Festival Debt: Losing Your Shirt To Lose Your Mind

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Once a curio for the most passionate music fans, music festivals have proliferated exponentially over the last two decades, sprouting up in markets across the country and catering to listeners of all stripes.

As festivals have become an increasingly entrenched aspect of America’s live music landscape, many have embraced high-end experiences, decking out events with top-tier talent, luxury amenities and VIP options, and often driving up demand for regional lodging.

Naturally, some of those costs have trickled down to consumers. According to a report from CompareCards, a subsidiary of LendingTree, about one in four Americans who attended a festival in the last calendar year are currently paying off some sort of festival-related debt, from tickets to accommodations to travel. Among millennial Americans, the number goes up to one in three.

Why, exactly, might Americans, particularly millennials, be willing to incur debt to attend a festival?

“Now that you can tweet or put on Instagram that you’re at a festival … I think that drives people wanting to go to these festivals more,” says First Tennessee Bank senior vice president Bryan Bolton, who works on the financing side of the festival business as part of the bank’s Music Industry Group.

As competition has increased in the festival sphere, more and more events have incorporated non-musical elements to differentiate themselves from the pack, which has in turn led to higher expectations for consumers. And, it turns out, many consumers are willing to pay top dollar for these multi-faceted experiences that extend far beyond the artists who happen to be on stage.

“Given the saturated market, the events that tend to succeed are usually established lifestyle brands (e.g. Coachella) or festivals that create unique programming for consumers,” says UTA agent David Strunk, who specializes in music festivals. “To that end, festivals are expanding to incorporate comedy, culinary options or high-touch VIP programs. Ultimately, festivals that have found success are ones that offer a more memorable experience for fans.

“I think millennials are willing to spend more money for experiences in general,” he adds.

“Millennial,” meanwhile, isn’t a fixed term. Many still think of millennials as twentysomethings, or even college students, but according to a definition issued by Pew Research Center earlier this year, the generation encompasses those born between 1981 and 1996. In other words, many millennials are well into their thirties, and are developing more refined – and expensive – tastes to match.

“As festivalgoers get older, their tastes tend to evolve, which results in higher costs for better accommodations across the board,” Strunk says.

Couch-surfing or basic camping might be fine for the young, but as festival attendees age, they’re more likely to gravitate toward hotels or VIP camping, raising the total cost of a festival experience.

While festivals still rake in eye-popping amounts of money – earlier this month, San Francisco’s Outside Lands Music & Arts Festival raked in $29.6 million, a record-setting mark for the three-day event – they incur hefty expenses that are passed down to consumers. Festival insurance, particularly, has become standard, as weather has forced events including Governors Ball, Pilgrimage and Panorama to modify or cancel programming.

“With increase in claims comes increase in premiums,” Bolton says. “That’s just the old Insurance 101.”

The competitive sphere has also forced festivals to up their talent budgets.

“Promoters have to curate lineups from top to bottom, not just spend money on headliners and higher-profile acts,” Strunk says. “Additionally, promoters need to think bigger in their ancillary programming, which includes artist activations, culinary options, comedians, speaker sessions, etc.”

Bolton also observes that, because “you basically have to build a small city” for rural fests, bankrolling law enforcement, sanitation and more, newer festivals have increasingly gravitated toward urban centers to keep event costs down by using existing infrastructure.

Cities have welcomed festivals, because they boost local commerce; a festival attendee’s budget now might include fine dining, tourism and other activities outside of the festival itself.

Festivals have little control over auxiliary expenses, like airfare and hotel costs, but the events have worked to make ponying up for festival tickets themselves less painful for consumers. Many major festivals, including Coachella, Ultra Music Festival and Bonnaroo, offer payment plans to ease the financial burden for attendees.

“As a whole, these payment plans are fantastic and are becoming more readily available throughout the festival landscape,” Strunk says. “They provide an opportunity for fans to attend festivals who may not have been able to do so if they had to pay the full cost up front.”

The payment plans work in tandem with the increased efforts of many festivals to announce lineups and make tickets available earlier, sometimes even unveiling the following year’s headliners on the final night of the current year.

Of course, taking advantage of longer lead times and consumer-friendly payment options requires some basic financial planning, something millennials may not be known for.

“As far as basic financial sense, if you can buy a ticket for a festival a year from now and have no interest on it and you pay it off in the next 12 months, I really think that’s probably smarter than, on a whim, buying a ticket on your credit card and then taking 12 months after the fact, with the interest accruing and things like that,” Bolton says.

Still, he says, swaths of consumers have utilized these avenues: “It’s really helping festivals sell more tickets, by giving the fan that option.”

At the end of the day, however, a simple observation about human nature could best explain the finding that some are incurring debt to go to festivals: People aren’t rational, especially when it comes to music.

“We’re probably due at some point soon for a recession,” Bolton says. “Over history in times of recession in general, you would think that most things that are above and beyond what you spend on daily life would go down, but two things that actually hold steady or increase are alcohol and music. Just because, in times of a recession, everything is depressing, and alcohol and music lift spirits.”

Adds Bolton: “People want to have that fan experience, they want to get out of their everyday life and experience something different and unique.”