How procurement plays its part in music festivals
- 19 Jul 2019
Running your own music festival may seem simple and an easy way of making a profit; all you need is good music and beer, right?
Away from good booze and great tunes, there’s a sophisticated operation underway to ensure revellers enjoy themselves safely – as well as ensuring the event actually goes ahead! Procurement plays a huge part in this and in this blog post, we’ll examine the role purchasing plays in festivals.
Festivals are more popular than ever
The music festival market has grown significantly in recent years and isn’t likely to stop soon; with research by Parcelhero indicating that 14 million adults in the UK plan on attending at least one music festival over the summer.
With the average cost per ticket for a music festival coming to £200, and incorporating the revenue made through additional streams such as sponsorships and catering - Parcelhero estimate that the festival industry is worth £2.3 billion each year.
Festivals are a lucrative business, and as such, many more are being set up.
What do you need to host a festival?
We’ve detailed the fundamental costs of hosting a festival below;
Most importantly, you need a venue to stage your festival. Prices for site hire will vary drastically, as festivals are generally held in rural locations which will be cheaper to hire - whereas festivals like Lovebox and Wireless festival are held in London, where the rent will be substantially more expensive.
Once you’ve secured a site, you’ll need infrastructure to support the thousands of attendees.
First, you need a water and electricity supply at the festival, both in the stage and camping areas. Co-founder of Festival No 6, Gareth Cooper, estimates that for a 10,000 capacity festival these costs will be between £60,000 and £100,000.
Waste management is also a large expense for festivals, as they produce on average 23,500 tons of waste; which only 32% of which is recycled. Cooper also states that it costs more than £30,000 to dispose of.
Stages & equipment
The bigger the festival, the bigger the stages are, with Download festival’s (the second largest festival in the UK) five stages weighing 278 tons, which require 57 artic lorries to transport all the equipment. There is a further 160 tons of lights, sound and video equipment. You’ll have to pay for both the transportation and setup of the stages and equipment.
In addition, you’ll need to organise the security of the festival to ensure the safety of your visitors. Costs include fencing around the site, security inside the festival, paying for police who manage the surrounding transport links and entrances. With earlier research mentioned, by the Guardian, finding that it costs £1 million for security and police at the Isle of Wight festival.
Now, you must pay for the acts that will be performing at your festival. The amount you spend on musicians can vary (especially for headline acts), as Parcelhero’s research found that artists such as Bruce Springsteen and Justin Bieber charge over £1 million per performance, but Ed Sheeran charges £125,000.
Non-headline acts are also required throughout the day, but they don’t charge as much as the headliners – however, there’s a larger number of these performers.
Tax & music rights
There is also a 20% VAT charge on each ticket sold and a further 3% paid to PRS to support musicians.
How do festivals make money?
Once all of the above has been paid for, the money made from your ticket sales may be dwindling, but there are a few ways that you can top up your profits – such as glamping, sponsorships and caterers.
Food and beverage catering is an essential part of hosting a successful event, with Parcelhero’s research finding that catering contributes 40% of the overall running costs. To give you an idea of the volumes of food and alcohol sold at festivals, Download Festival reported that attendees consume 1.2 million pints, 650,000 burgers and 650,000 litres of water each year.
Considering how much festival-goers spend on food and beverages, they are a lucrative opportunity for traders; and this is represented in the price of a pitch, as a spot at Latitude festival, for example, costs £10,000 per trader. However, each pitch at a festival will not receive the same level of footfall and there is limited access to stock, meaning that traders must estimate how much stock they need to maximise on sales and reduce waste.
Additionally, event sponsorships help cover the costs of the festival. However, sponsors have huge influence when organising the event and you need to be cautious of whether their ethics align with those of the festival.
Glamping is a private campsite provided for festival-goers with pre-erected tents that often have their own toilets, showers, and phone-charging spots. Glamping is growing in popularity, and organisers are keen to supply the demand as tickets to stay in these tents are anywhere between £500 and £2750.
How can the weather make or break a music festival?
Summer rain is commonplace for Britain and is impossible to predict at any time of the year. So, this makes organising a festival in the UK especially risky as rain can have a devastating effect on a festival’s profits.
As when it rains organisers must pay for straw to be laid out around the festival and extra labour to distribute it. Weather conditions also impact the number of “walk-up” sales (people buying a one-day pass on the day itself); for example, Cornbury festival sold 1,200-day tickets in 2013, but only 200 the year before due to the rain, which is a £200,000 different for a £200 festival. Although, when the weather is hot you are required to supply free water for attendees.
As more people continue to visit music festivals each year, making a profit by running your own is achievable but risky, as uncontrollable factors play a key role in its success. You also have to ensure that your festival is unique and exciting enough to draw the crowds away from your competitors.
There is also a sophisticated procurement operation needed to coordinate a music festival; in order to manage the event preparations and build, whilst ensuring that there are contingency procedures and funds available to overcome unforeseen issues.
So, do you think you could successfully host your own festival, and do you think the thrill of seeing your work unfold out-weighs the financial risk? Let us know on our Twitter and LinkedIn channels.