ELITE ADVISOR BEST PRACTICES
When the Show Can’t Go On
How advisors can protect their celebrity clients from nonappearance and nonperformance risks
By Ted Tefaro
- Whether you’re working with a millionaire DJ or a star executive moving up in the ranks, an unforeseen accident or illness can cause significant financial hardship when your client is not properly protected.
- For insurance advisors working with high-income earners, current events can often open discussions about how to protect one’s estate.
- Adequate protection for events such as a mega concert tour is beyond the scope of traditional carriers. You need to find a partner with specialized expertise.
The name Avicii may not ring a bell for you, but if you have high-earning celebrity clients who suddenly can’t make their performance dates, you might be hearing a lot more than static if they’re not adequately insured.
Avicii, the world-famous entertainer who recently ranked No. 3 on the Forbes list of highest-paid DJs, recently canceled all his tour dates and upcoming gigs due to health concerns. Avicii, who earned about $28 million last year, was preparing for his headlining act at Ulta Music Festival in Miami when he was rushed to the hospital for severe abdominal pains, nausea and a fever. The 25-year-old DJ (born Tim Berglin) was suffering from a blocked gallbladder and a ruptured appendix. Surgeons removed both organs, and Avicii was ordered to rest.
A rep for Avicii stated that the DJ is still suffering from the lingering effects of his surgery. He had no choice but to step out of the Electronic Dance Music (EDM) spotlight and cancel his upcoming world tour. “I’m sorry to postpone the shows this month,” he wrote at the time. “I sincerely wish I didn’t have to, but unfortunately there’s no going around it.” The Swede had been suffering from abdominal pain, nausea and fever. In March 2013, he was treated for acute pancreatitis in Australia over six days. His fans may understand, but how do you think his cancellation went over with tour organizers and sponsors?
Avicii’s career was in full swing; he was performing at renowned nightclubs worldwide, headlining major EDM tours and producing a platinum album consisting of international No. 1 hits. Almost overnight, he transitioned from a club DJ to an award-winning global artist. Whether you’re working with a millionaire DJ or a star executive moving up in the ranks, an unforeseen accident or illness can cause significant financial hardship when your client is not properly protected. For insurance advisors working with high-income earners, current events can often open discussions about how to protect one’s estate.
Advisors catering to touring performers know that extremely large profits can be made by completing a mega tour. However, what happens if the show can’t go on because adverse weather flight delays or the headliner’s disability causes shows to be canceled? The potential gross of a tour is left vulnerable, and the headliner and his or her handlers could also be at risk. Adequate protection for a mega tour such as Avicii’s is beyond the scope of traditional carriers. Risks such as these require expertise and detailed knowledge.
Nonappearance protection for A-list entertainers
Concerts, sporting events, plays, trade shows, exhibitions, tours and art expos all generate large amounts of revenue and require a high capital input. The large profits that can be made by holding such events can be jeopardized by natural disasters, adverse weather, damage to the venue and travel delays for the show’s star.
Savvy advisors understand that unavoidable circumstances may come into play that will stop an event from occurring, thereby reducing the profits earned. Risks such as these require expertise and detailed knowledge in order to prepare and write “contingency coverage” to mitigate such losses.
- The organizer of a major summer concert series was concerned with the potential loss of revenue if one or more concerts could not take place. Our firm placed a nonappearance and event cancellation policy with a benefit of $10 million, an amount equal to projected gross revenue.
- A production company sought to protect its two largest jackpot prizes for a new game show it was producing, a game that involved equal parts mathematics-based risk and skill. Our firm designed a program to insure the jackpot prizes for the production company against excessive winnings.
The entertainment industry has a large variety of risk management exposures that require a special approach and expertise. Actors, actresses, musicians and entertainers cannot obtain adequate insurance coverage from traditional carriers. Additionally, film studios, record companies and event planners rely on the abilities of their top performers to generate revenue.
See this video our firm created if you’d like to learn more about protecting entertainers.