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Shuttered Concert Venues Need Tax Lifeline From Congress

July 21, 2020, 8:45 AM

Concerts at venues like The Crocodile in Seattle or the 9:30 Club in Washington, D.C., may feel like a thing of the past for many people, as coronavirus social-distancing recommendations become a new way of life.

Faced with the possibility that virus-related restrictions may remain in place for many months, 2,000 independent concert venues have joined together under the National Independent Venue Association to call on Congress for help. The group is backing several tax relief measures, some of which are in existing bills, including a tax credit for refunded ticket costs and a credit to help businesses cover the costs of extra cleaning and protective equipment (H.R. 7079).

The financial hit of the pandemic is already enormous for the industry. Independent venues, which aren’t backed by a corporate entity, are anticipating a potential revenue hit of as much as $9 billion in lost ticket sales alone if they’re unable to hold shows for the rest of the year.

“We don’t have stockholders, so we don’t have that kind of a support system where there are bumps in the road,” said Audrey Fix Schaefer, NIVA’s spokesperson. “And we don’t have enormous cash reserves in the billions of dollars.

Many of NIVA’s venues have been shut out of relief so far, such as from the sweeping Paycheck Protection Program, which offered forgiveable loans primarily to small businesses. Many venues didn’t meet the program’s requirements, Schaefer said.

Bipartisan Push

Thus, targeted aid is needed. Concert venues can’t pivot to delivery and takeout like shuttered restaurants, Schaefer said.

NIVA has thrown its weight behind a bipartisan bill that the Recording Academy, which organizes the Grammy Awards, has also recently endorsed.

S. 3814, cosponsored by Sens. Todd Young (R-Ind.) and Michael Bennet (D-Colo.) would create a loan program for the hardest-hit businesses, providing funding to cover six months of payroll, benefits, and fixed operating expenses.

Young said in a statement that earlier this month he visited Mike’s Music & Dance Barn and the Slippery Noodle in Indiana, independent venues that “were forced to close their doors to fans, artists, and employees alike through no fault of their own.”

Lawmakers have returned from their July 4 recess to begin negotiating another aid package, which is seen as Republicans’ last chance to bolster the economy before the November election.

Treasury Secretary Steven Mnuchin, a key negotiator in previous aid packages, has said this aid package will be focused on industries that are struggling the most. Senate Majority Leader Mitch McConnell (R-Ky.) is expected to release a bill this week that will lay out Republicans’ priorities.

Ways and Means ranking member Kevin Brady (R-Texas) said earlier this month that he’s heard from sports and concert venues in Texas, and acknowledged that any business that puts a lot of people in close proximity is going to recover more slowly than other industries.

Congress will have to decide whether to focus on tax relief to help the broader economy recover, or aid for specific sectors, he said.

“I sense Congress is headed toward the first direction—those common elements that help businesses regardless of whether they are in a concert venue, or restaurant,” he said.

More than 90% of independent venues could close without further support from Congress, according to a survey conducted among NIVA members. The group’s efforts have already triggered support from major artists, including Cher and Lady Gaga, and companies like Spotify Inc.

“Smaller venues kind of operate on shoestring budgets and their revenue flows are generally quite limited,” said Stefan Hall, project and engagement lead for media, entertainment, and culture at the World Economic Forum. “The larger venues, they’re typically like multipurpose venues that are booked year-round for the major artists that generally have sellout crowds and a lot of supplemental revenue streams.”

To contact the reporter on this story: Faris Bseiso in Washington at fbseiso@bloombergindustry.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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