we've reinvented marketing overnight in an industry that has not been good at marketing for probably the last 10 years. I think it's been a bit of a demand-led industry. When NOAA cons big, the tickets sell. How we talk to casual NOAA fan cons is an industry we haven't been good at, nor of the labels anymore. We got this new whole marketing engine fueling all of our inventory that I think is going to be a big, big change for how we sell out and sell through our inventory. If you had a question for you.

Salmo Mehta, Other

Yeah, I think the thrust of the question was identity for fans. Is that right? Yeah. So, I mean, in the world of AI, I think the more you understand the fan, the deeper the context you have. And I think the way we think about it is identity is a function of your known preferences, the thing we know about you from your purchase history, your browse history, which we do, of course, for Tickmaster content, as well as the things you imply, right? So kind of the preferences you can tell us about. We believe that in the future, actually, there's going to be agent-to-agent communication, right? So you are going to have a personal agent for general horizontal tasks, and you're going to have specific TM agents. And we believe that there's going to be agent-to-agent communication specifically around passing identity preferences. So we're focused on that. And, of course, on ensuring that we have the right fan profile, which in turn drives the right context, which in turn drives an individualized relationship with the fan, which in turn drives sell-through. So that's how we're thinking about it.

Michael Rapino, CEO

I have to say, I think you may be the most stylish guy on the stage, our nerdy tech guy with the no socks.

David Joyce, Analyst — Seaport Research

That was unexpected.

Michael Rapino, CEO

That's confidence. I love that. Who's next?

Kotkan Maral, Analyst — Evercore ISI

Yeah, thanks. Hi, I'm Kotkan Maral with Evercore ISI. I had two on Venue Nation. You know, first, I was hoping you could talk a little bit about the pipeline that you see ahead, The 38 venues, fantastic. The modernization of it, the AOI that you expect, incredibly encouraging. I think the number and shape or contours of those 38 are a little bit different than maybe what we would have expected before. What are you seeing in the market today? And not to get too greedy, but even after the 2031 time horizon, this seems like I think one of the great parts of the story is this is not a two, three, four, five-year story. As you go into the 2030s, there should be a lot of opportunities. And so how are you seeing that market evolve? And the second question, Joe, don't kill me, but you've given a lot today and very fantastic information. If you wanted to talk about pre-opening expenses, you probably would have. But if you could talk a little bit about the 27, 28 peak, the quantum of that, how we should be thinking about that evolution, I think it would help a lot of folks.

Michael Rapino, CEO

I take the first, yeah. So the second part... I was going to say one quick thing. One quick thing on the future. I've said this in some of the roundtables we've had with you. Again, one of our secret sauces is we have 100 offices in 50 countries. We're a very local business. We've purposely done that to another strategy we've always deployed. Those are entrepreneurs unlocked. That's my, you know, we don't know if you should buy that venue in Peru on this side of the street or that side, right? You need local experts to tell you why you don't put a building in Jersey versus Manhattan. I would say we're in Nashville next week with 100 of them. They're unlocked with this new strategy. So they are every week with Jordan and I saying from you name it, from Columbia to Cape Town, hey, I got a venue idea. Hey, there's a development down the street. So I do think, you know, the pipeline we show you is the start of it. The pie is much bigger than 38 in terms of opportunity. So we'll be sitting here for year after year telling you the 38 now is and it'll be this. There's no destination. This will be a 10 year build out story.

Jordan, Other

Just to break down the numbers, obviously, we presented 38. Half of which are outside of the US. So if you just think of just those 19, that's like a drop in the bucket from the slide Paul showed you about the infrastructure that's missing. So as Michael, just to reiterate Michael's point, I think there's a long pipeline. You know, I would say in terms of how you all have been modeling or not, obviously, you don't have much insight, but also these are not straight line projects, right? We are going to make the right decision in a city like Munich to build the right building when the time is there on the right site, right? It's not, we're not going to spend money and shareholder capital to get something open in 2029 if it's not the right project. And so what we're going to keep giving you is directional guidance on the scale of the opportunity, but I don't know, not to parrot Joe, but while he doesn't like Quarterly, you can't expect a linear year-over-year-over-year on this. This is about the size of the opportunity, and the size is massive.

Joe Berchtold, CFO

And then in terms of the numbers, I'm happy to give you a lot of numbers with the caveat that four months from now, when we do our next earning or three months from now, I'll update them because the great. Problem, I'll go back to you, that we have, is as Jordan says, oh, I have more projects. Oh, we can get this going, right? The short-term math is that you're going to recognize some pre-opening costs. So these numbers may move around based on the exactness of his timing. But right now, our expectation is probably a 40 to 50 million increase next year in pre-opening costs. It's probably comparable in 28 to 27. May go up, may go down a bit based on the timing of the projects, but it's not a massive number in the scheme of the two point something billion dollars that we are. Obviously, just impacts the model that you specifically build for the year. Thank you. Thanks.

Cameron, Analyst — Morgan Stanley

Thanks, Cameron from Morgan Stanley. I won for Michael or Omar on the touring business, both, you know, complex and data rich. I'd love to hear how you think about the opportunity with that business to leverage technology to either drive efficiency in the business or kind of unearth new pockets of opportunity. And then for Samo, you talked a little bit in your presentation about Japan and scaling with HIP in 2027. What does that look like? And what does the scaling kind of beyond 2027 look like in that market? Thanks.

Michael Rapino, CEO

I mean, I'll do it quickly on concerts. It's mostly back-end, as you could imagine. You know, we're... And when I meet every week, we're talking about the back end, all the marketing, how we can do that better, all of the building, the business plans, building all the pricing strategies, the routings, all of that now is turning into his dashboard. He's built AI background. You've hired new CTO for that division. I think in any business you have right now, no matter where you are, you're obsessed that you don't have an AI agent brain in the nucleus of your division thinking differently. So every department we've tasked them with on, they'll present next week on, forget the external, what are you doing to make your industry smarter and truly have a central AI brain to drive your business decisions, your efficiency, your processes? So where are all those layers where we can do and smarter thinking can come into that? So any specific things you want to mention that you're?

Omar, Other

I think the other piece, too, is just as you go more global, we're using AI to figure out how to move things quicker and more efficiently and get them from Asia to Europe to America, try to find more efficient ways to have artists on the road and whether their shows will fit in certain places. And then ultimately, as Michael said, we're building agents for all the different teams. How do you make the marketing spend more efficient while still getting the big looks that you want while still getting the ROI? On ticketing, we're now looking at the by the seat level, by market, by day of the week versus historical versus if there's a college football game that day. You can just take so much more information and parse it so much quicker, so we're just making much better decisions quickly, and we're being challenged by these agents to break some of the historical thinking that we've had that's just been built up over generations, almost like rust, right, that AI is helping us wash off.

Michael Rapino, CEO

Yeah, I would say my obsession is because we're not affected by AI like other industries where it's such a front attack of maybe the labels, that I'm obsessed that we don't kind of rest on that because of live, not AI, physical, all that great, but that our industry and our company gets really, really smart. I tell these guys all the time, my competitor isn't the AEG of the world, it's that young kid with an AI agent doing a good marketing plan, right? So how do we make sure we are the smartest music company out there of the future with that skill set brought into every division? So every one of them is obsessed with showing me on this bi-monthly process on how we reorganized around an AI-centric smart thinking for your division.

Salmo Mehta, Other

Maybe a couple quick notes on Japan. So obviously, we just went on sale. It's super early. A couple things I'd add just for your reference. So first, it's one of the largest concert markets in the world. So I think that's relevant. Second, it is heavily kind of domestic plus international. And there's a huge opportunity on domestic shows in addition to major global tours of the sort that Omar puts together. Third, Japan being Japan, there's very unique characteristics in the market, and you have to actually reflect those characteristics. For example, the vast majority of tickets are actually picked up in 7-Elevens and convenience stores and paid for in cash. So we're building that integration. And that provides kind of a major opportunity for the future, but it also ensures that you actually have to build for the market, which we are. And finally, but maybe most importantly, there's a fantastic Japanese entrepreneur in the form of the promoter who we're partnering with closely and helping learn from. And what we've learned is that there's some very specific quirks in the Japanese market. So, for example, almost nothing is sold with a seat map, which is shocking for the average American consumer. And we believe that first, we have to meet the consumer and the promoter and the artist where they are. But over time, we believe that there's a scaling opportunity simply by applying all the things that we've learned in the US and Europe and bringing basic innovations, basic innovations of the sort that we expect here, like seat maps and digital tickets and barcodes even into the Japanese market. And we think that that's a real scaling opportunity.

Michael Rapino, CEO

Brandon. Brandon may be one of our longest supporters.

Brandon, Analyst — Needham & Company

I've been doing this for a long time, yeah. For Samal, we've heard a lot today about the B2C opportunities that exist in using AI, and then kind of just to follow up on Cameron's question, specific to Ticketmaster. First of all, how has AI and AI tools improved the B2B opportunity at Ticketmaster? And then, I mean, your code base has been built and rebuilt over decades at this point, probably doesn't have, you know. The most isn't the most efficient. Is there an opportunity to use coding tools, cloud code, codex, whatever else, to streamline that and kind of continue to bring the disparate ticket master markets together?

Salmo Mehta, Other

Well, I appreciate the question, and I'm going to use that as a way to recover my nerdy tech bona fides. So thanks for the opportunity. Okay, so there's just, I mean... AI is essentially completely woven into the fabric of the way we are working now. It is almost unrecognizable from the way we were working about a year ago when I first joined. I'll give you some examples. So when I first started, usage of cloud code in the engineering organization was about 4%, give or take, DAU. Today, it's in the neighborhood of like 98%. So that just shows you that the amount of kind of usage of AI, both in our product development process and our engineering process, is extremely high. The opportunity in front of us is two or threefold as we think about the B2B side and some of the tech stacks and so on that you mentioned. So I'll reference that. So first, as Ticketmaster has expanded around the world, there are these smaller platforms in Asia, for example, right? And they effectively have the same functionality as North America, but is effectively a duplicate. What AI gives us the opportunity to do is quickly migrate that entire platform onto our major North American and European platforms. Migrations, as you might already know, are extremely fast with AI. So I think that's part one of the story. Part two of the story is-

Michael Rapino, CEO

But just to give them time, you gave me crazy math and it used to take us versus now.

Salmo Mehta, Other

Yeah, I'll give you a concrete example of that. So we have a large-scale database migration that was, when I first joined, was slated to take in the neighborhood of three and a half to four years. And this is an older database that's going to end of life in a few years. And that thing is going to complete in the neighborhood of 18 months, right? Right? And so when you think about migrations, you can have speed up in the multiples. The Japanese market work, we started it at the top of this year, went live at the end of this year, right? So in under a year, in less than one calendar year. So that's concrete examples. We've seen also taking kind of our global kind of platforms, our major American platforms, European platforms, extracting those and making them available, slices of that around the world. So you talked about identity. We now have our global accounts system. So it's the same fan identity around 24-odd markets, right? We have the same checkout platform across 24-odd markets. We have the same payments platform across most of these markets. And so all of that has become significantly faster because of AI. And then the final piece you talked about is, oh, you know, the code's been built over many years. I think that there are slices of that that can be completely rebuilt from the ground up with swarms of agents. So the old school from a year ago of doing software engineering is to actually interact one-on-one with CloudCode. The new model is to actually just rebuild a service from the ground up with a swarm of agents. And we have examples internally that we're about to release of a capability that was old, a slice of capability, and we actually just rebuild it from the ground up with a fleet of agents. So it's just one guy working with like dozens of agents, and the entire thing was rebuilt within weeks. So that, of course, we have to, that's one example. I have to replicate that probably 50 times over at scale, but that's the journey we're on over the next several years. Over time, I believe so, but you have to remember that my first goal is to actually ensure that I drive sell-through, that I accelerate product velocity, and that I ensure that we are fully capturing the opportunity in front of us.

David Joyce, Analyst — Seaport Research

It's David Joyce with Seaport Research. I'm trying to coalesce some of these ideas, and you're solving for a lot of demand growth that's out there. What are your learnings, maybe what you're doing on customization and Ticketmaster that help you to price real-time food and beverage and ticketing and even help you price sponsorship deals? And are there particular regions of the world where these learnings are going to optimize that make you more excited than others?

Michael Rapino, CEO

Hmm. That's right. I'm not even sure I understood that question. So give me a give me again in division by division.

David Joyce, Analyst — Seaport Research

AI is going to do what for how it's a dirty word, but dynamic pricing of food and beverage and sponsorship and concerts. What are you doing? What is what is this doing? The AI efforts doing to help you optimize on the opportunity sets there.

Michael Rapino, CEO

Well, I wouldn't say it affects sponsorship. I'm not even sure it affects food and beverage. We don't dynamic price food and beverage opportunistically as much as you maybe could. We're not looking for those headlines. Yeah, we don't even raise price. It's closing time. We double the price.

Jordan, Other

Well, but I think just to help him out, because he asked twice, product choice is something we are using it for. We've always had a really good analytics effort on site. And obviously, as Michael said, we're B2C, so we know our customers. So if you think about the old way of doing it, it was a fan survey, right? That's slow. That's old. Maybe next season you could shift product. We're now using technology on a nightly basis. So when we see a tour go out in our venues, we are real-time looking at data, making product decisions, not price decisions, to enhance our TVs, to change locations of where we're selling things, to add more merch stands. So on a per-cap standpoint, we are using it, but I wouldn't call it dynamic pricing.

Michael Rapino, CEO

And even... On our ticketing, although we get beat up on Twitter for misinterpreting it, we don't dynamic price our shows on real time. So we're not changing the price as you're shopping, although that's the perception out there. Again, we're always trying to balance what's good for the customer, what's right for the artist, what's right for the profit. But we're not dynamic pricing on opportunity right now. We're trying to make sure that the artist understands pricing overall and what's the opportunity of his pricing versus the secondary market, and what could he price the on-sale at or what could he price platinum seats on. But once we price those, those go on the market. That's what's for sale to the customer.

Eric Handler, Analyst — ROTH Capital

Hi, Eric Handler, Roth Capital. I'll keep digging in on AI here. We've talked a lot about how it drives demand. What about on the cost efficiency side? Are you using it like on the concert area to say, all right, for this particular band, these towns are the best, are the most optimal towns to send this band to on the particular day is likely going to sell out more? You know, just all the variables that you could think of on the cost side.

Omar, Other

Thank you. Yeah, we started this project a couple of years ago, actually, before AI became the fad, and now we're deeper into it. So we're looking at all of that. You balance that with where the artist actually wants to go, so you've got to give them a bunch of information on why something might make more sense. But absolutely, it's one of the many ways that we're using AIs to be more efficient. What nights of the week? What can you charge on that night of the week? Is it cheaper to play a certain night of the week? Is there a venue 30 miles away that's more efficient to play? These are all things that go into the making of the tour.

Michael Rapino, CEO

The hard part on a tour isn't probably solving America. Most people, most managers know the difference between Boston and Cleveland. Our secret sauce and why it's still human-driven on a local basis is truly understanding the Argentina market and what markets to play there and what's the other things that are going on, World Cup soccer. So I'd say today we're still our great strength is those hundred offices with great promoters getting on the call with Omar, discussing a world tour. We only get so many dates, right? That artist will say to us, I'm going to give you nine months with 90 dates. There's thousands of opportunities. Our job then is to sit with all of our global, find out what that artist is. Latin America, priority to Asia, where do you want to go in the world? And they all know this now because they look at their global social followings of 200 million. They know they have 34 million in Brazil, so they want to go to. So, you know, working with the artist on his global agenda and then our global know-how, then you put those 90 dates together. Yes, then with AI, you're speeding up the process of how can I get that business plan done in one AI moment versus, you know, three days with the accountant. How do I get the routing done faster? What's the pricing opportunity? What's the cost opportunity? So absolutely, a whole bunch of that stuff is now being baked into what were manual processes behind all that thinking is being sped up by our AI agent and this kind of central brain he's building.

Stephen Lasik, Analyst — Goldman Sachs

Great. Steven Lasik from Goldman Sachs. Maybe one for Michael and Jordan and maybe Joe on the stadium front. We've seen just a tremendous amount of growth in the stadium layer of the industry over the last couple of years. I'm curious if you could speak a little bit more about the forward trajectory at stadiums, maybe your ability to profit from that growth at the EBITDA or ROI level. And then, Jordan, I'm curious if this level of growth that we've seen is maybe In your mind, created more of an opportunity for Live Nation to get involved in either building or buying stadiums over the next couple of years?

Michael Rapino, CEO

Yeah, we're seeing the stadium. You know, which is kind of historically was just left for rare air, the Rolling Stones, kind of these real big artists that could sell stadiums to now much more accessible to artists that you wouldn't have thought were stadium acts. Why is that? You know, lots of theories. One is just eventism, right? These fans and this idea that you can kind of be part of something magical when you're sitting on that field with whether it's, you know, Noah Kahn right now, who I saw recently at the Rose Bowl. Very different night seeing Noah Kahn in the Rose Bowl than maybe seeing them in the Forum. So eventism around the stadium show, the fans love it. The artists get to put on these basically mini Super Bowls. The production levels are crazy. They've delivered for that fan, Usher and Chris Brown. That show is, you know, incredible. So it seems to be that overnight the fans love the stadium show more than maybe the arena in terms of a spectacle. and artists are delivering with their production. As far as an artist's perspective, you know, you're always debating, right? Do you play 30 arenas or 10 stadiums? You know, what's your time allocated? So if I can be able to do a 15-stadium run. Versus 35 arenas. Maybe I do 15 stadiums in America and I'll go to an arena run in Europe. It just provides a whole new tool of accessibility around how do I tackle those 90 dates globally and what's the most efficient way to get as many fans as I can and build the greatest show. And with the production costs coming down in terms of overall, but being more spectacular in what you can produce, these artists historically weren't able to afford a Rolling Stones production. That was just kind of rare air, vintage wine. Now, if you're Noah Kahn, you can sit with the lighting and production company and come up with your own show at a price that makes sense for you to travel for 10 or 15 shows. So that overall cost per show has come down, although the quality has gone dramatically up. So it's not this huge endeavor. It used to be that I'm going to go on the stadium. I've got to do 100 dates. I've got to have the U2 CLAW multi-million dollar startup production to go. Now I can take my A show or my B show, as we call it. I can run in a stadium. I can run just for those 15 dates. So accessibility around production and quality has risen. And given you great opportunities where you would never think of doing 15 stadiums before, unless you did a whole. So, you know, some of those factors have made it now that artists looking at, can I go up to the stadium level, I can afford it. It's not really scary. I don't have to do 100 dates. My fans like it. And I can deliver a world class show used to be, you know, I don't want to go there with a bad, you know, two videos and a shitty stage and look bad to you too. They can deliver what they need now. At a cost that makes sense. So we're seeing every artist now look at that. Do I do stadiums or arena next year?

Omar, Other

I think you need to add to the efficiency. We've gotten so good at sharing costs. So you'll see, you know, we'll do six shows at MetLife Stadium with six different bands over eight days. There's a lot of cost sharing that goes on there. Fenway Park, you'll have eight artists play in a two-week span. So I think that also on the show cost side, on the non-sexy side, right? On the field covering and the porta-potties and the generators, split six to eight ways, Noah can put more of his money into production to make that work. And then there's that ambition. All artists are ambitious, right? They want to play the biggest shows. They want to play the biggest venues. So I think they're all seeing each other. There's a little bit of healthy competition out there that's driving it as well.

Steve K. Hall, Analyst — Wells Fargo

Steve K. Hall from Wells Fargo. So first, cost of capital has gone up a lot this year. It doesn't seem like anything has slowed down on the Venue Nation side. Should we assume that as you're looking at the IRR of these projects, there's underlying aspects of the business that continue to improve, so those projects still come in above the 20% IRR? And then the last 10 years, the stock has been amazing. I think adjusted free cash flow and AOI are your primary metrics. If we think about the next five or 10 years, the share count has crept up. The stock looks a little more expensive on per share metrics. I'm just wondering how you think about dilution or per share metrics as something you can look at to drive further stock value. Thank you.

Joe Berchtold, CFO

I guess I'll take the second one first, and then Jordan can talk about some of the returns. I think the way that we look at the capital's macro is still, when he's able to generate the 20% plus returns, that's the best use of our capital. So we're looking to continue to deploy against those 38 opportunities, turn 38 into 48 into 58 over the coming years, and continue to drive shareholder value that way. I think in terms of the share count, I don't think we expect anything dramatic to change. We, by and large, put aside a few COVID things, by and large, kind of been in the one-ish percent range of dilution a year. That's probably as good as anything. We normally, while we use converts, we normally replace them with further converts, and so we roll it forward. We're not really generating true dilution through that. So, I would expect that same sort of thing in terms of our share base. We don't have any imminent plans due to share buybacks, not as long as he can continue to develop projects. We'll see over time. We're not philosophically opposed to it. We just think that we can generate better returns with Jordan driving the venues.

Jordan, Other

Yeah, and just on the first sort of question, the short answer is yes, right? So, on a project level. Some are financed at a project level, so we're taking into account actual cost capital. Some are financed through our venue co-vehicle, so we're taking that into account. So everything, you know, we're watching everything quarter to quarter. It's all modeled.

Speaker 0

Great. But TLAVUBS, maybe just to follow up on that question, as you're sourcing new venues, can you talk to when you decide to bring a partner? And with more opportunities internationally, do you think that mix is going to go higher?

Michael Rapino, CEO

Makes the local hire? Makes the mix of partners go higher with international. I mean, you can ask. Venues are very specific on why we have partners, so you can explain.

Jordan, Other

Yeah, I wouldn't expect a trend. I mean, I think it's a case-by-case basis. We have strategic partners where it makes sense. Obviously, we have the capital, to Joe's point. So it's really always a minority partner who's typically local, right? So Munich, which we're really proud of, we announced with a great local partner who had been working on that site who has been very strategic. We bring one skill set, he brings another. There are other opportunities, like in Madrid, where we've talked about a sports partner who has helped develop it with us. So I wouldn't expect a change in mid-shift, but internationally especially, we'll bring in partners who add value on monetization as well as access.

Michael Rapino, CEO

And in America, most of our big venues that we're doing, the 5,000 seats are close to a sports facility. So we're dealing with the billionaire owner that owns the team that's doing the development. You know, our old model, like Atlanta, used to be they built it, they financed it. We're the dumb guy that came in late, overpaid for a long-term lease, and had a decent return. Today, we sit down with that owner and say, no, we'll build it and we'll finance it and run it. And you can put in 40% of the equity if you want to be part of it. So we do that many times as part of it. But that's more opportunist on who owns that land or who's the developer. And do we need them as a partner to secure the deal and get it done? Great. We'll do that as a minority.

Amy Yong, Head of Investor Relations

A quick question for Joe. I was talking to an investor yesterday, and they said, I can't figure out if this Venue Nation CapEx is defensive CapEx or offensive CapEx. And I said, what do you mean by defensive? I don't understand what that means. And they said, meaning, should I view the CapEx as required to deliver double-digit AOI growth? Or should we look at this over the long term as the CapEx accelerates AOI growth? And I'm sensitive because the... The quantum of AOI that you're generating is very different, right? 10% isn't $80 million. Now it's $260 million. So it's not a trick question. It's honestly, like, when you think about this, how should investors sort of frame the long-term AOI algo?

Joe Berchtold, CFO

Both things are true, is my short answer. The way I think about it is, Paul and Michael and others have shown you the magnitude of the global opportunity. We've talked about it year in, year out. Last year, we talked about the next billion fans aren't where the original fans came from. So that opportunity exists. The supply and demand dynamics exist globally for us to continue to grow. What the venues do is two things. One is they accelerate the development of some of the markets so that you have the infrastructure so you can deliver supply to the demand. So that's helpful. Now, over the long term, maybe that infrastructure would exist. And secondly, you're in a nice return on the capital you've deployed. So it's both of those. It's both offensive and defensive. Yeah. Maintaining double-digit growth, it gets harder every year because your denominator grows. So you need to continue to deploy more levers to do that. Venues are part of that. But we're not changing the fundamental nature of the business. We're finding the most effective way to deliver supply.

Michael Rapino, CEO

Yeah, and I don't think it would be... I don't think there's a company alive at 20 years old that's not investing capital to grow its business, right, whoever that investor was. I don't think there's anyone that wakes up and I'm being nice. I don't think you wake up and not invest in your company and it magically grows 10% a year 20 years later. Now, a lot of companies, as you see, they've got to go spend $17 billion. They've got to go buy big things to bolt on. We don't do that. Most companies don't have a very clear path to this growth, and most of our growth is still organic if you look at our ROI growth on an annual basis. So we're thrilled that we have a very, very, you know, tight strategy. We don't have to go far. We don't have to go horizontal, vertical. We're not asking to take a leap of faith. Very, very aligned to what we've been doing since day one. We just changed the hat from being the leaser to the developer to capture that margin. That's the only change in the strategy. So it's opportunistic because, as I've said before, for my first 15 years, I didn't have the balance sheet to do it, so I took the shitty lease. Then we started to get to a point, once we got Ticketmaster built and sponsorship and the cash flow, that I could look at that person and say, no, actually, I'll build it. I'll take the cost so I can capture the margin in all of this high-end concert space that I'm putting into your building. So very opportunistic.

Matt Condon, Analyst — Citizens Bank)

Matt Condon with Citizens Bank. I just wanted to ask, given you have this massive global venue footprint in the touring business, what additional opportunities are there for maybe digital distribution revenue? You've seen what happened with Coachella earlier this year. Are there opportunities to diversify into new revenue streams as you think about whether it be live streaming or other opportunities like that? Thank you.

Russell, Other

Yeah, we're definitely focused on live streaming opportunities. We're doing it with a number of our festivals today around the world in Brazil, Mexico, US, Germany. So that's going to be a continued strategy of ours, working with all the various streaming partners. You've seen it work very, very well in sports right now. So we think we have a massive opportunity. We have incredible IP with our festivals like the Lollapaloozas of the world. So yeah, that's definitely a focus for our team.

Michael Rapino, CEO

But it's a small piece of the business. There's no, I mean, as much as you referenced Coachella, you know, there's Coachella, Lala. There's a few that are worthy. Thankfully, I always say they're not duplicatable, right? We've been down this path for 30 years where Yahoo and everyone's tried YouTube. No one wants to watch two hours of the show, even if you're a fanatical fan. You're not watching the show. You're not watching it on Netflix. Even if you're watching Coachella or Lalit's background. So I go, I say that only because it reinforces, it's just not duplicatable. The only digital strategy we love is TikTok when every kid's doing 30 seconds of it and marketing for us. But we have never been able to find a big enough audience that really wants to watch the show because that magic happens on site less than on screen.

Peter Cipino, Analyst — Wolf Research, LLC

Hi, Peter Cipino, Wolf Research. A couple for Joe. Joe, I'll apologize in advance. First, on 2031, for Venue Nation, you all showed, I think, $850 million of AOI. And I'm wondering about the state or the maturity of the 38 venues contributing that AOI in that year. In other words, are there venues opening in 2030 and 2031 that may not be at full productivity in that number, or is that a stabilized number?

Joe Berchtold, CFO

That's that year's number. So we gave you because we gave you a couple different years. So we gave you 2029. We're 31 of the venues and we gave you the numbers for that. But 31 of the venues would be open in 2029. So you can assume that those 31 would be mature by the time you get to 2031. Usually within three years, you're mature. So it'd be the other seven that depending on whether they, I don't remember off the top of my head, those seven, the mix of opening in 30 or 31, but there's some tail maturity a bit off of the end of that.

Peter Cipino, Analyst — Wolf Research, LLC

Okay. So that simple math of AOI against invested capital is going to keep improving in the year.

Joe Berchtold, CFO

A bit, but you're pretty clear. I mean, if you have 31 and then you're on average 80% of the other seven, you're 90 odd percent of the way there.

Peter Cipino, Analyst — Wolf Research, LLC

Got it. Thanks. And the other question was on pre-opening costs. You discussed that a little earlier. So if you could just clarify, is the dollar value of pre-opening costs in 27 a bigger number than 26 and again in 28?

Joe Berchtold, CFO

It is bigger in 27 than 26. By current estimates, 40 to 50 million. We'll update you in February. And 28 being consistent with 27 at that same level.

Robert Fishman, Analyst — Moffat Nathanson

Hi, Robert Fishman from Moffin-Nathanson. Going back to the start of the presentation, you guys laid out some strong demand and the different demographics. So just thinking about the different opportunities there, especially the younger demos that you provided, help us think about. Where the opportunity is on different demographics, thinking, you know, beyond just the younger demographics, is there different marketing strategies that you can use or different targeting capabilities with the data that you have to help really drive that next step growth forward? Thank you.

Michael Rapino, CEO

I mean, yes and no. I think on a... You know, the biggest opportunity is still global. So many of these 19-year-olds haven't been to a show in a lot of these markets, Colombia, India, a lot of these markets. So it's all new market there. In America, where you're trying to hit the Dave Matthews fans differently than the Gracie Abrams fan, then absolutely a full marketing team, segmentation data, AI built into that now, trying to figure out with all of our AI and our past purchase data, how to find Dave Matthews fans, appeal to them differently than you're appealing to a K-pop crowd, different than, you know, it's all segmentation for us. And we have a segmentation strategy within marketing on how to communicate and reach those fans. So better and better every day with our AI underpin and data now. But, yeah, a big part of our business is segmentation.

David Karnowski, Analyst — JPMorgan

Hi, David Karnowski from JPMorgan. Maybe to start with Russell, it'd be great to hear about how you think about Venue Nation and growing your sponsored business. I know sometimes these buildings, the ones you're acquiring, for instance, can be tied to existing deals, but how do you think about positioning them for growth? And then for Jordan, you know, we were sampling a lot of brands in the lobby or food and beverage brands. How widely distributed these through your amphitheater or theater footprint? Is this about increasing spend at these venues? Is it about capturing margin? It'd be great to hear more about it.

Russell, Other

Yeah, so on the Venue Nation, obviously, I stay very, very close to our team with Jordan and his team around the world. You know, this year, I've been to Cardiff, Munich, Lima, Singapore, where we have all new venues. The demand from the brands and the excitement in those local markets is incredible. Michael's made the point a few times, just like we have promoters in all of these markets that are the best, we also have local sales sponsorship teams in all of these markets as well. So those are the ones that are... We're drumming up the excitement with the brands, and then we have a global team that's helping them with best practices on pricing and all of those things. So, yeah, the Venue Nation sponsorship are kind of tied at the hip for growth, inventory. As early as the design stage, we sit with those guys to figure out how not only, of course, Jordan's got to create the greatest venue in the world, and we're working with his team to figure out where those sponsorship opportunities are with those new venues.

Jordan, Other

And thank you for sampling the food. Hopefully you liked it. We're really proud. You know, last year we talked about we built these brands about a year ago, right? So to answer your question, the idea was first drive quality, really drive the experience. The brands that you all sampled that we talked about in the presentation are across the full amphitheater portfolio. And depending on kitchen and location in some of the clubs and theaters, some of them are also sold by third party concessionaires and arenas because they've recognized the quality of it. I would remind you all, though, this is still primarily a beverage-driven APF business. While food is growing, and our goal is always to keep driving, that's really a beverage-driven APF for the majority that's been.

Michael Rapino, CEO

And as a little under story to that, Russell runs our venture group where we have our liquid death investment, which is paid off handsomely. The idea here is similar. We used to have a lot of brands in our amphitheaters. We pay them a royalty and big cost of goods to us to kind of have this perception that that chicken wing or pizza slice was quality. So then we looked at it and said either someone's going to write us a big check on the sponsorship side and integrate, or we're going to create our own brands. So much like Liquid Death, we probably have 15 ventures now. We're from the earplug on site to different beverages to the sausage company we bought and the pizza company we bought, Ziggy's. So those are all about also just building brand equity, using our distribution, build value around that equity, and achieve more value from it. So that's the underlining story on why we own the brands now instead of paying someone else.

Peter Henderson, Analyst — Bank of America

Peter Henderson from Bank of America. So you presented $1.9 billion in incremental AOI opportunities up from the 2.6 currently. Where do you believe you have the most visibility across those different categories, venue nation, ticketing, sponsorship, and where do you think the most upside exists across those different opportunities?

Joe Berchtold, CFO

He wants more upside. It's not good enough. Well, I think for the reason that Jordan laid out, the venue side of it is, if you will, the most linear, right? We've now, we gave you case studies on a number of arenas that we purchased, on amphitheaters that we built, clearly what the yield is, clearly what the return is. He's got 38 venues in process. So I personally feel very good about those venues are going to get open, they're going to deliver AOI, and they're going to move forward, right? Now, all of the other pieces of running the business. I mean, we've been doing a version of this presentation for 10 years, right? And every year we say, because of these supply and demand dynamics, we're going to add more global fans. Ticketmaster is going to keep adding clients. Russell's going to keep adding more sponsors, take advantage of all the assets he gets. So we have very consistently executed that for a decade now. You have to believe we can continue to execute it, but we certainly believe in that as well. I think we'll wait for next year to give you the, where's the upside, as opposed to add on further from what we've done so far today.

Ben Saf, Analyst — Deutsche Bank

Ben Saf from Deutsche Bank, thanks for the question. First on sponsorships, as you enter new markets, how does that open the door for local sponsors, and how do you think about that? And then more broadly, could you talk about the opportunity with the non-musical act and content creator economy? Thanks.

Russell, Other

So on the local sponsorship, it's a combination. So when I go to Lima, we're meeting with every single local bank in Lima about venues that we're working on there. Additionally, we've got global relationships, you know, with a host of brands that may also be interested in Peru. So we have a global sales team that's working on the global brands, figuring out what markets you want to be in. You want to be in Brazil, Mexico, UK, Japan. And then we have local teams. So we work in tandem to make sure we're maximizing every single deal in every single market.

Jed Kelly, Analyst — Oppenheimer

Hey, Grace. Thanks for squeezing me in here. Jed Kelly, Oppenheimer. Just two. First, as you talked about AI, better personalization, can you just talk about the opportunity and digital sponsorships? And then as you build, you know, more venues into Venue Nation, is there an opportunity for greater subscription offering or membership? Just some thoughts on that. Thanks.

Michael Rapino, CEO

Digital sponsorship? I don't know.

Russell, Other

I mean, digital continues to be a growing area for us. We work closely with Samuel and his team in figuring out inventory that as we're launching in Japan or we're launching in other markets, what inventory does Ticketmaster have that we can then go out and sell to brands? So we do have, again, we're mainly an IRL venue festival base. That's where brands start. But we've built out an entire digital portfolio for brands. And pretty much every deal we do everywhere in the world includes some aspect of digital within those packages.

Michael Rapino, CEO

And I think we mentioned our all-access membership. That's our kind of work in progress, but we love what we're doing there. Chris Lawl and Michael Abrams work on it. 14 million members, kind of a quiet little club we're building, but we think there's a big, big story there over time of building a membership subscription business with fans for sure. That's it. Appreciate all your questions, all your support. Thank you.