Club Cartel

Millionaire Mogul Robert F.X. Sillerman Buys into Several South Beach Clubs

Robert F.X. Sillerman the New York Millionare businessman and brilliant mind behind Live Nation, the largest concert promotion company in the US, has quietly being buying up nightclubs on South Beach. SFX Entertainment started their South Florida buying spree with the August, 2012 purchase of Life in Color, the company that produces The World’s Largest Paint Party. Before this, Sillerman announced his intentions to delve into the burgeoning EDM (electronic dance music) scene, by buying the top EDM leader in the United States Donnie Disco Presents — the promotion company of EDM guru Donnie Estopinal. Dayglow is the second in what is expected to be a series of acquisitions, with Sillerman telling the New York Times in June that he was in negotiations with up to 50 other companies, with tentative agreements in place with around 15 of them. It was also reported that his newly-formed organization would be laying out $1 billion over the course of the year to acquire these companies.

“The two great club markets are Miami and Las Vegas. Miami is much more authentic and international, and consequently it’s a breeding ground for future talent,” says Sillerman. “We’ve got great facilities, great venues, and terrific management.”

Life in Color cofounder and owner, Paul Campbell was very positive about his business future with SFX Entertainment and Sillerman, “The deal that they gave us is we run and operate our business, and we have resources to bring this thing bigger,” he added. “There is no downside to it, not from a business perspective, not from a fan perspective, not for EDM as a scene.

“Every single person is able to run their business, and that’s the first thing that [Sillerman] made clear.”

According to Talknightlife, an online forum that follows Miami nightlife rumors, Sillerman made an investment in the Opium Group, which owns Mansion, Set, Mokai, Cameo, and Opium. On January 11 Talknightlife posted a photo of a city notice that was posted outside Mokai announcing a public hearing to change the club’s name to SFX-Mokai Operating LLC. A duplicate notice appeared outside Set.

And the spree does not end there. According to the New Times, Jimmy Vargas, vice president of marketing for Miami Management Group who operates LIV, Story and Arkadia, acknowledged negotiations between MGM and Sillerman, although nothing official has been set.

“As of now, there is a deal in the works,” said MMG’s vice president of marketing, Jimmy Vargas. Though there’s “not much other information besides that.”

Just how the Opium deal was structured was revealed last week at the Planning Board meeting. Sillerman bought 72.76% of Mokai which will become “SFX-Mokai Operating LLC,” and 72.78% of “320 Lincoln Road” which will become “SFX-320 Lincoln Operating LLC. Both applications were approved. A representative of SFX Entertainment stated at the meeting that these two transactions are part of a much larger transaction.

Just who is Robert F.X. Sillerman? He has been proclaimed a man of vision who takes grandiose schemes to fruition, for the most part. Sillerman founded SFX Broadcasting in 1992, which purchased and operated more than 120 US radio stations. In 1997, he sold the company’s radio business for $2.1 billion and as part of the deal, kept control of the live entertainment business, which he spun off as SFX Entertainment. He then purchased and consolidated the operations of regional promoters across the country forming the world’s largest producer, promoter and presenter of live entertainment, Live Nation. Then in 2000, SFX was bought by Clear Channel Communications, Inc., in a merger valued at a whopping $4.4 billion.

In recent years, Sillerman set his sights on iconic properties. In 2005, he founded CKX, Inc., which acquired the rights to the name, image and likeness of Elvis Presley and the operations of Graceland. But CKX’s largest purchase to date was its acquisition of 19 Entertainment, the company that created and owned the television show American Idol and all its international versions. In May 2010, Sillerman stepped down as Chairman and CEO of CKX, but remains the largest shareholder of the company, which was recently renamed to Core Media Group.

Enter his newest business interest, electronic dance music and nightclubs. His thoughts on the business in general is focused more on the actual experience than the music.

“There’s a wave of interest in attending concerts that have less to do with the specific music and more to do with the experience attached to the music,” he told the New York Times. “Our thought is that the experience of attending an individual event can be perpetuated and made better by connecting the people, not just when they’re consuming the entertainment but when they’re away from it.”

But, back to the business of nightlife on South Beach. How is this going to change the local club experience for clubbers? The conglomeration of the South Beach nightlife industry has sparked off a fierce debate from those who work in or those that spend money in the clubs. Veteran club Bartender Brandon S, who did not want to reveal his employer for fear of reprisal, stated his opposition to the deal.

“It is hard enough for a club to manage the local scene, stay ahead of the game and bring in the people. Now you have all these clubs competing against each other and all the revenue going into the same pocket, But then you have different owners, with their own way of doing things. Sounds like a total cluster….. to me.”

Club server Marnie did not agree. “I think it’s a good thing. It can only make the business stronger and unify things. It should be easier for all of us who work in this industry.” she said. ” It is kind of like when a Walmart come into town and all those mom an pops merge into one big store with lots of choices and cheaper prices.”

Aramis Lorie partner at club Grand Central told the New Times “I think that for consumers, it’s not the greatest thing,” he said, “It eliminates the competitive nature of the business.”

Talknightlife’s boards was abuzz with comments including these.

“In a nutshell, Miami nightlife is going corporate.”

“So yep. That’s that. They got Mokai, Cameo, SET, Mansion. Confirmed, public records. ”

“Two things will happen for sure..1. Wages will go down in Miami night life. 2. Djs are in for a rude awaking, peak EDM booking fees in Miami have just ended…”

“Regardless of the current trends in dance music being corporatized, I’m actually shocked this hadn’t happened earlier. The Beach is a mall nowadays, so it was only a matter of time before the clubs themselves became part of that mall system.”

“If Opium Group and MMG are both under the SFX umbrella, does that mean no more bidding wars for talent? Can’t this new powerhouse simply set prices and tell agents to take it or leave it?”

Well, here we go…Personally, if Opium is leaving us, I’m saddened. Even if you guys thought they were douchebags, (personally, I liked them) at least they were our douchebags. What we do not need is more corporatization. Of course, if SFX does buy out Opium, what is most likely to happen is that they will come in, spend a gazillion dollars on renovation, fuck it up like every other out-of-towner who has tried to invade Miami, and then leave us with a bunch of empty clubs.”

“I just hope everyone who is selling out took my advice and insisted on cash up front and didn’t take stock in SFX as payment. Oh, BTW, Dade and I are going to buy up all the clubs for 20 cents on the dollar when SFX craters in about 30 months. ”

 

 

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