For the music world, outdoor festivals are a big business that is only getting bigger. And the world’s largest concert conglomerate is getting a bigger piece of it.
On Tuesday, Live Nation Entertainment announced that it had taken a controlling stake in the Bonnaroo Music and Arts Festival, an annual four-day event that draws some 80,000 fans to rural Tennessee to hear jam bands, dance D.J.s and marquee pop stars.
The deal is the latest in a wave of consolidation in the concert business, as corporate players like Live Nation, AEG Live and SFX Entertainment have all moved aggressively to swoop up major outdoor events, leaving a shrinking number of independent operators.
Last year, Live Nation paid an estimated $125 million for a 51 percent stake in C3 Presents, the company behind Lollapalooza in Chicago and Austin City Limits in Texas; in 2013, Live Nation bought a controlling stake in Insomniac, the promoter behind the dance-music festival Electric Daisy Carnival, for an unspecified sum. Altogether, Live Nation controls more than 60 festivals around the world.
“We continue to expand the industry’s most unparalleled and scalable festival platform, all while driving strong revenue and growth for Live Nation on a global basis,” Michael Rapino, Live Nation’s chief executive, said in a statement. “Bonnaroo is another crown jewel in this festival channel strategy.”
Neither the price of the transaction, nor the size of Live Nation’s stake in Bonnaroo, was disclosed.
Once a marginal part of the music scene in North America, festivals now play an increasingly central role in the business. The biggest events, like Coachella and Electric Daisy Carnival, have built powerful identities, luring huge crowds as well as sponsorship dollars. And for the promoters who not only sell tickets but also control a range of other sales, like food and V.I.P. packages that can include amenities such as special viewing areas and luxury tents, they can be highly profitable.
“Festivals are the one area of the business where there is consistent growth,” said Steve Martin, a longtime talent agent now with the APA agency in New York. “Profit margins on a good festival are vastly better than a regular night at Jones Beach.”
Bonnaroo, held on more than 700 acres of farmland about 60 miles south of Nashville, started in 2002 and has become one of the country’s premier festivals, with a hug-your-neighbors culture and an immersive environment that includes its own post office and newspaper. This year’s event, to be held June 11-14, will feature Billy Joel, Mumford & Sons, Kendrick Lamar, My Morning Jacket, Alabama Shakes and Deadmau5.
In 2012, the last year Bonnaroo’s results were reported to Pollstar, an industry trade publication, the festival had nearly $19 million in ticket sales over four days. By comparison, Coachella had $47 million over six days that year, and in 2014 reached $78.3 million.
In a joint announcement by Live Nation and Bonnaroo’s founding promoters, Superfly and AC Entertainment, the deal was described as a partnership that gives the founders a certain amount of autonomy. Among the other investors in Bonnaroo are Coran Capshaw, a powerful artist manager behind acts like the Dave Matthews Band.
“Through this partnership with Live Nation, we’re even more empowered to enhance the festival while preserving the integrity of the event that we’ve thoughtfully built over the past 14 years,” Rick Farman, a co-founder of Superfly, said in a statement.
For most big festival operators, rapid expansion has been critical to build a network for booking talent and making sponsorship deals. Much of that expansion has happened overseas, as promoters like C3 and Ultra, an independent dance festival company, have looked to South America, Australia and Europe.
So far the Bonnaroo promoters have a mixed record when it comes to expansion. Vegoose, presented by Superfly and AC Entertainment in Las Vegas, ran only from 2005 to 2007. But for Outside Lands, an annual event in San Francisco, Superfly has teamed with Another Planet, a California promoter, and others.
But among the details in the announcement that were noticed by concert industry observers was a note that Live Nation would also gain an unspecified share in Great Stage Park in Manchester, Tenn., where Bonnaroo takes place. Gary Bongiovanni, the editor of Pollstar, said this was a sign of possible growth.
“The festival market has continued to grow, and in Bonnaroo’s case it involves real estate as well,” Mr. Bongiovanni said. “We may eventually see more than one festival a year out there.”
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