In a move that would give it a major Los Angeles base and bolster its national reach, New York-based SFX Entertainment Inc. has signed a deal in principle to purchase Los Angeles-based Avalon Entertainment Partners, a leading L.A.-based concert promoter and venue owner, for about $30 million, sources said Wednesday.
The deal, expected to close within two weeks, would give SFX control of the 15,500-seat Irvine Meadows Amphitheater, along with a new outdoor venue in Camarillo that Avalon has planned.
SFX embarked on a buying spree last spring in a bid to consolidate the long-fragmented concert promotion business. Within nine months, the company has spent over half a billion dollars to acquire such operations as San Francisco's Bill Graham Presents and New York's Delsener/Slater Enterprises.
SFX is rumored to also be on the verge of a $100-million deal for giant Florida-based concert promoter Cellar Door International, which stages shows in half a dozen states in the South and Midwest.
The Avalon deal would give SFX control of every large outdoor venue in New York and Los Angeles, said Gary Bongiovanni, editor of the concert industry publication Pollstar.
It would also take SFX a step closer to its goal of controlling a large share of the concert promotion business in the top 50 U.S. markets. It's nearly halfway there already, with operations in 21 markets including New York, San Francisco and St. Louis.
(SFX Entertainment is a subsidiary of SFX Broadcasting Inc., which owns more than 70 radio stations in the U.S. and which agreed to be bought by Hicks, Muse, Tate & Furst last year for $2.1 billion. SFX Entertainment, which is building the live entertainment businesses, is scheduled to be spun off to existing shareholders later this quarter.)
Brian Murphy, president of Avalon, did not return calls seeking comment; an SFX spokesman declined to comment on any possible deal. During its swift consolidation, SFX executives have rarely spoken publicly about their strategy.
Many agents and managers in the music business are watching SFX with growing concern. They grumble that the company is looking to reduce their fees or cut them out of the equation entirely by using its national leverage to pay less to bands while beefing up its own revenue by raising ticket service fees, as well as concession and parking prices.
SFX "doesn't want to play by any rules; this has always been a risk/reward business, where everyone can end up sharing the wealth," said one music agent who asked not to be named.
Fredric Rosen, chief executive of Los Angeles-based Ticketmaster, recently said his company would "have to look at getting involved in promoting" if SFX made significant forays into ticketing. It is unclear now what would happen in such a scenario, as Rosen is expected to leave Ticketmaster after its sale to USA Networks is completed.
Avalon was purchased just a year ago by publicly traded TBA Entertainment Corp. (formerly Nashville Country Club Inc.) of Hickory Valley, Tenn. T. Jackson Weaver III, chairman of TBA, did not return calls.
If SFX's earlier deals are any indication, SFX chief Robert F.X. Sillerman would probably keep Murphy to run Avalon.
Sources say SFX's Avalon purchase would also involve the company's buying out the other partners in the Irvine Amphitheater.