Irish rock giants U2 signed a recent deal with Live Nation which appears to have back fired badly on the ticket company.
A recent deal with Live Nation saw U2 being paid part of their fee with stock. The contract ties them in for twelve years, and was worth vast amounts to both parties.
As part of the deal U2 were given stock in the company worth an estimated $25 million. Due to recent events, however, shares in Live Nation have shrunk to just a fifth of their previous value leaving U2’s payment worth a mere $6.1 million.
However, a clause in the group’s contract guaranteed the original value, meaning that Live Nation have to make up $19 million by themselves. In an SEC filing Live Nation said they would do this with cash on hand or borrowed money.
Live Nation have signed a similar contract with Madonna, meaning that the company could be facing difficult times.
Live Nation, however, have chosen to play down the events saying “Madonna and U2 are the only two deals that did contain this provision. The Madonna business is great, and we look forward to monetizing our investment in U2 next year.”
U2 are set to launch a world tour in 2009 to coincide with the release of their album ‘No Line On The Horizon’.
