Synergy Global Entertainment Closes, Files For Bankruptcy

– John Reese
SGE

Trailblazing boutique concert and festival producer Synergy Global Entertainment has announced it is filing for bankruptcy and shuttering, owing more than $8.46 million to creditors including Paradigm, WME and Abel Management USA.

“It is with deep regret and after exhaustive efforts to save the business, SGE is now closed.” Reese told Pollstar in a statement. “After 15 years as a successful festival promoter, SGE was hit by a perfect storm of adverse market conditions and a massive drop in ticket sales and RPT (Revenue Per Ticket) since late April of this year compared to historical ticket sales metrics. As a result of these issues, the negative economic impact for SGE became untenable.”

“After having creative impact in over 45 Festival Brands and Tours in the company’s history, we most appreciate the years of partnerships with fans, artists, brands and vendors.”

The news of the bankruptcy, first reported by Billboard, follows a Pollstar story from July stating that SGE would be “reorganizing its operations and assessing strategic options,” after the cancellation of Mad Decent Block Party at Gillette Stadium in Foxborough, Mass.

That cancellation was one of many financial burdens which documents filed with United States Bankruptcy Court for the Central District of California Aug. 29 (made available by Amplify) detail. The documents show $1.71 million is owed to Front Gate Tickets for “Ticket refunds” debt incurred from between July 1 and Aug. 15. Groupon Inc is also owed a substantial amount for refund debt incurred during the same period.

Debts of $100,000 or more were owed to 1Fifty1 Inc. for event cleanup services ($141,860); 4 Wall Entertainment Inc. for equipment rental ($124,885); Abel Management USA for arbitration resulting in a settlement agreement ($350,000); American Express for business expenses ($512,063); Briar Rose Inc for an appearance fee ($100,000); Integro Insurance for insurance policy renewal ($112,071); Outer Springs LLC for advance concessionaire refunds ($445,000); Paradigm Talent Agency for artist fees ($180,000); Rat Sound Systems for equipment rental ($227,142); Rockstar Beverage Corporation for sponsorship payments for a canceled event (estimated $100,000); Sheppard Mullin Richter Hampton LLP for Legal Services ($646,829); United Site Services of CA Inc for equipment rental ($166,958); and William Morris Endeavor for artist fees ($162,000). The filing says SGE has about $1 million in assets.

According to the documents the May 6 arbitration settlement with Abel Management USA (represented by Theodora Oringher) stems from a dispute relating to the parties’ 2017 agreement to co-promote Lost Lands festival in Ohio, topped by EDM artist Excision. Combining the arbitration figure ($350,000) and legal fees to Sheppard Mullin Richter Hampton LLP ($646,829 for services rendered from March through July) and legal expenses on the year ran to nearly $1 million.

At the time SGE’s troubles were becoming public, multiple sources told Pollstar they were saddened, iterating the need for strong independent concert promoters and acknowledging the fragility of solvency as an independent.

Since forming 15 years ago, SGE became one of North America’s largest festival promoters, with more than 30 events scheduled in 2019 and a forecast of between 1.75 million and 2.25 million tickets sold for the year. The bankruptcy filing shows the company’s gross revenue in 2019 estimated at $16,953,995. The same figure for 2018 was estimated at $20,510,800 and $14,498,186 for 2017.