Festival Season Economics

Coachella may be done for the year , but we are deep in the throngs of festival season! Every year from Spring until the Fall, huge gatherings of crowds and artists are popping up all over the world to celebrate in the joy of live music. So, today we consider how the economics of these music festivals work, considering Coachella as our lens!

Revenue Streams: For the companies and individuals that throw these music festival, there are many different streams generating revenue that make them economically viable. Let’s review what they are and how they might be structured.

• Ticket Sales:

  • The initial and primary source of income for most festivals. In 2013, Coachella sold 180,000 tickets generating 67.2 million dollars.

    • ticket tiers offer varying levels of access or amenities; i.e. a VIP ticket costs more than a general entry ticket.

• Sponsorship:

  • Companies pay to sponsor and promote their brand at the festival.

    • Sponsorship deals may include logo placement, product integration, or exclusive partnerships.

    • Heineken has long sponsored Coachella, even repping a Heineken house stage. Sponsorships such as push Coachella’s past what they’d be able to generate with ticket sales alone.

• Camping:

  • If the festival includes camping options, fees from campsite rentals contribute to revenue.

  • A camping spot at Coachella typically cost $125 before fees. For a “preferred car camping spot” you’re paying $325 before fees.

  • In 2023, car camping spots were sold out, adding to Coachella’s giant financial haul.

• Merchandising:

  • Sales of festival-branded merchandise, including T-shirts, hats, and other memorabilia.

  • There aren’t transparent numbers for Coachella’s merch haul. But one vendor, self-reporting on Reddit in 2022, postulated that the festival was generating 100k/hr in their merch lines.

• Food and Beverage Sales:

  • People need to eat! Festivals hire out vendors to feed their ticket holders, receiving a percentage of sales from vendors in the process.

• Partnerships and Collaborations:

  • Collaborative ventures with other brands or events to generate additional revenue.

Implications for the surrounding area: Coachella, located in Indio, is a huge economic engine for its neighbors in the Coachella Valley. Ryan Faughdner of the LATimes did a deep dive into the economic implications for Coachella’s neighbor. One interviewee reported that “it literally pays half my mortgage in three weekends.” Here’s the breakdown by numbers as reported by Faughdner.

• $704 million -- amount of overall economic activity (spending by consumers and businesses) generated by Coachella and Stagecoach, according to projections by the Coachella Valley Economic Partnership and Greater Palm Springs Convention and Visitors Bureau

• $403 million -- estimated spending in the greater Coachella Valley area

• $106 million -- estimated amount of money injected into the economy of Indio alone

• $3.18 million -- tax revenue for Indio generated by ticket sales, accounting for 5% of the city’s general fund

• 99,000 -- per-day attendance during the six days of Coachella, according to Goldenvoice

• 70,000 -- per-day attendance for the three days of Stagecoach

• 9,000 -- estimated number of people expected to stay in Airbnb homes during the festival, double the amount from last year

Expenditures: Of course to put on a great festival, companies and individuals must pony up the big bucks to ensure things run smoothly. Let’s examine where festivals are burning through cash to put on a great event. Of course, there are not financial transparency reports available to the public, but here’s things that are likely on Coachella’s itemized budgets.

• Artist Fees:

  • Major portion of the budget; fees vary based on the popularity of the artists.

  • May include travel, accommodation, and rider requirements.

    • Headliners, like Frank Ocean or Blink182, can command hefty sums. For his headline set, Ocean was paid 4 million dollars per night. Because he backed out of his second headlining set, he left 4 million dollars on the table.

    • 2nd billing might generating $750,000.

    • Smaller artists get paid even less.

• Production Costs:

  • Stage construction, sound systems, lighting, and other technical elements.

  • Costs associated with permits, security, and emergency services.

• Promotion and Marketing:

  • Advertising, online and offline promotion, and marketing campaigns to attract attendees.

• Staff and Personnel:

  • Payment for event organizers, security, medical staff, volunteers, and other personnel.

• Infrastructure and Logistics:

  • Rental of festival grounds, tents, fencing, and other infrastructure.

  • Transportation and logistics for equipment, artists, and staff.

• Insurance and Permits:

  • Costs associated with obtaining necessary permits and event insurance.

• Technology and IT:

  • Investment in ticketing systems, cashless payment systems, and other technological infrastructure.

• Environmental Considerations:

  • Increasingly, festivals allocate funds for eco-friendly initiatives and waste management.

  • Coachella has shady areas as well as water fountains that protect attendees from the heat.

Miscellaneous:

• Contingency Fund:

  • Buffer for unexpected expenses or emergencies.

• Post-Event Activities:

  • Clean-up, restoration, and post-event evaluations