The New South Wales and federal governments have propped up the private company behind Splendour in the Grass music festival, recently cancelled for this year, with millions of dollars for years as the festival’s multinational parent company recorded multimillion-dollar profits.
Since Covid crippled the live music sector in 2020-21, Secret Sounds and its parent company, Live Nation Australia Festivals – the owners of some of Australia’s largest music festivals including Splendour, Spilt Milk, the Falls festival and Harvest Rock – have received more than $16m in government grants, including $1.09m for a 2021 festival that was subsequently cancelled and $2.6m for a partially washed out 2022 festival.
As recently as February, the NSW government was scrambling to broker another package to ensure Splendour went ahead in 2024.
At the end of 2022, Secret Sounds was carrying short-term liabilities of $82.7m, and $29.7m in long-term debt, according to the latest documents lodged with the corporate regulator. The documents show that its debts outweighed its assets by $9.3m at that point, up from $8.7m the previous year.
Its ultimate parent company, Live Nation Entertainment, is one of the world’s largest entertainment companies. Since its merger with the ticketing colossus Ticketmaster in 2010, the corporation has been hoovering up ticketing services, concert promotion deals, festivals and more than 300 venues globally.
Live Nation Australia owns or holds long-term leases for a growing number of venues, including Melbourne’s Palais Theatre and Festival Hall and Brisbane’s Fortitude Music Hall. And, like its US parent company, the Australian subsidiary holds exclusive ticketing rights through Ticketmaster. In 2019 it consolidated its ticketing dominance by acquiring Moshtix for an undisclosed sum.
The following year Saudi Arabia’s Public Investment Fund – controlled by Crown Prince Mohammed bin Salman – bought a A$770m stake in Live Nation Entertainment, making it the third-largest shareholder. Last year Live Nation Entertainment generated US$22.75bn (A$34.34bn) in revenue, a 36% increase from 2022, and recorded a net profit of US$563m.
Multiple pandemic grants
Jessica Ducrou and Paul Piticco famously brainstormed what was to become Splendour in the Grass in a Byron Bay pub in the 1990s, when he was the manager of a little-known group from Brisbane called Powderfinger and she was a rookie booking agent fresh out of the accounts department at Rolling Stone.
In 2016 the pair merged their various businesses and projects into the Secret Sounds Group. A few months later, Secret Sounds sold a 51% share of the company to Live Nation for an undisclosed sum.
Ducrou and Piticco are now co-chief executives and directors of Secret Sounds.
An analysis of documents lodged with the Australian Securities and Investments Commission (Asic) shows that Secret Sounds reported net assets of $13.2m in 2017 and $8.9m in 2018, but the company was losing money before the pandemic hit.
It went from reporting a $2.9m profit in 2017 to a $4.2m operating loss in 2018, according to documents lodged with the corporate regulator. Guardian Australia was unable to find an annual report for 2019 lodged with Asic, but understands that the operating loss grew substantially that calendar year.
The following year Secret Sounds’ finances also took a hit through the $7m settlement of a class action in the Victorian supreme court over the 2016 Falls festival in Lorne, where dozens of people were injured in a crowd crush.
Five months into lockdown in 2020, the Morrison government announced the $75m restart investment to sustain and expand (Rise) fund for the cultural sector. That fund, which was to support cultural organisations hit by lockdowns, was to grow to $200m over the following 18 months.
Secret Sounds and Live Nation’s Australia subsidiary would become two of the fund’s most successful applicants, securing six Rise grants totalling $5.8m.
In the first round of emergency funding in late 2020, Secret Sounds secured $1.59m for an unspecified festival, while Live Nation received $120,000 for a podcast festival.
The following year, Splendour received $1m for its 2021 festival, which was ultimately cancelled due to Covid disruption, and the Secret Sounds-owned company Ash Sounds received $1.48m for the 2021-22 Falls festival. Live Nation secured $1.6m in a further three Rise grants.
In 2023, Live Nation received several additional grants through the government’s Live Music Australia body totalling more than $200,000, including $100,00 for the 2024 Splendour, now cancelled.
The companies also collected more than $10m from the NSW government over the same period.
Live Nation received $2.5m in Create NSW’s performing arts Covid support payments for “various performances”, according to a government spokesperson, and an additional $5m through the Create NSW festival relaunch program. Secret Sounds received $353,730 from Create NSW’s performing arts Covid support program and most recently $2.6m to assist the relaunch of Splendour in 2022.
The South Australian government has also supported events run by Secret Sounds, providing an unspecified amount for its annual Harvest Rock festival for three years. An SA Tourism Commission spokesperson said Harvest injected $18m into the state’s economy last year, but details of the sponsorship were subject to contractual confidentiality.
Secret Sounds recorded a total of $3.43m in income from government grants for 2022. The same year the company once more recorded an operating loss. According to its latest accounts, in 2022 it reported a $1.1m operating loss.
Secret Sounds owns or has interests in a number of companies that run various festivals and businesses, including Splendour in the Grass Pty Ltd. While the underlying financial position of each subsidiary is not set out in the accounts, the Guardian understands Splendour had net assets in 2022.
In July last year, Live Nation exercised an option in its contract to compulsorily acquire a further 25% of shares from Secret Sounds’ 14 other shareholders, including Ducrou and Piticco.
The Guardian understands that due to Secret Sounds’ financial state, Live Nation acquired the shares without any payment to the shareholders.
‘Heartbroken’ at cancellation
When the announcement came last month that Splendour would not go ahead this year, Ducrou and Piticco said they were “heartbroken”, and the decision to cancel was “due to unexpected events”.
The NSW arts minister, John Graham, told Guardian Australia he was “devastated” by Splendour’s cancellation.
Late last year he began negotiating with Destination NSW for another rescue package for Splendour 2024. The minister would not provide details about the negotiations, which involved a “significant” sum of money, citing commercial in confidence.
A Live Nation spokesperson said in a statement: “The NSW government offered some support for Splendour in the Grass in 2024, but no funds were received because the event is not moving forward.
“All events in prior years that received some level of government funding proceeded in accordance with the approved terms.”
Graham said all organisations that received government funding underwent financial scrutiny.
“Any government assistance comes with very, very stringent auditing requirements and a close examination of financial records … that would have been the case in this instance,” Graham said.
He declined to comment on why a government would provide millions of dollars to an entity majority-owned by a highly profitable S&P 500 corporation partially owned by the Saudi regime.
The funding of Splendour was in Australia’s public interest, Graham said.
“Splendour is a crucial part of the festival circuit … this is one of the reasons it’s devastating it hasn’t gone ahead,” he said. “This will now be a blow to every other festival that’s going to run over next summer. It decreases confidence in the financial backers, in the ticket buyers, in the music acts who might invest in the next festival season.”
Secret Sounds said the company would uphold all contractual commitments in relation to Splendour 2024’s cancellation and was working to find alternative performances for the artists involved.
