Live Nation Entertainment, Inc. - Quarter Report: 2021 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________

Form 10-Q

____________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-32601

____________________________________

LIVE NATION ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

____________________________________


Delaware						20-3247759
(State of Incorporation)						(I.R.S. Employer Identification No.)

9348 Civic Center Drive

Beverly Hills, CA 90210

(Address of principal executive offices, including zip code)

(310) 867-7000

(Registrant’s telephone number, including area code)

______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $.01 Par Value Per Share

LYV

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes x No

On October 28, 2021, there were 224,659,997 outstanding shares of the registrant’s common stock, $0.01 par value per share, including 3,211,191 shares of unvested restricted and deferred stock awards and excluding 408,024 shares held in treasury.

LIVE NATION ENTERTAINMENT, INC.

INDEX TO FORM 10-Q


		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Consolidated Balance Sheets (Unaudited) as of Sept ember 30, 2021 and December 31, 2020	2
	Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2021 and 2020	3
	Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the three and nine months ended September 30 , 2021 and 2020	4
	Consolidated Statements of Changes in Equity (Unaudited) for the three and nine months ended S eptember 30 , 2021 and 2020	6
	Consolidated Statements of Cash Flows (Unaudited) for the nine months ended Se ptember 30 , 2021 and 2020	9
	Notes to Consolidated Financial Statements (Unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3.	Defaults Upon Senior Securities	46
Item 5.	Other Information	46
Item 6.	Exhibits	47


GLOSSARY OF KEY TERMS
AOCI			Accumulated other comprehensive income (loss)
AOI			Adjusted operating income (loss)




FASB			Financial Accounting Standards Board
GAAP			United States Generally Accepted Accounting Principles

Live Nation			Live Nation Entertainment, Inc. and subsidiaries
LNE			Live Nation Entertainment, Inc.


SEC			United States Securities and Exchange Commission
Ticketmaster			Our ticketing business

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	September 30, 2021		December 31, 2020
	(in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	4,628,880	$	2,537,787
Accounts receivable, less allowance of $53,116 and $72,904, respectively	1,182,242		486,734
Prepaid expenses	691,086		577,130
Restricted cash	4,317		8,652
Other current assets	48,766		39,465
Total current assets	6,555,291		3,649,768
Property, plant and equipment, net	1,041,854		1,101,414
Operating lease assets	1,390,650		1,424,223
Intangible assets
Definite-lived intangible assets, net	732,276		855,600
Indefinite-lived intangible assets	369,016		369,058
Goodwill	2,109,719		2,129,203
Long-term advances	651,794		668,756
Other long-term assets	480,144		391,281
Total assets	$	13,330,744	$	10,589,303
LIABILITIES AND EQUITY
Current liabilities
Accounts payable, client accounts	$	1,499,131	$	744,096
Accounts payable	111,142		86,356
Accrued expenses	1,445,840		894,149
Deferred revenue	2,303,373		1,839,323
Current portion of long-term debt, net	46,214		53,415
Current portion of operating lease liabilities	111,090		107,147
Other current liabilities	41,314		72,083
Total current liabilities	5,558,104		3,796,569
Long-term debt, net	5,686,905		4,855,096
Long-term operating lease liabilities	1,448,270		1,445,674
Long-term deferred income taxes	174,083		170,759
Other long-term liabilities	242,811		182,508
Commitments and contingent liabilities
Redeemable noncontrolling interests	262,347		272,449
Stockholders' equity
Common stock	2,218		2,145
Additional paid-in capital	2,903,613		2,386,790
Accumulated deficit	(3,132,813)		(2,676,833)
Cost of shares held in treasury	(6,865)		(6,865)
Accumulated other comprehensive loss	(170,997)		(177,009)
Total Live Nation stockholders' equity	(404,844)		(471,772)
Noncontrolling interests	363,068		338,020
Total equity	(41,776)		(133,752)
Total liabilities and equity	$	13,330,744	$	10,589,303

See Notes to Consolidated Financial Statements

Table of Contents

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

	(in thousands except share and per share data)
Revenue	$	2,698,722	$	184,018	$	3,565,277	$	1,623,795
Operating expenses:
Direct operating expenses	1,969,912		130,749		2,346,998		1,199,126
Selling, general and administrative expenses	446,929		405,934		1,098,676		1,243,307
Depreciation and amortization	101,235		119,938		313,758		364,785
Loss (gain) on disposal of operating assets	(1,148)		208		(1,038)		897
Corporate expenses	44,649		31,630		100,195		80,858
Operating income (loss)	137,145		(504,441)		(293,312)		(1,265,178)
Interest expense	70,407		66,093		210,146		162,781

Interest income	(1,333)		(2,810)		(3,953)		(9,712)
Equity in losses (earnings) of nonconsolidated affiliates	(7,025)		2,615		(4,608)		6,656
Gain from sale of investments in nonconsolidated affiliates	(30,633)		(2,514)		(83,580)		(2,479)
Other expense (income), net	12,441		(8,463)		19,903		(9,043)
Income (loss) before income taxes	93,288		(559,362)		(431,220)		(1,413,381)
Income tax expense (benefit)	6,421		(16,904)		15,095		(49,417)
Net income (loss)	86,867		(542,458)		(446,315)		(1,363,964)
Net income (loss) attributable to noncontrolling interests	39,989		(13,556)		9,665		(82,761)
Net income (loss) attributable to common stockholders of Live Nation	$	46,878	$	(528,902)	$	(455,980)	$	(1,281,203)

Basic net income (loss) per common share available to common stockholders of Live Nation	$	0.20	$	(2.45)	$	(2.13)	$	(6.08)
Diluted net income (loss) per common share available to common stockholders of Live Nation	$	0.19	$	(2.45)	$	(2.13)	$	(6.08)

Weighted average common shares outstanding:
Basic	216,888,355		212,593,719		215,716,239		211,781,620
Diluted	223,800,400		212,593,719		215,716,239		211,781,620


Reconciliation to net income (loss) available to common stockholders of Live Nation:
Net income (loss) attributable to common stockholders of Live Nation	$	46,878	$	(528,902)	$	(455,980)	$	(1,281,203)
Accretion of redeemable noncontrolling interests	(4,245)		6,990		(4,210)		(5,955)
Basic and diluted net income (loss) available to common stockholders of Live Nation	$	42,633	$	(521,912)	$	(460,190)	$	(1,287,158)

See Notes to Consolidated Financial Statements

Table of Contents

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Net income (loss)	$	86,867	$	(542,458)	$	(446,315)	$	(1,363,964)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on cash flow hedge	852		(2,249)		10,160		(38,845)
Realized loss on cash flow hedge	1,991		1,854		5,853		3,207
Foreign currency translation adjustments	(12,008)		21,983		(10,001)		(40,866)
Comprehensive income (loss)	77,702		(520,870)		(440,303)		(1,440,468)
Comprehensive income (loss) attributable to noncontrolling interests	39,989		(13,556)		9,665		(82,761)
Comprehensive income (loss) attributable to common stockholders of Live Nation	$	37,713	$	(507,314)	$	(449,968)	$	(1,357,707)

See Notes to Consolidated Financial Statements

Table of Contents

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)


	Live Nation Stockholders’ Equity
	Common Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Cost of Shares Held in Treasury		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	(in thousands, except share data)															(in thousands)
Balances at June 30, 2021	216,388,477	$	2,164	$	2,433,462	$	(3,179,691)	$	(6,865)	$	(161,832)	$	333,159	$	(579,603)	$	250,767

Non-cash and stock-based compensation	—	—		27,318		—		—		—		—		27,318		—
Common stock issued under stock plans, net of shares withheld for employee taxes	151,280	1		(4,523)		—		—		—		—		(4,522)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	70,011	1		2,238		—		—		—		—		2,239		—
Sale of common shares	5,239,259	52		449,363		—		—		—		—		449,415		—
Acquisitions	—	—		—		—		—		—		7,117		7,117		230



Redeemable noncontrolling interests fair value adjustments	—	—		(4,245)		—		—		—		—		(4,245)		4,245
Contributions received	—	—		—		—		—		—		1,329		1,329		—
Cash distributions	—	—		—		—		—		—		(8,341)		(8,341)		(2,749)
Other	—	—		—		—		—		—		(331)		(331)		—
Comprehensive income (loss):
Net income	—	—		—		46,878		—		—		30,135		77,013		9,854
Unrealized gain on cash flow hedge	—	—		—		—		—		852		—		852		—
Realized loss on cash flow hedge	—	—		—		—		—		1,991		—		1,991		—
Foreign currency translation adjustments	—	—		—		—		—		(12,008)		—		(12,008)		—
Balances at September 30, 2021	221,849,027	$	2,218	$	2,903,613	$	(3,132,813)	$	(6,865)	$	(170,997)	$	363,068	$	(41,776)	$	262,347

See Notes to Consolidated Financial Statements

Table of Contents


	Live Nation Stockholders’ Equity
	Common Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Cost of Shares Held in Treasury		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	(in thousands, except share data)															(in thousands)
Balances at December 31, 2020	214,466,988	$	2,145	$	2,386,790	$	(2,676,833)	$	(6,865)	$	(177,009)	$	338,020	$	(133,752)	$	272,449

Non-cash and stock-based compensation	—	—		80,165		—		—		—		—		80,165		—
Common stock issued under stock plans, net of shares withheld for employee taxes	812,829	8		(24,593)		—		—		—		—		(24,585)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	1,329,951	13		12,162		—		—		—		—		12,175		—
Sale of common shares	5,239,259	52		449,363		—		—		—		—		449,415		—
Acquisitions	—	—		—		—		—		—		7,117		7,117		828

Purchases of noncontrolling interests	—	—		3,775		—		—		—		(2,577)		1,198		(1,698)
Sales of noncontrolling interests	—	—		161		—		—		—		8,868		9,029		—
Redeemable noncontrolling interests fair value adjustments	—	—		(4,210)		—		—		—		—		(4,210)		4,210
Contributions received	—	—		—		—		—		—		16,522		16,522		95
Cash distributions	—	—		—		—		—		—		(20,852)		(20,852)		(4,780)
Other	—	—				—		—		—		(2,452)		(2,452)		—
Comprehensive income (loss):
Net income (loss)	—	—		—		(455,980)		—		—		18,422		(437,558)		(8,757)
Unrealized gain on cash flow hedge	—	—		—		—		—		10,160		—		10,160		—
Realized loss on cash flow hedge	—	—		—		—		—		5,853		—		5,853		—
Foreign currency translation adjustments	—	—		—		—		—		(10,001)		—		(10,001)		—
Balances at September 30, 2021	221,849,027	$	2,218	$	2,903,613	$	(3,132,813)	$	(6,865)	$	(170,997)	$	363,068	$	(41,776)	$	262,347

See Notes to Consolidated Financial Statements

Table of Contents


	Live Nation Stockholders’ Equity
	Common Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Cost of Shares Held in Treasury		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	(in thousands, except share data)															(in thousands)
Balances at June 30, 2020	212,523,147	$	2,125	$	2,295,069	$	(1,704,599)	$	(6,865)	$	(243,805)	$	341,605	$	683,530	$	334,228
Non-cash and stock-based compensation	—	—		56,696		—		—		—		—		56,696		—
Common stock issued under stock plans, net of shares withheld for employee taxes	979,124	10		(25,489)		—		—		—		—		(25,479)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	320,731	3		6,683		—		—		—		—		6,686		—


Acquisitions	—	—		—		—		—		—		10,480		10,480		7,349
Divestitures	—	—		—		—		—		—		(1)		(1)		—
Purchases of noncontrolling interests	—	—		20,882		—		—		—		(426)		20,456		(33,406)
Redeemable noncontrolling interests fair value adjustments	—	—		6,990		—		—		—		—		6,990		(6,990)
Contributions received	—	—		—		—		—		—		1,101		1,101		446
Cash distributions	—	—		—		—		—		—		(3,242)		(3,242)		(1,916)
Other	—	—		184		—		—		—		(2,247)		(2,063)		16
Comprehensive loss:
Net loss	—	—		—		(528,902)		—		—		(816)		(529,718)		(12,740)
Unrealized loss on cash flow hedge	—	—		—		—		—		(2,249)		—		(2,249)		—
Realized loss on cash flow hedge	—	—		—		—		—		1,854		—		1,854		—
Foreign currency translation adjustments	—	—		—		—		—		21,983		—		21,983		—
Balances at September 30, 2020	213,823,002	$	2,138	$	2,361,015	$	(2,233,501)	$	(6,865)	$	(222,217)	$	346,454	$	247,024	$	286,987

See Notes to Consolidated Financial Statements

Table of Contents


	Live Nation Stockholders’ Equity
	Common Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Cost of Shares Held in Treasury		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	(in thousands, except share data)															(in thousands)
Balances at December 31, 2019	211,262,062	$	2,113	$	2,245,619	$	(949,334)	$	(6,865)	$	(145,713)	$	318,134	$	1,463,954	$	449,498
Cumulative effect of change in accounting principle	—	—		—		(2,964)		—		—		—		(2,964)		—
Non-cash and stock-based compensation	—	—		106,975		—		—		—		—		106,975		—
Common stock issued under stock plans, net of shares withheld for employee taxes	1,320,373	13		(33,154)		—		—		—		—		(33,141)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	1,240,567	12		8,402		—		—		—		—		8,414		—
Fair value of convertible debt conversion feature, net of issuance cost	—	—		33,347		—		—		—		—		33,347		—

Acquisitions	—	—		—		—		—		—		45,802		45,802		19,248
Divestitures	—	—		—		—		—		—		592		592		—
Purchases of noncontrolling interests	—	—		13,943		—		—		—		(1,458)		12,485		(129,596)
Sales of noncontrolling interests	—	—		(8,161)		—		—		—		39,161		31,000		—
Redeemable noncontrolling interests fair value adjustments	—	—		(5,955)		—		—		—		—		(5,955)		5,955
Contributions received	—	—		—		—		—		—		2,568		2,568		446
Cash distributions	—	—		—		—		—		—		(15,925)		(15,925)		(15,548)
Other	—	—		(1)		—		—		—		(2,692)		(2,693)		17
Comprehensive loss:
Net loss	—	—		—		(1,281,203)		—		—		(39,728)		(1,320,931)		(43,033)
Unrealized loss on cash flow hedge	—	—		—		—		—		(38,845)		—		(38,845)		—
Realized loss on cash flow hedge	—	—		—		—		—		3,207		—		3,207
Foreign currency translation adjustments	—	—		—		—		—		(40,866)		—		(40,866)		—
Balances at September 30, 2020	213,823,002	$	2,138	$	2,361,015	$	(2,233,501)	$	(6,865)	$	(222,217)	$	346,454	$	247,024	$	286,987

See Notes to Consolidated Financial Statements

Table of Contents

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30,
	2021		2020
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(446,315)	$	(1,363,964)
Reconciling items:
Depreciation	167,170		184,391
Amortization	146,588		180,394
Amortization of non-recoupable ticketing contract advances	49,214		38,833
Deferred income tax expense (benefit)	4,365		(22,615)
Amortization of debt issuance costs and discounts	27,916		24,201

Non-cash compensation expense	80,165		106,965
Unrealized changes in fair value of contingent consideration	(6,998)		(25,745)

Equity in losses of nonconsolidated affiliates, net of distributions	6,396		8,266
Provision for uncollectible accounts receivable	(14,006)		48,413
Gain on sale of investments in nonconsolidated affiliates	(83,580)		(2,479)
Other, net	2,015		(12,681)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (increase) in accounts receivable	(690,105)		406,202
Decrease (increase) in prepaid expenses and other assets	(92,635)		1,793

Increase (decrease) in accounts payable, accrued expenses and other liabilities	1,323,448		(1,213,409)
Increase in deferred revenue	551,059		684,532
Net cash provided by (used in) operating activities	1,024,697		(956,903)
CASH FLOWS FROM INVESTING ACTIVITIES
Advances of notes receivable	(24,476)		(12,232)
Collections of notes receivable	16,500		13,838

Investments made in nonconsolidated affiliates	(55,246)		(9,728)
Purchases of property, plant and equipment	(103,914)		(187,036)

Cash paid for acquisitions, net of cash acquired	(19,594)		(37,283)

Proceeds from sale of investments in nonconsolidated affiliates	80,593		3,753
Other, net	(5,622)		4,156
Net cash used in investing activities	(111,759)		(224,532)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs	904,164		1,608,462
Payments on long-term debt	(93,168)		(24,202)
Contributions from noncontrolling interests	15,985		2,568
Distributions to noncontrolling interests	(25,632)		(31,473)
Purchases and sales of noncontrolling interests, net	(3,273)		(106,971)
Proceeds from sale of common stock, net of issuance costs	449,415		—
Proceeds from exercise of stock options	30,322		18,092
Taxes paid for net share settlement of equity awards	(42,731)		(42,818)
Payments for deferred and contingent consideration	(12,845)		(62,035)
Other, net	84		13
Net cash provided by financing activities	1,222,321		1,361,636
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(48,501)		(20,952)
Net increase in cash, cash equivalents, and restricted cash	2,086,758		159,249
Cash, cash equivalents and restricted cash at beginning of period	2,546,439		2,474,242
Cash, cash equivalents and restricted cash at end of period	$	4,633,197	$	2,633,491

See Notes to Consolidated Financial Statements

Table of Contents

LIVE NATION ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION AND OTHER INFORMATION

Preparation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, they include all normal and recurring accruals and adjustments necessary to present fairly the results of the interim periods shown. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021.

Seasonality

Our Concerts and Sponsorship & Advertising segments typically experience higher revenue and operating income in the second and third quarters as our outdoor venues and festivals are primarily used in or occur from May through October. In addition, the timing of when tickets are sold and the tours of top-grossing acts can impact comparability of quarterly results year over year, although annual results may not be impacted. Our Ticketing segment revenue is impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by our clients.

Cash flows from our Concerts segment typically have a slightly different seasonality as payments are often made for a portion of artist performance fees and production costs for tours in advance of the date the related event tickets go on sale. These artist fees and production costs are expensed when the event occurs. Once tickets for an event go on sale, we generally begin to receive payments from ticket sales at our owned or operated venues and festivals and in some cases from third-party venues in advance of when the event occurs. We record these ticket sales as revenue when the event occurs. Our seasonality also results in higher balances in cash and cash equivalents, accounts receivable, prepaid expenses, accrued expenses and deferred revenue at different times in the year.

Due to the unprecedented global stoppage of our concert and other events beginning in mid-March 2020 resulting from the global COVID-19 pandemic, we did not experience our typical seasonality trends in 2020 and do not expect 2021 will follow our typical seasonality trends even with the resumption of events late in the second quarter of 2021.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. Our cash and cash equivalents include domestic and foreign bank accounts as well as interest-bearing accounts consisting primarily of bank deposits and money market accounts managed by third-party financial institutions. These balances are stated at cost, which approximates fair value.

Included in the September 30, 2021 and December 31, 2020 cash and cash equivalents balance is $1.3 billion and $673.5 million, respectively, of cash received that includes the face value of tickets sold on behalf of ticketing clients and their share of service charges (“client cash”), which amounts are to be remitted to these clients. We generally do not utilize client cash for our own financing or investing activities as the amounts are payable to our clients on a regular basis. These amounts are included in accounts payable, client accounts.

Restricted cash primarily consists of cash held in escrow accounts to fund capital improvements of certain leased or operated venues. The cash is held in these accounts pursuant to the related lease or operating agreement.

Nonconsolidated Affiliates

In general, nonconsolidated investments in which we own more than 20% of the common stock or otherwise exercise significant influence over an affiliate are accounted for under the equity method. We review the value of equity method investments and record impairment charges in the statements of operations for any decline in value that is determined to be other-than-temporary. If we obtain control of a nonconsolidated affiliate through the purchase of additional ownership interest or changes in the governing agreements, we remeasure our investment to fair value first and then apply the accounting guidance for business combinations. Any gain or loss resulting from the remeasurement to fair value is recorded as a component of other expense (income), net in the statements of operations. At September 30, 2021 and December 31, 2020, we had investments in nonconsolidated affiliates of $246.3 million and $170.5 million, respectively, included in other long-term assets on our consolidated balance sheets.

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Income Taxes

Each reporting period, we evaluate the realizability of our deferred tax assets in each tax jurisdiction. As of September 30, 2021, we continued to maintain a full valuation allowance against our net deferred tax assets in certain jurisdictions due to cumulative pre-tax losses. As a result of the valuation allowances, no tax benefits have been recognized for losses incurred, if any, in those tax jurisdictions for the first nine months of 2021 and 2020.

Accounting Pronouncements - Not Yet Adopted

In August 2020, the FASB issued guidance that simplifies the accounting for convertible instruments and its application of the derivatives scope exception for contracts in an entity’s own equity. The new guidance reduces the number of accounting models that require separating embedded conversion features from convertible instruments. As a result, only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately. For contracts in an entity’s own equity, the new guidance eliminates some of the current requirements for equity classification. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. The guidance is effective for annual periods beginning after December 15, 2021 and interim periods within that year. The guidance should be applied using either a modified retrospective method or a full retrospective method. We will adopt this guidance on January 1, 2022, and are currently assessing which implementation method we will apply and the impact that adoption will have on our financial position and results of operations.

NOTE 2—IMPACT OF THE GLOBAL COVID-19 PANDEMIC

The unprecedented and rapid spread of COVID-19 and the related government restrictions and social distancing measures implemented throughout the world significantly impacted our business through the first half of this year. Late in the second quarter, however, we began to see the positive impacts of successful vaccination rollouts in many of our key markets, mainly the United States and United Kingdom, with social distancing restrictions easing and live events resuming. In the third quarter, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in the United States and United Kingdom. The restart of our operations has been executed with careful consideration of the safety and health of our fans, artists and employees through a mix of masking, testing and vaccination protocols at our events, venues and offices around the world.

Operating Results

While the first half of the year saw a material impact from the global COVID-19 pandemic, in the third quarter, ticket sales grew, new sponsor partners were signed and shows began to resume, primarily in the United States and United Kingdom. Our overall revenue for the quarter increased by $2.5 billion to $2.7 billion and for the nine months increased by $1.9 billion to $3.6 billion as compared to the same period of the prior year. The revenue increase during the quarter was across all of our segments as a result of more events going on sale and occurring globally, along with lower refunds, during the third quarter of 2021 as compared to the same period of the prior year. The increase in revenue during the first nine months of 2021 was primarily in our Concerts and Ticketing segments largely due to the resumption of shows and festivals late in the second quarter of 2021 and continuing into the third quarter of 2021 primarily in the United States and United Kingdom.

The event-related deferred revenue for our Concerts segment, which is reported as part of deferred revenue on our consolidated balance sheets, includes the face value and Concerts’ share of service charges for all tickets sold by September 30, 2021 for shows expected to occur in the next 12 months. Any refunds committed to for shows cancelled or rescheduled during the first nine months of 2021 have either been returned to fans or are reflected in accrued expenses on the consolidated balance sheets. In addition, we have recorded an estimate of $20 million in Concerts for refunds that may occur in the future for shows we believe may be cancelled or rescheduled based on the data available on refunds resulting from the global shutdown of our live events. This estimate only impacts our financial position as a reclassification from deferred revenue to accrued expenses. We expect that the majority of our shows postponed due to the pandemic will be rescheduled. Event-related deferred revenue for tickets sold for shows expected to occur after September 30, 2022 totaled $100.9 million and is reflected in other long-term liabilities on our consolidated balance sheets.

The revenue recognized in our Ticketing segment during the first nine months of 2021 includes our share of ticket service charges for tickets sold during the period for third-party clients and for shows that occurred in the period for our Concerts segment where our promoters control the ticketing. Revenue has been reduced for any shows that were cancelled and for refunds requested on rescheduled shows up to the time of the filing of these consolidated financial statements, and funds have either been returned to the customer or are reflected in accrued expenses on the consolidated balance sheets. Our ticketing clients determine if shows will be rescheduled or cancelled and what the refund policy will be for those shows. We have not recorded an estimate for refunds that may occur in the future since our clients, not Ticketmaster, determine when shows are

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cancelled or rescheduled and we have a limited amount of historical data of refunds resulting from a global shutdown of live events on which to reliably determine an estimate.

For events that are cancelled, our standard policy is to refund the fans within 30 days, subject to regulations in various markets and in some cases at the discretion of our venue or event organizer clients. Our ticket refund policies for rescheduled shows vary by ticketing client and country. In multiple international markets, including Germany, Italy and Belgium, governmental regulations which allow for the issuance of vouchers in place of cash refunds for rescheduled shows, and in some cases for cancelled shows, have been put in place in response to the global COVID-19 pandemic. The volume and pace of cash refunds has had and may continue to have a material negative effect on our liquidity and capital resources.

The restart of our operations is now well underway in the United States and United Kingdom and we expect the same to happen in other parts of the world as vaccination efforts gain momentum in mainland Europe, Asia-Pacific and Latin America. The reduction in live events due to the pandemic has had a negative impact on our operating results for the first nine months of 2021 and we expect certain markets to continue to be impacted in the fourth quarter as there is still uncertainty on the exact timing and pace of the recovery in certain markets where vaccination efforts are still underway.

NOTE 3—LONG-LIVED ASSETS

We reviewed our long-lived assets for potential impairment indicators due to the suspension of our live events resulting from the global COVID-19 pandemic. Our venues are either owned or we have long-term operating rights under lease or management agreements typically with terms ranging from 5 to 25 years at inception. Many of our definite-lived intangible assets are based on revenue-generating contracts and client or vendor relationships associated with live events and have useful lives, established at the time of acquisition, typically ranging from 3 to 10 years. Our more significant investments in nonconsolidated affiliates are in the concert event promotion, venue operation or ticketing businesses, and these businesses have been experiencing similar impacts to their operations, in line with what we are experiencing as a result of the pandemic. Based on our assessments, we have recorded impairment charges on certain of our definite-lived intangible assets, which are discussed below.

Late in the second quarter we began to see the positive impacts of successful vaccination rollouts in many of our key markets, mainly the United States and United Kingdom, with social distancing restrictions easing and live events resuming. In the third quarter, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in both the United States and United Kingdom. We expect the same to happen in other parts of the world as vaccination efforts gain momentum in mainland Europe, Asia-Pacific and Latin America. The reduction in live events due to the pandemic has had a negative impact on our operating results for the first nine months of 2021 and we expect certain markets to continue to be impacted in the fourth quarter as there is still uncertainty on the exact timing and pace of the recovery in certain markets where vaccination efforts are still underway. As our larger venues have reopened and tours have resumed in the United States and United Kingdom and we expect other markets to reopen in the last quarter of 2021 and throughout 2022, we believe the underlying business supporting all of our long-lived assets will begin generating operating income once again.

Property, Plant and Equipment, Net

Property, plant and equipment, net, consisted of the following:


	September 30, 2021		December 31, 2020
	(in thousands)
Land, buildings and improvements	$	1,292,025	$	1,239,696
Computer equipment and capitalized software	901,725		887,637
Furniture and other equipment	423,517		424,363
Construction in progress	149,184		151,830
	2,766,451		2,703,526
Less: accumulated depreciation	1,724,597		1,602,112
	$	1,041,854	$	1,101,414

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Definite-lived Intangible Assets

The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the nine months ended September 30, 2021:


	Client / vendor relationships		Revenue- generating contracts		Venue management and leaseholds		Trademarks and naming rights		Technology		Other (1)		Total
	(in thousands)
Balance as of December 31, 2020:
Gross carrying amount	$	496,074	$	578,664	$	147,956	$	150,344	$	72,283	$	17,413	$	1,462,734
Accumulated amortization	(146,397)		(277,710)		(51,924)		(73,604)		(45,799)		(11,700)		(607,134)
Net	349,677		300,954		96,032		76,740		26,484		5,713		855,600
Gross carrying amount:
Acquisitions—current year	15,308		—		—		—		10,407		2,650		28,365
Acquisitions—prior year	5,558		—		—		—		—		—		5,558

Foreign exchange	(4,658)		(10,249)		(1,716)		(1,448)		158		2		(17,911)
Other (2)	(31,454)		(35,846)		(19,954)		(8,790)		(29,272)		(9,335)		(134,651)
Net change	(15,246)		(46,095)		(21,670)		(10,238)		(18,707)		(6,683)		(118,639)
Accumulated amortization:
Amortization	(55,420)		(49,813)		(11,444)		(11,106)		(15,357)		(3,448)		(146,588)

Foreign exchange	2,396		4,427		556		521		(189)		(4)		7,707
Other (2)	31,454		34,709		19,969		8,632		29,936		9,496		134,196
Net change	(21,570)		(10,677)		9,081		(1,953)		14,390		6,044		(4,685)
Balance as of September 30, 2021:
Gross carrying amount	480,828		532,569		126,286		140,106		53,576		10,730		1,344,095
Accumulated amortization	(167,967)		(288,387)		(42,843)		(75,557)		(31,409)		(5,656)		(611,819)
Net	$	312,861	$	244,182	$	83,443	$	64,549	$	22,167	$	5,074	$	732,276

(1) Other primarily includes intangible assets for non-compete agreements.

(2) Other primarily includes netdowns of fully amortized or impaired assets.

Included in the current year acquisitions amounts above are definite-lived intangible assets primarily associated with the acquisition of an artist management business in the United States and certain purchased software licenses.

The 2021 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:


			Weighted- Average Life (years)

Client/vendor relationships			5

Non-compete agreements			2



All categories			4

The current year acquisitions amount above for technology intangibles includes software licenses acquired in the normal course of business.

We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a significant reduction in operating cash flow or a change in the manner in which the asset is intended to be used, which may indicate that the carrying amount of the asset may not be recoverable. During the nine months ended September 30, 2021 and 2020, we reviewed definite-lived intangible assets that management determined had an indicator that remaining future operating cash flows over the acquisition-date estimated useful life may not support their carrying value, as a result of the expected impacts from the global COVID-19 pandemic, and it was determined that certain of those assets were impaired since the estimated undiscounted operating cash flows associated with those assets were less than their carrying value.

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For the nine months ended September 30, 2021, there were no significant impairment charges. For the nine months ended September 30, 2020, we recorded impairment charges related to definite-lived intangible assets of $15.3 million as a component of depreciation and amortization primarily related to intangible assets for revenue-generating contracts and client/vendor relationships in the Concerts segment. See Note 6—Fair Value Measurements for further discussion of the inputs used to determine the fair value.

Amortization of definite-lived intangible assets for the three months ended September 30, 2021 and 2020 was $46.1 million and $58.4 million, respectively, and for the nine months ended September 30, 2021 and 2020 was $146.6 million and $180.4 million, respectively. As acquisitions and dispositions occur in the future and the valuations of intangible assets for recent acquisitions are completed, amortization will vary.

Goodwill

We review goodwill for impairment annually, as of October 1. As such, we completed our annual review in the fourth quarter of 2020 and, as reported in our December 31, 2020 Form 10-K, no impairments were recorded as the fair value of each reporting unit was determined to be in excess of its carrying value for all reporting units. There were no indicators of impairment during the interim periods of 2021.

The following table presents the changes in the carrying amount of goodwill in each of our reportable segments for the nine months ended September 30, 2021:


	Concerts		Ticketing		Sponsorship & Advertising		Total
	(in thousands)
Balance as of December 31, 2020:
Goodwill	$	1,318,273	$	782,559	$	463,734	$	2,564,566
Accumulated impairment losses	(435,363)		—		—		(435,363)
Net	882,910		782,559		463,734		2,129,203

Acquisitions—current year	5,947		—		—		5,947
Acquisitions—prior year	(1,817)		(3,888)		419		(5,286)

Dispositions	(150)		—		—		(150)
Foreign exchange	(9,541)		(4,791)		(5,663)		(19,995)

Balance as of September 30, 2021:
Goodwill	1,312,712		773,880		458,490		2,545,082
Accumulated impairment losses	(435,363)		—		—		(435,363)
Net	$	877,349	$	773,880	$	458,490	$	2,109,719

We are in various stages of finalizing our acquisition accounting for recent acquisitions, which may include the use of external valuation consultants, and the completion of this accounting could result in a change to the associated purchase price allocations, including goodwill and our allocation between segments.

Investments in Nonconsolidated Affiliates

During the nine months ended September 30, 2021, we sold certain investments in nonconsolidated affiliates for $101.1 million in cash and noncash consideration resulting in a gain on sale of investments in nonconsolidated affiliates of $83.6 million.

During the nine months ended September 30, 2021, we entered into certain agreements whereby we received equity in the counterparty to those agreements primarily in exchange for providing sponsorship and marketing programs and support. We recognized $25.0 million of noncash additions to investments in nonconsolidated affiliates which are included in other long-term assets on our consolidated balance sheets associated with these agreements.

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NOTE 4—LEASES

The significant components of operating lease expense are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Operating lease cost	$	56,662	$	59,923	$	168,538	$	180,478
Variable and short-term lease cost	44,552		10,545		57,548		43,275
Sublease income	(1,346)		(3,682)		(4,864)		(11,944)
Net lease cost	$	99,868	$	66,786	$	221,222	$	211,809

Many of our leases contain contingent rent obligations based on revenue, tickets sold or other variables, while others include periodic adjustments to rent obligations based on the prevailing inflationary index or market rental rates. Contingent rent obligations are not included in the initial measurement of the lease asset or liability and are recorded as rent expense in the period that the contingency is resolved.

Supplemental cash flow information for our operating leases is as follows:


	Nine Months Ended September 30,
	2021		2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	142,243	$	154,471
Lease assets obtained in exchange for lease obligations, net of terminations	$	79,703	$	149,817

Future maturities of our operating lease liabilities at September 30, 2021 are as follows:


	(in thousands)
October 1 - December 31, 2021	$	39,264
2022	207,883
2023	210,108
2024	193,320
2025	181,720
Thereafter	1,543,848
Total lease payments	2,376,143
Less: Interest	816,783
Present value of lease liabilities	$	1,559,360

The weighted average remaining lease term and weighted average discount rate for our operating leases are as follows:


	September 30, 2021		December 31, 2020
Weighted average remaining lease term (in years)	13.5		13.9
Weighted average discount rate	6.36	%	6.31	%

As of September 30, 2021, we have additional operating leases that have not yet commenced, with total lease payments of $266.7 million. These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from October 2021 to June 2030, with lease terms ranging from 1 to 20 years.

In response to the impacts we are experiencing from the global COVID-19 pandemic, we have amended certain of our lease agreements and are continuing negotiations with certain of our landlords for deferral or abatement of fixed rent payments. These lease concessions are not expected to substantially increase our obligations under the respective lease agreements. Therefore, we have elected to account for these lease concessions as though enforceable rights and obligations for those concessions existed in our lease agreements as clarified by the FASB rather than applying the lease modification guidance.

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NOTE 5—LONG-TERM DEBT

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028. A portion of the proceeds were used to pay fees of $7.7 million and repay $75.0 million aggregate principal amount of our senior secured term loan B facility, leaving approximately $417.3 million for general corporate purposes, including acquisitions and organic investment opportunities.

In September 2021, we elected to draw down the $400 million term loan A under the amended senior secured credit facility prior to expiration of the drawdown period on October 17, 2021. We intend to use the proceeds from the drawdown for general corporate purposes.

Long-term debt, which includes finance leases, consisted of the following:


		September 30, 2021		December 31, 2020
		(in thousands)
Senior Secured Credit Facility:

	Term loan A	$	397,500	$	—
	Term loan B	856,570		938,125

6.5% Senior Secured Notes due 2027		1,200,000		1,200,000
3.75% Senior Secured Notes due 2028		500,000		—
4.75% Senior Notes due 2027		950,000		950,000
4.875% Senior Notes due 2024		575,000		575,000
5.625% Senior Notes due 2026		300,000		300,000
2.5% Convertible Senior Notes due 2023		550,000		550,000
2.0% Convertible Senior Notes due 2025		400,000		400,000
Other long-term debt		112,930		125,226
Total principal amount		5,842,000		5,038,351
Less unamortized discounts and debt issuance costs		(108,881)		(129,840)
Total long-term debt, net of unamortized discounts and debt issuance costs		5,733,119		4,908,511
Less: current portion		46,214		53,415
Total long-term debt, net		$	5,686,905	$	4,855,096

Future maturities of long-term debt at September 30, 2021 are as follows:


	(in thousands)
October 1, 2021 - December 31, 2021	$	21,678
2022	589,658
2023	66,375
2024	1,351,506
2025	37,782
Thereafter	3,775,001
Total	$	5,842,000

All long-term debt without a stated maturity date is considered current and is reflected as maturing in the earliest period shown in the table above. See Note 6—Fair Value Measurements for discussion of the fair value measurement of our long-term debt.

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3.75% Senior Secured Notes due 2028

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028. Interest on the notes is payable semi-annually in cash in arrears on January 15 and July 15 of each year and began on July 15, 2021, and the notes will mature on January 15, 2028. We may redeem some or all of the notes, at any time prior to January 15, 2024, at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium. We may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to January 15, 2024, at a price equal to 103.75% of the aggregate principal amount, plus accrued and unpaid interest thereon to the date of redemption. In addition, on or after January 15, 2024 we may redeem some or all of the notes at any time at redemption prices specified in the notes indenture, plus any accrued and unpaid interest to the date of redemption.

We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control. The notes are secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries.

NOTE 6—FAIR VALUE MEASUREMENTS

Recurring

The following table shows the fair value of our significant financial assets that are required to be measured at fair value on a recurring basis, which are classified on the consolidated balance sheets as cash and cash equivalents.


	Estimated Fair Value
	September 30, 2021						December 31, 2020
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(in thousands)
Assets:
Cash equivalents	$	776,553	$	—	$	776,553	$	282,696	$	—	$	282,696

Our outstanding debt held by third-party financial institutions is carried at cost, adjusted for any discounts or debt issuance costs. Our debt is not publicly traded and the carrying amounts typically approximate fair value for debt that accrues interest at a variable rate, which are considered to be Level 2 inputs as defined in the FASB guidance.

The following table presents the estimated fair values of our senior secured notes, senior notes and convertible senior notes:


	Estimated Fair Value at
	September 30, 2021		December 31, 2020
	Level 2
	(in thousands)
6.5% Senior Secured Notes due 2027	$	1,322,100	$	1,340,688
3.75% Senior Secured Notes due 2028	$	497,860	$	—
4.75% Senior Notes due 2027	$	966,986	$	970,872
4.875% Senior Notes due 2024	$	581,929	$	581,480
5.625% Senior Notes due 2026	$	312,237	$	307,785
2.5% Convertible Senior Notes due 2023	$	796,329	$	720,764
2.0% Convertible Senior Notes due 2025	$	459,180	$	425,172

The estimated fair value of our third-party fixed-rate debt is based on quoted market prices in active markets for the same or similar debt, which are considered to be Level 2 inputs.

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Non-recurring

The following table shows the fair value of our financial assets that have been adjusted to fair value on a non-recurring basis, which had a significant impact on our results of operations for the nine months ended September 30, 2020.


			Fair Value Measurements Using
Description	Fair Value Measurement		Level 1		Level 2		Level 3		Loss (Gain)
			(in thousands)

2020
Definite-lived intangible assets, net	$	7,390	$	—	$	—	$	7,390	$	15,264

For the nine months ended September 30, 2021, there were no significant impairment charges. During the nine months ended September 30, 2020, we recorded impairment charges related to definite-lived intangible assets of $15.3 million as a component of depreciation and amortization primarily related to intangible assets for revenue-generating contracts and client/vendor relationships in the Concerts segment. It was determined that these assets were impaired since the most recent estimated undiscounted future cash flows associated with these assets were less than their carrying value, primarily as a result of the expected impacts from the global COVID-19 pandemic. These impairments were calculated using operating cash flows, which were discounted to approximate fair value. The key inputs in these calculations include future cash flow projections, including revenue profit margins, and, for the fair value computation, a discount rate. The key inputs used for these non-recurring fair value measurements are considered Level 3 inputs.

NOTE 7—COMMITMENTS AND CONTINGENT LIABILITIES

Litigation

Consumer Class Actions

The following putative class action lawsuits were filed against Live Nation and/or Ticketmaster in Canada: Thompson-Marcial v. Ticketmaster Canada Holdings ULC (Ontario Superior Court of Justice, filed September 2018); McPhee v. Live Nation Entertainment, Inc., et al. (Superior Court of Quebec, District of Montreal, filed September 2018); Crystal Watch v. Live Nation Entertainment, Inc., et al. (Court of Queen’s Bench for Saskatchewan, by amendments filed September 2018); and Gomel v. Live Nation Entertainment, Inc., et al. (Supreme Court of British Columbia, Vancouver Registry, filed October 2018). Similar putative class actions were filed in the United States during the same time period, but as of November 2020, each of the lawsuits filed in the United States has been dismissed with prejudice.

The Canadian lawsuits make similar factual allegations that Live Nation and/or Ticketmaster engage in conduct that is intended to encourage the resale of tickets on secondary ticket exchanges at elevated prices. Based on these allegations, each plaintiff asserts violations of different provincial and federal laws. Each plaintiff also seeks to represent a class of individuals who purchased tickets on a secondary ticket exchange, as defined in each plaintiff’s complaint. The Watch complaint also makes claims related to Ticketmaster’s fee display practices on the primary market. The complaints seek a variety of remedies, including unspecified compensatory damages, punitive damages, restitution, injunctive relief and attorneys’ fees and costs.

The McPhee matter is stayed pending the outcome of the Watch matter, and the Thompson-Marcial, Watch, and Gomel cases are in the class certification phase. In April 2021, the court in the Gomel lawsuit refused to certify all claims other than those pled under British Columbia’s Business Practices and Consumer Protection Act and claims for punitive damages, but the court did certify a class of British Columbia residents who purchased tickets to an event in Canada on any secondary market exchange from June 30, 2015 through April 15, 2021 that were initially purchased on Ticketmaster.ca. We filed a notice of appeal of the class certification ruling in May 2021, and the plaintiff filed a cross-appeal shortly thereafter.

Based on information presently known to management, we do not believe that a loss is probable of occurring at this time, and we believe that the potential liability, if any, will not have a material adverse effect on our financial position, cash flows or results of operations. Further, we do not currently believe that the claims asserted in these lawsuits have merit, and considerable uncertainty exists regarding any monetary damages that will be asserted against us. We continue to vigorously defend these actions.

CIE Arbitration

In July 2019, we entered into agreements with Corporación Interamericana de Entretenimiento, S.A.B. de C.V. (“CIE”) and Grupo Televisa, S.A.B. (“TV”) to acquire an aggregate 51% interest in OCESA Entretenimiento, S.A. de C.V. (“OCESA”) and certain other related subsidiaries of CIE. In May 2020, we notified CIE and TV that we were terminating our agreements with them and commenced binding arbitration proceedings, in New York, New York, before the International Court of

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Arbitration of the International Chamber of Commerce (“ICC”), seeking a declaratory judgment that we had properly terminated the CIE purchase agreement and that any obligations thereunder were excused. In July 2020, CIE filed its response to our claims, seeking specific performance to require us to proceed with closing under the CIE purchase agreement and damages in an unspecified amount arising from our alleged failure to timely close. The matter has been assigned to a panel of arbitrators and a hearing had been scheduled to commence in June 2022. In September 2021, we entered into amendments to revive the previously terminated purchase agreements with CIE and TV and proceed with the acquisition of OCESA on modified terms. In connection with the purchase agreement amendment entered into with CIE, the pending arbitration matter before the ICC has been suspended pending the closing of the OCESA acquisition, and we and CIE have agreed to terminate the ICC arbitration and release any claims arising from the earlier termination of the purchase agreements upon completion of the acquisition.

NOTE 8—EQUITY

Common Stock

In September 2021, we completed the public offering of 5,239,259 shares of common stock. A portion of the proceeds of $455.3 million were used to pay estimated fees of $5.9 million, leaving approximately $449.4 million of net proceeds. We intend to use the net proceeds to fund the acquisition of 51% of the capital stock of OCESA and use any remaining proceeds for general corporate purposes.

Accumulated Other Comprehensive Loss

The following table presents changes in the components of AOCI, net of taxes, for the nine months ended September 30, 2021:


	Cash Flow Hedge		Foreign Currency Items		Total
	(in thousands)
Balance at December 31, 2020	$	(31,587)	$	(145,422)	$	(177,009)
Other comprehensive income before reclassifications	10,160		(10,001)		159
Amount reclassified from AOCI	5,853		—		5,853
Net other comprehensive income	16,013		(10,001)		6,012
Balance at September 30, 2021	$	(15,574)	$	(155,423)	$	(170,997)

Earnings Per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. The calculation of diluted net income (loss) per common share includes the effects of the assumed exercise of any outstanding stock options, the assumed vesting of shares of restricted and deferred stock awards and the assumed conversion of our convertible senior notes, where dilutive.

The following table sets forth the computation of weighted average common shares outstanding:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020

Weighted average common shares—basic	216,888,355	212,593,719	215,716,239	211,781,620
Effect of dilutive securities:
Stock options and restricted stock	6,912,045	—	—	—

Weighted average common shares—diluted	223,800,400	212,593,719	215,716,239	211,781,620

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The following table shows securities excluded from the calculation of diluted net loss per common share because such securities are anti-dilutive:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Options to purchase shares of common stock	3,750	9,874,376	7,727,064	9,874,376
Restricted stock and deferred stock—unvested	91,275	3,713,249	3,207,115	3,713,249

Conversion shares related to the convertible senior notes	11,864,035	11,864,035	11,864,035	10,729,717
Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding	11,959,060	25,451,660	22,798,214	24,317,342

NOTE 9—REVENUE RECOGNITION

The global COVID-19 pandemic has significantly impacted the recognition of revenue for our Concerts, Ticketing and Sponsorship & Advertising segments. Late in the second quarter we began to see the positive impacts of successful vaccination rollouts in many of our key markets, mainly the United States and United Kingdom, with social distancing restrictions easing and live events resuming. In the third quarter, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in both the United States and United Kingdom.

For our Concerts segment, the impact is partially a delay in the timing of revenue recognition as many events have been or are being rescheduled to dates later in 2021 or 2022. For events that have been cancelled as of September 30, 2021, the deferred revenue has been reclassified to accrued expenses on our consolidated balance sheets where not already refunded to the fan. In certain markets, we are offering fans an incentive to receive a voucher for a future ticket purchase to one of our events in lieu of receiving a refund for the cancelled event. Where a fan has elected to receive the incentive voucher, the cash from the original ticket purchase remains in deferred revenue. For certain of our rescheduled events, we are offering a limited refund window for fans to request a refund. Where a fan has elected to receive a refund for a rescheduled event and where we have estimated future refunds, the deferred revenue has been reclassified to accrued expenses if not already refunded. The estimate of future refunds was developed by applying the percentage of future shows we believe could be rescheduled to the deferred revenue balances as of September 30, 2021 for those impacted quarters, and then applying a venue-specific refund take rate. The venue-specific refund take rates are based on the refunds we have issued since we ceased all our tours and closed our venues in mid-March 2020 through the end of the first quarter of 2021.

For our Ticketing segment, the impact is similar to the Concerts segment if the tickets sold for an event are controlled by our concert promoters. For the Ticketing segment’s third-party clients, previously recognized service charges are reversed from revenue when the event is cancelled or a refund is issued for a rescheduled event, including refunds issued after the balance sheet date but prior to the filing of our consolidated financial statements. The revenue reversal is reflected as accrued expenses on our consolidated balance sheets where not already refunded to the fan. The timing of our third-party clients’ event cancellations and rescheduling of postponed events versus new events available for sale can result in refunds of service charges exceeding quarterly sales resulting in negative revenue for that period.

For our Sponsorship & Advertising segment, the impact is partially a delay in the timing of revenue recognition due to our concert events being rescheduled, our venues being closed along with the limited number of events that were available for sale on our websites. In response to the impacts we are experiencing from the global COVID-19 pandemic, we have amended or are continuing negotiations with certain of our sponsors to either provide additional benefits when our venues reopen and our concert events resume or extend the term of the agreement with no additional benefits to the sponsor.

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Concerts

Concerts revenue, including intersegment revenue, for the three and nine months ended September 30, 2021 and 2020 are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands)
Total Concerts Revenue	$	2,151,596		$	154,791		$	2,677,970		$	1,290,007
Percentage of consolidated revenue	79.7		%	84.1		%	75.1		%	79.4		%

Our Concerts segment generates revenue from the promotion or production of live music events and festivals in our owned or operated venues and in rented third-party venues, artist management commissions and the sale of merchandise for music artists at events. As a promoter and venue operator, we earn revenue primarily from the sale of tickets, concessions, merchandise, parking, ticket rebates or service charges on tickets sold by Ticketmaster or third-party ticketing agreements, and rental of our owned or operated venues. As an artist manager, we earn commissions on the earnings of the artists and other clients we represent, primarily derived from clients’ earnings for concert tours. Over 95% of Concerts’ revenue, whether related to promotion, venue operations, artist management or artist event merchandising, is recognized on the day of the related event. The majority of consideration for our Concerts segment is collected in advance of, or on the day, of the event. Consideration received in advance of the event is recorded as deferred revenue or in other long-term liabilities if the event is more than twelve months from the balance sheet date. Any consideration not collected by the day of the event is typically received within three months after the event date.

Ticketing

Ticketing revenue, including intersegment revenue, for the three and nine months ended September 30, 2021 and 2020 are as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
	(in thousands)
Total Ticketing Revenue	$	374,237		$	(19,822)	$	646,560		$	177,436
Percentage of consolidated revenue	13.9		%	*		18.1		%	10.9		%


*			Percentage is not meaningful.

Ticket fee revenue is generated from convenience and order processing fees, or service charges, charged at the time a ticket for an event is sold in either the primary or secondary markets. Our Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients, which include venues, concert promoters, professional sports franchises and leagues, college sports teams, theater producers and museums. Our Ticketing segment records revenue arising from convenience and order processing fees, regardless of whether these fees are related to tickets sold in the primary or secondary market, and regardless of whether these fees are associated with our concert events or third-party clients’ concert events. Our Ticketing segment does not record the face value of the tickets as revenue. Ticket fee revenue is recognized when the ticket is sold for third-party clients and secondary market sales, as we have no further obligation to our client’s customers following the sale of the ticket. For our concert events where our concert promoters control ticketing, ticket fee revenue is recognized when the event occurs because we also have the obligation to deliver the event to the fan. The delivery of the ticket to the fan is not considered a distinct performance obligation for our concert events because the fan cannot receive the benefits of the ticket unless we also fulfill our obligation to deliver the event. The majority of ticket fee revenue is collected within the month of the ticket sale. Revenue received from the sale of tickets in advance of our concert events is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date. Reported revenue is net of any refunds made or committed to and the impact of any cancellations of events that occurred during the period up to the time of filing these consolidated financial statements.

Ticketing contract advances, which can be either recoupable or non-recoupable, represent amounts paid in advance to our clients pursuant to ticketing agreements and are reflected in prepaid expenses or in long-term advances if the amount is expected to be recouped or recognized over a period of more than twelve months. Recoupable ticketing contract advances are generally recoupable against future royalties earned by the client, based on the contract terms, over the life of the contract. Royalties are typically earned by the client when tickets are sold. Royalties paid to clients are recorded as a reduction to revenue when the tickets are sold and the corresponding service charge revenue is recognized. Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are fixed additional incentives

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occasionally paid by us to certain clients to secure the contract and are typically amortized over the life of the contract on a straight-line basis as a reduction to revenue.

At September 30, 2021 and December 31, 2020, we had ticketing contract advances of $94.0 million and $63.5 million, respectively, recorded in prepaid expenses and $80.5 million and $87.0 million, respectively, recorded in long-term advances on the consolidated balance sheets. We amortized $20.5 million and $6.7 million for the three months ended September 30, 2021 and 2020, respectively, and $49.2 million and $38.8 million for the nine months ended September 30, 2021 and 2020, respectively, related to non-recoupable ticketing contract advances.

Sponsorship & Advertising

Sponsorship & Advertising revenue, including intersegment revenue, for the three and nine months ended September 30, 2021 and 2020 are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands)
Total Sponsorship & Advertising Revenue	$	174,449		$	47,927		$	241,657		$	156,560
Percentage of consolidated revenue	6.5		%	26.0		%	6.8		%	9.6		%

Our Sponsorship & Advertising segment generates revenue from sponsorship and marketing programs that provide its sponsors with strategic, international, national and local opportunities to reach customers through our venue, concert and ticketing assets, including advertising on our websites. These programs can also include custom events or programs for the sponsors’ specific brands, which are typically experienced exclusively by the sponsors’ customers. Sponsorship agreements may contain multiple elements, which provide several distinct benefits to the sponsor over the term of the agreement, and can be for a single or multi-year term. We also earn revenue from exclusive access rights provided to sponsors in various categories such as ticket pre-sales, beverage pouring rights, venue naming rights, media campaigns, signage within our venues, and advertising on our websites. Revenue from sponsorship agreements is allocated to the multiple elements based on the relative stand-alone selling price of each separate element, which are determined using vendor-specific evidence, third-party evidence or our best estimate of the fair value. Revenue is recognized over the term of the agreement or operating season as the benefits are provided to the sponsor unless the revenue is associated with a specific event, in which case it is recognized when the event occurs. Revenue is collected in installment payments during the year, typically in advance of providing the benefit or the event. Revenue received in advance of the event or the sponsor receiving the benefit is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date.

At September 30, 2021, we had contracted sponsorship agreements with terms greater than one year that had approximately $1.0 billion of revenue related to future benefits to be provided by us. We expect to recognize, based on current projections, approximately 12%, 37%, 19% and 32% of this revenue in the remainder of 2021, 2022, 2023 and thereafter, respectively.

Deferred Revenue

The majority of our deferred revenue is typically classified as current and is shown as a separate line item on the consolidated balance sheets. Deferred revenue that is not expected to be recognized within the next twelve months is classified as long-term and reflected in other long-term liabilities on the consolidated balance sheets. We had current deferred revenue of $1.8 billion and $1.4 billion at December 31, 2020 and 2019, respectively.

The table below summarizes the amount of the preceding December 31 current deferred revenue recognized during the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Concerts	$	278,557	$	11,539	$	330,852	$	281,017
Ticketing	24,159		4,023		31,950		25,231
Sponsorship & Advertising	43,437		824		58,070		17,408
Other & Corporate	—		1,364		—		3,402
	$	346,153	$	17,750	$	420,872	$	327,058

As of September 30, 2021, approximately 15.4% of the current deferred revenue balance from December 31, 2020 is expected to be recognized in 2021 and thus such amounts remain in current deferred revenue. In addition, as of September 30,

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2021, approximately 14.9% of the current deferred revenue balance from December 31, 2020 has been or is expected to be refunded to fans as the corresponding events have been cancelled or refunds were or are expected to be requested for rescheduled events, and thus such amounts have been reclassified to accrued expenses if not already refunded. Our long-term deferred revenue balance has increased as events have been rescheduled into the fourth quarter of 2022 in markets still experiencing severe impacts from the global COVID-19 pandemic. We had long-term deferred revenue of $149.4 million and $88.6 million at September 30, 2021 and December 31, 2020, respectively, which is reflected in other long-term liabilities on the consolidated balance sheets.

NOTE 10—STOCK-BASED COMPENSATION

The following is a summary of stock-based compensation expense recorded during the respective periods:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Selling, general and administrative expenses	$	18,826	$	47,590	$	50,636	$	82,802
Corporate expenses	8,492		9,105		29,529		24,163
Total	$	27,318	$	56,695	$	80,165	$	106,965

The decrease in stock-based compensation expense for the three and nine months ended September 30, 2021 as compared to the same periods of the prior year is primarily due to lower expense in 2021 associated with restricted stock awards issued in 2020 and 2021 with a three to six month vesting period in lieu of cash payments for certain compensation owed to employees, as part of our cash savings initiative in connection with the global COVID-19 pandemic.

NOTE 11—SEGMENT DATA

Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising. Our Concerts segment involves the promotion of live music events globally in our owned or operated venues and in rented third-party venues, the production of music festivals, the operation and management of music venues, the creation or streaming of associated content and the provision of management and other services to artists. Our Ticketing segment involves the management of our global ticketing operations, including providing ticketing software and services to clients, and consumers with a marketplace, both online and mobile, for tickets and event information, and is responsible for our primary ticketing website, www.ticketmaster.com. Our Sponsorship & Advertising segment manages the development of strategic sponsorship programs in addition to the sale of international, national and local sponsorships and placement of advertising such as signage, promotional programs, rich media offerings, including advertising associated with live streaming and music-related content, and ads across our distribution network of venues, events and websites.

Revenue and expenses earned and charged between segments are eliminated in consolidation. Our capital expenditures below include accruals for amounts incurred but not yet paid for, but are not reduced by reimbursements received from outside parties such as landlords and noncontrolling interest partners or replacements funded by insurance proceeds.

We manage our working capital on a consolidated basis. Accordingly, segment assets are not reported to, or used by, our management to allocate resources to or assess performance of our segments, and therefore, total segment assets have not been presented.

The following table presents the results of operations for our reportable segments for the three and nine months ended September 30, 2021 and 2020:


	Concerts		Ticketing		Sponsorship & Advertising		Other		Corporate		Eliminations		Consolidated
	(in thousands)
Three Months Ended September 30, 2021
Revenue	$	2,151,596	$	374,237	$	174,449	$	543	$	—	$	(2,103)	$	2,698,722
Direct operating expenses	1,822,537		111,197		38,281		—		—		(2,103)		1,969,912
Selling, general and administrative expenses	303,378		116,796		26,247		508		—		—		446,929

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	Concerts		Ticketing		Sponsorship & Advertising		Other		Corporate		Eliminations		Consolidated
	(in thousands)
Depreciation and amortization	59,541		32,040		7,166		10		2,478		—		101,235
Loss (gain) on disposal of operating assets	(1,098)		(66)		—		—		16		—		(1,148)
Corporate expenses	—		—		—		—		44,649		—		44,649
Operating income (loss)	$	(32,762)	$	114,270	$	102,755	$	25	$	(47,143)	$	—	$	137,145
Intersegment revenue	$	1,473	$	630	$	—	$	—	$	—	$	(2,103)	$	—

Three Months Ended September 30, 2020
Revenue	$	154,791	$	(19,822)	$	47,927	$	806	$	—	$	316	$	184,018
Direct operating expenses	113,283		8,503		8,647		—		—		316		130,749
Selling, general and administrative expenses	257,131		126,518		18,891		3,394		—		—		405,934
Depreciation and amortization	65,794		42,565		6,634		2,192		2,753		—		119,938
Loss (gain) on disposal of operating assets	208		(1)		—		1		—		—		208
Corporate expenses	—		—		—		—		31,630		—		31,630
Operating income (loss)	$	(281,625)	$	(197,407)	$	13,755	$	(4,781)	$	(34,383)	$	—	$	(504,441)
Intersegment revenue	$	(286)	$	(30)	$	—	$	—	$	—	$	316	$	—

Nine Months Ended September 30, 2021
Revenue	$	2,677,970	$	646,560	$	241,657	$	2,173	$	—	$	(3,083)	$	3,565,277
Direct operating expenses	2,108,617		188,330		53,134		—		—		(3,083)		2,346,998
Selling, general and administrative expenses	713,922		317,451		65,046		2,257		—		—		1,098,676
Depreciation and amortization	180,877		103,406		21,837		32		7,606		—		313,758
Loss (gain) on disposal of operating assets	(988)		(66)		—		—		16		—		(1,038)
Corporate expenses	—		—		—		—		100,195		—		100,195
Operating income (loss)	$	(324,458)	$	37,439	$	101,640	$	(116)	$	(107,817)	$	—	$	(293,312)
Intersegment revenue	$	1,473	$	1,610	$	—	$	—	$	—	$	(3,083)	$	—
Capital expenditures	$	59,367	$	30,627	$	4,930	$	—	$	15,315	$	—	$	110,239

Nine Months Ended September 30, 2020
Revenue	$	1,290,007	$	177,436	$	156,560	$	2,407	$	—	$	(2,615)	$	1,623,795
Direct operating expenses	1,046,405		120,967		34,369		—		—		(2,615)		1,199,126
Selling, general and administrative expenses	762,961		411,875		59,661		8,810		—		—		1,243,307
Depreciation and amortization	202,352		125,054		21,766		6,630		8,983		—		364,785
Loss on disposal of operating assets	896		—		—		1		—		—		897
Corporate expenses	—		—		—		—		80,858		—		80,858
Operating income (loss)	$	(722,607)	$	(480,460)	$	40,764	$	(13,034)	$	(89,841)	$	—	$	(1,265,178)
Intersegment revenue	$	811	$	1,804	$	—	$	—	$	—	$	(2,615)	$	—
Capital expenditures	$	98,790	$	58,515	$	4,709	$	—	$	6,239	$	—	$	168,253

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

“Live Nation” (which may be referred to as the “Company,” “we,” “us” or “our”) means Live Nation Entertainment, Inc. and its subsidiaries, or one of our segments or subsidiaries, as the context requires. You should read the following discussion of our financial condition and results of operations together with the unaudited consolidated financial statements and notes to the financial statements included elsewhere in this quarterly report.

Special Note About Forward-Looking Statements

Certain statements contained in this quarterly report (or otherwise made by us or on our behalf from time to time in other reports, filings with the SEC, news releases, conferences, internet postings or otherwise) that are not statements of historical fact constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, notwithstanding that such statements are not specifically identified. Forward-looking statements include, but are not limited to, statements about our financial position, business strategy, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition, the effects of future legislation or regulations and plans and objectives of our management for future operations. We have based our forward-looking statements on our beliefs and assumptions considering the information available to us at the time the statements are made. Use of the words “may,” “should,” “continue,” “plan,” “potential,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “outlook,” “could,” “target,” “project,” “seek,” “predict,” or variations of such words and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those set forth below under Part II—Other Information—Item 1A.—Risk Factors, in Part I—Item IA.—Risk Factors of our 2020 Annual Report on Form 10-K as well as other factors described herein or in our annual, quarterly and other reports we file with the SEC (collectively, “cautionary statements”). Based upon changing conditions, should any risk or uncertainty that has already materialized, such as, for example, the risks and uncertainties posed by the global COVID-19 pandemic, worsen in scope, impact or duration, or should one or more of the currently unrealized risks or uncertainties materialize, or should any underlying assumptions prove incorrect, actual results may vary materially from those described in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We do not intend to update these forward-looking statements, except as required by applicable law.

Executive Overview

In the third quarter, we saw a meaningful restart of our operations which was reflected in our financials and key performance indicators. As a result, this was our best quarter in the last two years. After nearly a year and a half of very limited events and ticket sales, shows began to play off in our key markets and on-sales for future events continue to grow. In particular, we saw outdoor amphitheater events as well as festivals take place in the United States and United Kingdom with enthusiastic fan response. Despite the operational challenges associated with ramping up our concerts in a compressed timeframe, increased health and safety protocols, and a generally tighter labor market, we were able to successfully deliver every planned concert, increase overall per fan profitability, and deliver our first positive operating income in two years. This has been done with careful consideration of the safety and health of our fans, artists and employees via a mix of masking, testing and vaccination protocols. We have seen record festival attendance at a number of our events this year and little pushback on our vaccine requirements in the United States; in fact, recent surveys reveal an improvement to the fan experience versus 2019. Emerging from the pandemic, our organization has streamlined its operations, reduced costs and focused its cash management strategies for future flexibility. In the United States and United Kingdom, our reopening is well underway while other parts of the world catch up as vaccination efforts gain momentum in mainland Europe, Asia-Pacific and Latin America. A key leading indicator of the future health of our business is transacted ticket sales and for the third quarter, our United States and United Kingdom markets had double-digit growth versus the third quarter of 2019. Sales were notably strong for concert events in both markets and sporting events in the United States.

Our revenue increased by $2.5 billion in the third quarter, from $184 million in 2020 to $2.7 billion in 2021. All three of our segments reported revenue growth due to more events, higher ticket sales and increased sponsor fulfillment over the past three months. As a result, our operating income improved by $642 million, from a loss of $504 million in 2020 to an income of $137 million in 2021. The improvement resulted from both increased events, ticket sales and sponsor client activation partially offset by higher selling, general and administrative expenses as we brought employees back from furlough and began hiring new roles to execute 2021 events through the remainder of the year and prepare for 2022. For the first nine months of 2021, our revenue increased by $1.9 billion, from $1.6 billion in 2020 to $3.6 billion in 2021, which was largely due to our business re-

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starting in mid-summer of this year versus operations limited to January through mid-March of 2020. Our operating loss improved by $1.0 billion or 77%, from $1.3 billion in 2020 to $293 million in 2021. The improvement was due to the revenue growth as well as reduced selling, general and administrative, and depreciation and amortization costs in the first nine months of this year. For the third quarter and year-to-date, the impact of changes in foreign exchange rates did not materially impact our year-over-year variances.

Our Concerts segment revenue for the third quarter increased by $2.0 billion, from $155 million in 2020 to $2.2 billion in 2021. The revenue growth was a result of increased shows and fans this quarter as well as ancillary spend per fan at our events. The number of events for the third quarter of 2021 was nearly 5,600 compared to approximately 400 events in the third quarter of last year. The number of fans for the third quarter of 2021 was nearly 17 million compared to approximately 265 thousand in the third quarter of last year. The growth was largely in the United States and United Kingdom. Concerts operating loss for the third quarter improved by $249 million, from a loss of $282 million in 2020 to $33 million in 2021. The improvement was primarily due to more shows this year as well as an increase in net ancillary spend per fan at our amphitheater and festival events. Our amphitheater net ancillary spend per fan grew by double digits compared to 2019 as a result of higher consumption and our transition to cashless transactions. At our major festivals that had over 100 thousand fans, we also saw robust growth in onsite spend with our ancillary per fan increasing by double-digits over 2019. And while we have seen some adverse impacts in our operating expenses per show due to labor shortages and supply chain issues, our spend per fan metrics have outpaced the higher costs. For the first nine months, our Concerts segment revenue increased by $1.4 billion, from $1.3 billion in 2020 to $2.7 billion in 2021. The growth in the second and third quarters more than offset the revenue generated in January through mid-March of 2020, prior to the pandemic related shut-down. Concerts operating loss for the first nine months improved by $398 million, from $723 million in 2020 to $324 million in 2021. The improvement was driven by the return of shows and fans, higher on-site spend and ticket prices as well as lower selling, general and administrative costs.

Our Ticketing segment revenue for the third quarter increased by $394 million, from negative $20 million in 2020 to positive $374 million in 2021. The improvement resulted from an increase in ticket sales, stronger pricing, and a reduction in ticket refunds this year. Excluding refunds, we sold 49 million fee-bearing tickets in the third quarter of this year compared to 7 million tickets in the third quarter of last year. The improvement was almost entirely driven by sales in the United States and the United Kingdom, largely for concert and sporting events. Our resale business bounced back dramatically in the third quarter with our highest National Football League sales quarter ever and the month of September was our highest resale gross transaction value month ever. Ticketing operating income for the third quarter improved by $312 million, from a $197 million loss in 2020 to income of $114 million in 2021. The improvement in operating results was largely driven by increased ticket sales, strong ticket pricing and higher ancillary revenue streams. For the first nine months, Ticketing revenue increased by $469 million, from $177 million in 2020 to $647 million in 2021. This was mostly driven by the reduction in refunds across our global Ticketing segment as refunded tickets declined from 23 million for the first nine months of last year to 13 million for the first nine months of this year. Excluding refunds, we sold 89 million tickets for the first nine months of this year compared to 52 million tickets for the first nine months of last year with most of these being transacted prior to the pandemic. Operating income improved by $518 million, from a loss of $480 million in 2020 to income of $37 million in 2021. This was largely driven by reduced ticket refunds as well as cost savings in the first nine months of this year as compared to last year.

Our Sponsorship & Advertising segment revenue for the third quarter increased by $127 million, from $48 million in 2020 to $174 million in 2021. The improvement was due to higher activations with our marketing partners due to more events going on sale, venues re-opening and supplying more advertising content to our clients. Even with a greatly compressed sales window, we saw strong sales for many of our larger festivals and our sponsorship revenue per fan at our United Kingdom events grew compared to 2019. Operating income for the third quarter increased by $89 million, from $14 million in 2020 to $103 million in 2021. The improvement was due to more sponsor and online advertising activations resulting from the restart of live events and rapidly increasing ticket sales, particularly in the United States. For the first nine months, Sponsorship & Advertising revenue increased by $85 million, from $157 million in 2020 to $242 million in 2021. The growth in the second and third quarters more than offset the revenue generated in January through mid-March of 2020 when our business was fully open. Operating income for the first nine months increased by $61 million, from $41 million in 2020 to $102 million in 2021 for the same reasons discussed above.

As ticket sales return and events scale up in key markets, we continue to focus on mitigating the financial impact of the shutdown. We are balancing our ramp-up with the cost-savings initiatives we implemented across the organization and are also protecting our liquidity by managing cash outflows associated with all our major expenditures: operating expenses, capital expenditures, acquisitions, and advances in both our ticketing and concert businesses. The pace of the recovery continues to depend on each market’s containment efforts and expeditious rollout of approved vaccines and treatments for COVID-19. The progress and momentum over the last two quarters has made us even more optimistic about the long-term potential of our company and the unique power of live shows to unite people.

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Recent Events

In September 2021, we agreed to proceed with the previously announced acquisition of an aggregate 51% interest in OCESA Entretenimiento, S.A. de C.V. and certain other related subsidiaries of Corporación Interamericana de Entretenimiento, S.A.B. de C.V. (“CIE”). The closing of the acquisition is subject to customary closing conditions, including Mexican regulatory approvals. We have submitted our initial concentration notice filings to, and responded to initial requests for information from, the regulatory authorities in Mexico, and we are awaiting further responses from them in connection with their review of our initial filings. We could receive responses from the regulatory authorities by the end of November, which would allow the parties to proceed to close the transaction in the fourth quarter of 2021 if it is re-approved within that time frame.

Impact of the Global COVID-19 Pandemic

The unprecedented and rapid spread of COVID-19 and the related government restrictions and social distancing measures implemented throughout the world significantly impacted our business through the first half of this year. Late in the second quarter, however, we began to see the positive impacts of successful vaccination rollouts in many of our key markets, mainly the United States and United Kingdom, with social distancing restrictions easing and live events resuming. In the third quarter, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in both the United States and United Kingdom. The restart of our operations has been executed with careful consideration of the safety and health of our fans, artists and employees through a mix of masking, testing and vaccination protocols at our events, venues and offices around the world.

Operating Results

The impact of the global COVID-19 pandemic to our operating results are discussed in Part I—Financial Information—Item 1. Financial Statements—Note 2—COVID-19 Impacts.

Cash and available liquidity

We currently have approximately $571.3 million available for future borrowings under our senior secured credit facility, net of outstanding letters of credit. In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028 and in September 2021, we elected to draw down the $400 million term loan A under the amended senior secured credit facility and completed the public offering of 5,239,259 shares of common stock for $449.4 million of net proceeds. We will continue to evaluate future financing opportunities to further expand liquidity at reasonable costs. Additionally, our senior secured credit facility has a $500 million liquidity covenant (as defined in the agreement) until the earlier of (a) December 31, 2021 and (b) at our election, any fiscal quarter prior to December 31, 2021, when we will revert to a net leverage covenant. We believe these additional debt and equity issuances, along with our liquidity covenant, allow us the flexibility to manage our business through the disruption that we continue to experience into 2021 and fund the acquisition of 51% of the capital stock of OCESA.

As of September 30, 2021, our total cash and cash equivalents balance was $4.6 billion, which included $1.3 billion of ticketing client cash. We believe this cash, net of client cash, together with our available debt capacity of $571.3 million, gives us the liquidity to fund our operations during the pandemic and as our markets begin reopening. Our total cash includes event-related deferred revenue the amount of which can fluctuate over the course of the year, but given the shift of shows into 2022, we expect this number to remain above seasonally normal levels throughout 2021.

Event-related deferred revenue consists of cash held by our Concerts segment for future shows, with approximately half the funds associated with upcoming shows in the United States and half for international shows as of September 30, 2021. In the United States, the funds are largely associated with shows in our owned or operated venues, notably amphitheaters, festivals, theaters and clubs. Internationally, the funds held are from a combination of both shows in our owned or operated venues, as well as shows in third-party venues associated with our promoter share of tickets in allocation markets.

Cost and Cash Management Programs

In response to the impacts the COVID-19 pandemic has had and continues to have on our business globally, we have implemented a number of initiatives to reduce fixed costs and conserve cash while our business was shut down. As part of these cost reduction efforts, we implemented salary reductions for most of our employees, with salaries for senior executives reduced by up to 60% during 2020. We began eliminating the salary reductions in January 2021 and fully restored salaries during the second quarter. Additional cost reduction efforts include hiring freezes, reduction in the use of contractors, rent re-negotiations, furloughs, termination of certain employees and reduction or elimination of other discretionary spending, including, among other things, travel and entertainment, repairs and maintenance, and marketing. As our business scales back up, we are beginning to reinvest in our growth while continuing to closely monitor our cash flow and liquidity.

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We continue to make use of government support programs globally. In most European and Asia-Pacific markets, including the United Kingdom, Germany, Italy, France, Spain and Australia, there were payroll support programs to mitigate a substantial portion of employee costs. Additionally, in the United States, we have filed for payroll support under the Employee Retention Credit program established as part of the CARES Act. Finally, the CARES Act also provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022.

Based on these actions and assumptions regarding the impact of the global COVID-19 pandemic, we believe that we will remain in compliance with our debt covenants throughout 2021 and be able to generate sufficient liquidity and profitability to satisfy our obligations for the next twelve months, prior to giving effect to any additional financings that may occur. Our forecasted expense management and liquidity measures may be modified as we get more clarity on the timing of events. We cannot assure you that our assumptions used to estimate our leverage, liquidity and profitability requirements will be correct because we have never previously experienced a complete cessation of our live events and the magnitude, duration and speed of the global pandemic is unknown, and as a consequence, our ability to be predictive is uncertain.

Health and Safety and Implementing a Return to Business

We are currently implementing steps for the health and safety of our employees as they return to work in our offices in the future, and for our artists and fans as they return to live events. We are returning to work in local markets in appropriate numbers with expanded cleaning and any social distancing or other regulations. Similarly, we are resuming concerts when the time is right on a market by market basis. We recognize that as concerts have started back up, the experience at our venues has changed, and are working with medical experts and public health officials to implement safety precautions and protocols necessary for fans to return to enjoy our shows. The reopening of concerts is happening on a market by market basis, and given we operate in 46 countries globally, the timelines will vary from now to not for several months or beyond. In the markets where we have reopened, cancellation rates are declining back to historical levels prior to the pandemic.

As the leading global live event and ticketing company, we believe that we are well-positioned to provide the best service to artists, teams, fans and venues as business resumes. Twenty years of global growth demonstrates the resilience of fan demand for the live entertainment experience.

Segment Overview

Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising.

Concerts

Revenue and related costs for events are generally deferred and recognized when the event occurs. All advertising costs incurred during the year for shows in future years are expensed at the end of the year. If a current year event is rescheduled into a future year, all advertising costs incurred to date are expensed in the period when the event is rescheduled.

Concerts direct operating expenses include artist fees, event production costs, show-related marketing and advertising expenses, along with other costs.

To judge the health of our Concerts segment, we primarily monitor the number of confirmed events and fan attendance in our network of owned or operated and third-party venues, talent fees, average paid attendance, market ticket pricing, advance ticket sales and the number of major artist clients under management. In addition, at our owned or operated venues and festivals, we monitor ancillary revenue per fan and premium ticket sales. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

Ticketing

Revenue related to ticketing service charges is recognized when the ticket is sold for our third-party clients. For our own events, where our concert promoters control ticketing, revenue is deferred and recognized when the event occurs. Gross transaction value (“GTV”) represents the total amount of the transaction related to a ticket sale and includes the face value of the ticket as well as the service charge. We use GTV to evaluate changes in ticket fee revenue that are driven by the pricing of our service charges.

Ticketing direct operating expenses include call center costs and credit card fees, along with other costs.

To judge the health of our Ticketing segment, we primarily review the GTV and the number of tickets sold through our ticketing operations, the number of clients renewed or added and the average royalty rate paid to clients who use our ticketing services. In addition, we review the number of visits to our websites, cost of customer acquisition, the purchase conversion rate, the overall number of customers in our database, the number and percentage of tickets sold via mobile and the number of app

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installs. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

Sponsorship & Advertising

Revenue related to sponsorship and advertising programs is recognized over the term of the agreement or operating season as the benefits are provided to the sponsor unless the revenue is associated with a specific event, in which case it is recognized when the event occurs.

Sponsorship & Advertising direct operating expenses include fulfillment costs related to our sponsorship programs, along with other costs.

To judge the health of our Sponsorship & Advertising segment, we primarily review the revenue generated through sponsorship arrangements and online advertising, and the percentage of expected revenue under contract. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates.

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Key Operating Metrics


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
	(in thousands except estimated events)
Concerts (1)
Estimated events:
North America	4,235	219	5,695	5,016
International	1,328	141	2,252	2,571
Total estimated events	5,563	360	7,947	7,587
Estimated fans:
North America	13,425	204	14,151	5,943
International	3,427	61	4,562	4,779
Total estimated fans	16,852	265	18,713	10,722
Ticketing (2)
Estimated number of fee-bearing tickets sold	43,296	1,323	76,222	28,658
Estimated number of non-fee-bearing tickets sold	39,798	8,392	78,174	70,031
Total estimated tickets sold	83,094	9,715	154,396	98,689

_________

(1)Events generally represent a single performance by an artist. Fans generally represent the number of people who attend an event. Festivals are counted as one event in the quarter in which the festival begins, but the number of fans is based on the days the fans were present at the festival and thus can be reported across multiple quarters. Events and fan attendance metrics are estimated each quarter.

(2)The fee-bearing tickets estimated above include primary and secondary tickets that are sold using our Ticketmaster systems or that we issue through affiliates. This metric includes primary tickets sold during the year regardless of event timing, except for our own events where our concert promoters control ticketing which are reported when the events occur. The non-fee-bearing tickets estimated above include primary tickets sold using our Ticketmaster systems, through season seat packages and our venue clients’ box offices, along with tickets sold on our “do it yourself” platform. These ticketing metrics are net of any refunds requested and any cancellations that occurred during the period and up to the time of reporting of these consolidated financial statements, which may result in a negative number. Fee-bearing tickets sold above are net of refunds of 5.8 million and 5.2 million tickets for the three months ended September 30, 2021 and 2020, respectively, and 12.9 million and 23.2 million tickets for the nine months ended September 30, 2021 and 2020, respectively.

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Non-GAAP Measures

The following table sets forth the reconciliation of AOI to operating income (loss):


	Operating income (loss)		Stock- based compensation expense		Loss (gain) on disposal of operating assets		Depreciation and amortization		Amortization of non-recoupable ticketing contract advances		Acquisition expenses		AOI
	(in thousands)
Three Months Ended September 30, 2021
Concerts	$	(32,762)	$	14,226	$	(1,098)	$	59,541	$	—	$	19,671	$	59,578
Ticketing	114,270		3,310		(66)		32,040		21,700		500		171,754
Sponsorship & Advertising	102,755		1,290		—		7,166		—		—		111,211
Other and Eliminations	25		—		—		10		(1,214)		—		(1,179)
Corporate	(47,143)		8,492		16		2,478		—		473		(35,684)
Total	$	137,145	$	27,318	$	(1,148)	$	101,235	$	20,486	$	20,644	$	305,680
Three Months Ended September 30, 2020
Concerts	$	(281,625)	$	39,635	$	208	$	65,794	$	—	$	2,603	$	(173,385)
Ticketing	(197,407)		5,422		(1)		42,565		9,178		(1,693)		(141,936)
Sponsorship & Advertising	13,755		2,533		—		6,634		—		—		22,922
Other and Eliminations	(4,781)		—		1		2,192		(2,471)		—		(5,059)
Corporate	(34,383)		9,105		—		2,753		—		746		(21,779)
Total	$	(504,441)	$	56,695	$	208	$	119,938	$	6,707	$	1,656	$	(319,237)
Nine Months Ended September 30, 2021
Concerts	$	(324,458)	$	34,170	$	(988)	$	180,877	$	—	$	11,389	$	(99,010)
Ticketing	37,439		12,188		(66)		103,406		53,754		1,697		208,418
Sponsorship & Advertising	101,640		4,278		—		21,837		—		—		127,755
Other and Eliminations	(116)		—		—		32		(4,540)		—		(4,624)
Corporate	(107,817)		29,529		16		7,606		—		1,715		(68,951)
Total	$	(293,312)	$	80,165	$	(1,038)	$	313,758	$	49,214	$	14,801	$	163,588
Nine Months Ended September 30, 2020
Concerts	$	(722,607)	$	66,376	$	896	$	202,352	$	—	$	(19,269)	$	(472,252)
Ticketing	(480,460)		11,219		—		125,054		44,122		(750)		(300,815)
Sponsorship & Advertising	40,764		5,207		—		21,766		—		—		67,737
Other and Eliminations	(13,034)		—		1		6,630		(5,289)		—		(11,692)
Corporate	(89,841)		24,163		—		8,983		—		2,094		(54,601)
Total	$	(1,265,178)	$	106,965	$	897	$	364,785	$	38,833	$	(17,925)	$	(771,623)

Adjusted Operating Income (Loss)

AOI is a non-GAAP financial measure that we define as operating income (loss) before certain stock-based compensation expense, loss (gain) on disposal of operating assets, depreciation and amortization (including goodwill impairment), amortization of non-recoupable ticketing contract advances and acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration obligations, and acquisition-related severance and compensation). We use AOI to evaluate the performance of our operating segments. We believe that information about AOI assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results. AOI is not calculated or presented in accordance with GAAP. A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, AOI should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.

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AOI Margin

AOI margin is a non-GAAP financial measure that we calculate by dividing AOI by revenue. We use AOI margin to evaluate the performance of our operating segments. We believe that information about AOI margin assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results. AOI margin is not calculated or presented in accordance with GAAP. A limitation of the use of AOI margin as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, AOI margin should be considered in addition to, and not as a substitute for, operating income (loss) margin, and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI margin as presented herein may not be comparable to similarly titled measures of other companies.

Constant Currency

Constant currency is a non-GAAP financial measure. We calculate currency impacts as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior period’s currency exchange rates. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

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Segment Operating Results

Concerts

Our Concerts segment operating results were, and discussions of significant variances are, as follows:


	Three Months Ended September 30,					% Change	Nine Months Ended September 30,						% Change
	2021			2020			2021			2020
	(in thousands)						(in thousands)
Revenue	$	2,151,596		$	154,791	*	$	2,677,970		$	1,290,007		*
Direct operating expenses	1,822,537			113,283		*	2,108,617			1,046,405			*
Selling, general and administrative expenses	303,378			257,131		18%	713,922			762,961			(6)%
Depreciation and amortization	59,541			65,794		(10)%	180,877			202,352			(11)%
Loss (gain) on disposal of operating assets	(1,098)			208		*	(988)			896			*

Operating loss	$	(32,762)		$	(281,625)	88%	$	(324,458)		$	(722,607)		55%
Operating margin	(1.5)		%	*			(12.1)		%	(56.0)		%
AOI **	$	59,578		$	(173,385)	*	$	(99,010)		$	(472,252)		79%
AOI margin **	2.8		%	*			(3.7)		%	(36.6)		%

_______


*			Percentages are not meaningful.
**			See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Three Months

Revenue

Concerts revenue increased $2.0 billion during the three months ended September 30, 2021 as compared to the same period of the prior year primarily due to the resumption of shows and festivals in major markets including the United States and United Kingdom as compared to the lack of events during the same period in 2020 driven by the global COVID-19 pandemic.

Operating results

Concerts operating loss decreased $248.9 million during the three months ended September 30, 2021 as compared to the same period of the prior year primarily driven by the resumption of shows and festivals in 2021 discussed above.

Nine Months

Revenue

Concerts revenue increased $1.4 billion during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to the resumption of shows and festivals in major markets including the United States and United Kingdom late in the second quarter of 2021 as compared to revenue generated in January through mid-March of 2020 when our business was fully open prior to the global COVID-19 pandemic.

Operating results

Concerts operating loss decreased $398.1 million during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily driven by the resumption of shows and festivals during 2021 discussed above. In addition, we recorded $15.3 million of impairment charges in the first nine months of 2020 primarily associated with revenue-generating contracts and client/vendor relationships intangible assets. There were no significant impairments recorded in the first nine months of 2021.

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Ticketing

Our Ticketing segment operating results were, and discussions of significant variances are, as follows:


	Three Months Ended September 30,					% Change	Nine Months Ended September 30,					% Change
	2021			2020			2021			2020

	(in thousands)						(in thousands)
Revenue	$	374,237		$	(19,822)	*	$	646,560		$	177,436	*
Direct operating expenses	111,197			8,503		*	188,330			120,967		56%
Selling, general and administrative expenses	116,796			126,518		(8)%	317,451			411,875		(23)%
Depreciation and amortization	32,040			42,565		(25)%	103,406			125,054		(17)%
Gain on disposal of operating assets	(66)			(1)		*	(66)			—		*

Operating income (loss)	$	114,270		$	(197,407)	*	$	37,439		$	(480,460)	*
Operating margin	30.5		%	*			5.8		%	*
AOI **	$	171,754		$	(141,936)	*	$	208,418		$	(300,815)	*
AOI margin **	45.9		%	*			32.2		%	*

_______


*			Percentages are not meaningful.
**			See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Three Months

Revenue

Ticketing revenue increased $394.1 million during the three months ended September 30, 2021 as compared to the same period of the prior year primarily due to an increase in North America primary and secondary ticket fees driven by more events on sale due to the resumption of concerts and sporting events in the third quarter of 2021, strong ticket pricing and lower ticket refunds in 2021.

Operating results

Ticketing operating income for the three months ended September 30, 2021 was $114.3 million as compared to an operating loss of $197.4 million for the same period of the prior year primarily driven by the increased ticketing activity discussed above along with lower ticket refunds in 2021.

Nine Months

Revenue

Ticketing revenue increased $469.1 million during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to an increase in North America primary and secondary ticket fees driven by more events on sale due to the resumption of concerts and sporting events in the second quarter of 2021, strong ticket pricing and lower ticket refunds in 2021.

Operating results

Ticketing operating income for the nine months ended September 30, 2021 was $37.4 million as compared to an operating loss of $480.5 million for the same period of the prior year primarily driven by the increased ticketing activity discussed above along with cost reduction measures implemented in the second quarter of 2020 continuing into 2021, including salary reductions, hiring freezes, furloughs, and reduction or elimination of other discretionary spending along with participating in government support programs globally.

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Sponsorship & Advertising

Our Sponsorship & Advertising segment operating results were, and discussions of significant variances are, as follows:


	Three Months Ended September 30,						% Change	Nine Months Ended September 30,						% Change
	2021			2020				2021			2020
	(in thousands)							(in thousands)
Revenue	$	174,449		$	47,927		*	$	241,657		$	156,560		54%
Direct operating expenses	38,281			8,647			*	53,134			34,369			55%
Selling, general and administrative expenses	26,247			18,891			39%	65,046			59,661			9%
Depreciation and amortization	7,166			6,634			8%	21,837			21,766			*


Operating income	$	102,755		$	13,755		*	$	101,640		$	40,764		*
Operating margin	58.9		%	28.7		%		42.1		%	26.0		%
AOI **	$	111,211		$	22,922		*	$	127,755		$	67,737		89%
AOI margin **	63.7		%	47.8		%		52.9		%	43.3		%

_______


*			Percentages are not meaningful.
**			See “—Non-GAAP Measures” above for the definition and reconciliation of AOI and AOI margin.

Three Months

Revenue

Sponsorship & Advertising revenue increased $126.5 million during the three months ended September 30, 2021 as compared to the same period of the prior year primarily due to increased activity in national sponsorship programs, festival sponsorships and online advertising in North America due to the resumption of concert events and festivals in the third quarter of 2021.

Operating results

Sponsorship & Advertising operating income increased $89.0 million during the three months ended September 30, 2021 as compared to the same period of the prior year primarily driven by higher sponsorship activity discussed above.

Nine Months

Revenue

Sponsorship & Advertising revenue increased $85.1 million during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to increased activity in national sponsorship programs, festival sponsorships and online advertising in North America due to the resumption of concert events and festivals in the second quarter of 2021.

Operating results

Sponsorship & Advertising operating income increased $60.9 million during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily driven by the higher sponsorship activity discussed above.

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Consolidated Results of Operations

Three Months


	Three Months Ended September 30,								% Change
	2021						2020
	As Reported		Currency Impacts		At Constant Currency**		As Reported		As Reported	At Constant Currency**
	(in thousands)
Revenue	$	2,698,722	$	(22,946)	$	2,675,776	$	184,018	*	*
Operating expenses:
Direct operating expenses	1,969,912		(15,926)		1,953,986		130,749		*	*
Selling, general and administrative expenses	446,929		(4,515)		442,414		405,934		10%	9%
Depreciation and amortization	101,235		(1,109)		100,126		119,938		(16)%	(17)%
Loss (gain) on disposal of operating assets	(1,148)		—		(1,148)		208		*	*
Corporate expenses	44,649		(4)		44,645		31,630		41%	41%
Operating income (loss)	137,145		$	(1,392)	$	135,753	(504,441)		*	*
Operating margin	5.1%				5.1%		*
Interest expense	70,407						66,093

Interest income	(1,333)						(2,810)
Equity in losses (earnings) of nonconsolidated affiliates	(7,025)						2,615
Gain from sale of investments in nonconsolidated affiliates	(30,633)						(2,514)
Other expense (income), net	12,441						(8,463)
Income (loss) before income taxes	93,288						(559,362)
Income tax expense (benefit)	6,421						(16,904)
Net income (loss)	86,867						(542,458)
Net income (loss) attributable to noncontrolling interests	39,989						(13,556)
Net income (loss) attributable to common stockholders of Live Nation	$	46,878					$	(528,902)

_______


*			Percentages are not meaningful.
**			See “—Non-GAAP Measures” above for the definition of constant currency.

Gain from sale of investments in nonconsolidated affiliates

Gain from sale of investments in nonconsolidated affiliates increased $28.1 million during the three months ended September 30, 2021 as compared to the same period of the prior year primarily due to the sale of certain cost basis investments during the three months ended September 30, 2021.

Other expense (income), net

Other expense (income), net was a loss of $12.4 million during the three months ended September 30, 2021 and includes net foreign exchange rate losses of $11.6 million. Other expense (income), net was income of $8.5 million during the three months ended September 30, 2020 and includes net foreign exchange rate gains of $5.7 million. The net foreign exchange rate gains and losses result primarily from revaluation of certain foreign currency denominated net assets held internationally.

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests was net income of $40.0 million during the three months ended September 30, 2021 as compared to a net loss of $13.6 million for the same period of the prior year primarily due to higher operating results from certain concert and festival promotion businesses in North America during the third quarter of 2021 due to the resumption of events in the third quarter of 2021.

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Nine Months


	Nine Months Ended September 30,											% Change
	2021								2020
	As Reported			Currency Impacts		At Constant Currency**			As Reported			As Reported	At Constant Currency**
	(in thousands)
Revenue	$	3,565,277		$	(46,575)	$	3,518,702		$	1,623,795		*	*
Operating expenses:
Direct operating expenses	2,346,998			(28,853)		2,318,145			1,199,126			96%	93%
Selling, general and administrative expenses	1,098,676			(22,695)		1,075,981			1,243,307			(12)%	(13)%
Depreciation and amortization	313,758			(6,562)		307,196			364,785			(14)%	(16)%
Loss (gain) on disposal of operating assets	(1,038)			(4)		(1,042)			897			*	*
Corporate expenses	100,195			(30)		100,165			80,858			24%	24%

Operating loss	(293,312)			$	11,569	$	(281,743)		(1,265,178)			77%	78%
Operating margin	(8.2)		%			(8.0)		%	(77.9)		%
Interest expense	210,146								162,781

Interest income	(3,953)								(9,712)
Equity in losses (earnings) of nonconsolidated affiliates	(4,608)								6,656
Gain from sale of investments in nonconsolidated affiliates	(83,580)								(2,479)
Other expense (income), net	19,903								(9,043)
Loss before income taxes	(431,220)								(1,413,381)
Income tax expense (benefit)	15,095								(49,417)
Net loss	(446,315)								(1,363,964)
Net income (loss) attributable to noncontrolling interests	9,665								(82,761)
Net loss attributable to common stockholders of Live Nation	$	(455,980)							$	(1,281,203)

____________


*			Percentages are not meaningful.
**			See “—Non-GAAP Measures” above for the definition of constant currency.

Interest expense

Interest expense increased $47.4 million, or 29%, during the nine months ended September 30, 2021 as compared to the same period of the prior year due to additional interest costs from the issuance of our 2.0% convertible senior notes in February 2020, the issuance of our 6.5% senior secured notes in May 2020 and the issuance of our 3.75% senior secured notes in January 2021.

Gain from sale of investments in nonconsolidated affiliates

Gain from sale of investments in nonconsolidated affiliates increased $81.1 million during the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to the sale of certain cost basis investments during the first nine months of 2021.

Other expense (income), net

Other expense (income), net was a net loss of $19.9 million during the nine months ended September 30, 2021 and includes net foreign exchange rate losses of $14.0 million. Other expense (income), net was net income of $9.0 million during the nine months ended September 30, 2020 and includes net foreign exchange rate gains of $4.6 million. The net foreign exchange rate gains and losses result primarily from revaluation of certain foreign currency denominated net assets held internationally.

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Income tax expense (benefit)

For the nine months ended September 30, 2021, we had a net tax expense of $15.1 million on a loss before income taxes of $431.2 million compared to a net tax benefit of $49.4 million on a loss before income taxes of $1.4 billion for the nine months ended September 30, 2020. For the nine months ended September 30, 2021, the income tax expense consisted of $9.2 million related to foreign entities, $5.0 million related to United States federal taxes, and $0.9 million related to state and local income taxes. The net increase in tax expense of $64.5 million was primarily due to profits in certain non-United States jurisdictions and other discrete tax benefits recorded in the first nine months of 2020.

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to noncontrolling interests was net income of $9.7 million during the nine months ended September 30, 2021 as compared to a net loss of $82.8 million for the same period of the prior year primarily due to higher operating results from certain concert and festival promotion businesses in North America during the first nine months of 2021 due to the resumption of events in 2021.

Liquidity and Capital Resources

In response to the impact that the global COVID-19 pandemic has had and continues to have on our business, we have taken certain actions to strengthen our liquidity position and preserve our capital resources.

In April 2020, we amended our senior secured credit facility to provide an incremental $130 million revolving credit facility. We further amended our senior secured credit facility in July 2020, which, among other things, substitutes our net leverage covenant with a $500 million liquidity covenant (as defined in the agreement) until the earlier of (a) December 31, 2021 and (b) at our election, any fiscal quarter prior to December 31, 2021. In February 2020, we issued $400 million principal amount of 2.0% convertible senior notes due 2025 and in May 2020, we issued $1.2 billion principal amount of 6.5% senior secured notes due 2027. In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028 and in September 2021, we elected to draw down the $400 million term loan A under the amended senior secured credit facility and completed the public offering of 5,239,259 shares of common stock for $449.4 million of net proceeds. As a result, we believe these amendments and additional debt and equity issuances will allow us the flexibility to manage our business through the disruption we continue to experience into 2021 and fund the acquisition of 51% of the capital stock of OCESA.

Our cash is centrally managed on a worldwide basis. Our primary short-term liquidity needs are to fund general working capital requirements, capital expenditures and debt service requirements while our long-term liquidity needs are primarily related to acquisitions and debt repayment. Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our amended senior secured credit facility, while our long-term sources of funds will be from cash flows from operations, long-term bank borrowings and other debt or equity financings. We may from time to time engage in open market purchases of our outstanding debt securities or redeem or otherwise repay such debt.

Our balance sheet reflects cash and cash equivalents of $4.6 billion at September 30, 2021 and $2.5 billion at December 31, 2020. Included in the September 30, 2021 and December 31, 2020 cash and cash equivalents balances are $1.3 billion and $673.5 million, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash. We generally do not utilize client cash for our own financing or investing activities as the amounts are payable to clients on a regular basis. Our foreign subsidiaries held approximately $991.2 million in cash and cash equivalents, excluding client cash, at September 30, 2021. We generally do not repatriate these funds, but if we did, we would need to accrue and pay United States state income taxes as well as any applicable foreign withholding or transaction taxes on future repatriations. We may from time to time enter into borrowings under our revolving credit facility. If the original maturity of these borrowings is 90 days or less, we present the borrowings and subsequent repayments on a net basis in the statement of cash flows to better represent our financing activities. Our balance sheet reflects total net debt of $5.7 billion and $4.9 billion at September 30, 2021 and December 31, 2020, respectively. Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.2% at September 30, 2021.

Our cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in our operating accounts and invested cash. Cash held in non-interest-bearing and interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits. The invested cash is in interest-bearing funds consisting primarily of bank deposits and money market funds. While we monitor cash and cash equivalents balances in our operating accounts on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets, including those resulting from the global COVID-19 pandemic.

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For our Concerts segment, we often receive cash related to ticket revenue in advance of the event, which is recorded in deferred revenue until the event occurs. In the United States, this cash is largely associated with events in our owned or operated venues, notably amphitheaters, festivals, theaters and clubs. Internationally, this cash is from a combination of both events in our owned or operated venues, as well as events in third-party venues associated with our promoter’s share of tickets in allocation markets. With the exception of some upfront costs and artist advances, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related expenses at or after the event. Artists are paid when the event occurs under one of several different formulas, which may include fixed guarantees and/or a percentage of ticket sales or event profits, net of any advance they have received. When an event is cancelled, any cash held in deferred revenue is reclassified to accrued expenses as those funds are typically refunded to the fan within 30 days of event cancellation. In certain markets, we are offering fans an incentive to receive a voucher for a future ticket purchase to one of our events in lieu of receiving a refund for a cancelled event. Where a fan has elected to receive the incentive voucher, the cash from the original ticket purchase remains in deferred revenue. When a show is rescheduled, fans have the ability to request a refund if they do not want to attend the event on the new date, although historically we have had low levels of refund requests for rescheduled events.

We view our available cash as cash and cash equivalents, less ticketing-related client cash, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others, plus event-related prepaid expenses. This is essentially our cash available to, among other things, repay debt balances, make acquisitions, pay artist advances and finance capital expenditures.

Our intra-year cash fluctuations are impacted by the seasonality of our various businesses. Examples of seasonal effects include our Concerts segment, which reports the majority of its revenue in the second and third quarters. Cash inflows and outflows depend on the timing of event-related payments but the majority of the inflows generally occur prior to the event. See “—Seasonality” below. We believe that we have sufficient financial flexibility to fund these fluctuations and to access the global capital markets on satisfactory terms and in adequate amounts, although there can be no assurance that this will be the case, and capital could be less accessible and/or more costly given current economic conditions, including those resulting from the global COVID-19 pandemic. We expect cash flows from operations and borrowings under our amended senior secured credit facility, along with other financing alternatives, to satisfy working capital requirements, capital expenditures and debt service requirements for at least the succeeding year.

We may need to incur additional debt or issue equity to make other strategic acquisitions or investments. There can be no assurance that such financing will be available to us on acceptable terms or at all. We may make significant acquisitions in the near term, subject to limitations imposed by our financing agreements and market conditions.

The lenders under our revolving loans and counterparty to our interest rate hedge agreement consists of banks and other third-party financial institutions. While we currently have no indications or expectations that such lenders will be unable to fund their commitments as required, we can provide no assurances that future funding availability will not be impacted by adverse conditions in the financial markets, including those resulting from the global COVID-19 pandemic. Should an individual lender default on its obligations, the remaining lenders would not be required to fund the shortfall, resulting in a reduction in the total amount available to us for future borrowings, but would remain obligated to fund their own commitments. Should the counterparty to our interest rate hedge agreement default on its obligation, we could experience higher interest rate volatility during the period of any such default.

Sources of Cash

During 2020, we amended our senior secured credit facility, issued $1.2 billion principal amount of 6.5% senior secured notes due 2027 and issued $400 million principal amount of 2.0% convertible senior notes due 2025. A portion of the proceeds were used to pay transaction fees of $35.5 million, leaving approximately $1.6 billion for general corporate purposes.

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028. The proceeds were used to pay fees of $7.7 million and repay $75.0 million aggregate principal amount of our senior secured term loan B facility, leaving approximately $417.3 million for general corporate purposes, including acquisitions and organic investment opportunities.

In September 2021, we completed the public offering of 5,239,259 shares of common stock. A portion of the gross proceeds of $455.3 million were used to pay estimated fees of $5.9 million, leaving approximately $449.4 million of net proceeds. We intend to use the net proceeds to fund the acquisition of 51% of the capital stock of OCESA and use any remaining proceeds for general corporate purposes.

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Amended Senior Secured Credit Facility

In April and July 2020, we amended our senior secured credit facility and now have (i) a $400 million term loan A facility, (ii) a $950 million term loan B facility, (iii) a $500 million revolving credit facility and (iv) a $130 million incremental revolving credit facility. In addition, subject to certain conditions, we have the right to increase such facilities by an amount equal to the sum of (x) $425 million during the Restricted Period and $855 million after the Restricted Period, (y) the aggregate principal amount of voluntary prepayments of the term loan A and term loan B and permanent reductions of the revolving credit facility commitments, in each case, other than from proceeds of long-term indebtedness, and (z) except during the Restricted Period, additional amounts so long as the senior secured leverage ratio calculated on a pro-forma basis (as defined in the agreement) is no greater than 3.75x. The combined revolving credit facilities provide for borrowings up to $630 million with sublimits of up to (i) $150 million for the issuance of letters of credit, (ii) $50 million for swingline loans, (iii) $300 million for borrowings in Dollars, Euros or British Pounds and (iv) $100 million for borrowings in those or one or more other approved currencies. The amended senior secured credit facility is secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.

The interest rates per annum applicable to revolving credit facility loans and term loan A under the amended senior secured credit facility are, at our option, equal to either Eurodollar plus 2.25% or a base rate plus 1.25%. The interest rates per annum applicable to the term loan B are, at our option, equal to either Eurodollar plus 1.75% or a base rate plus 0.75%. The interest rates per annum applicable to the incremental revolving credit facility are, at our option, equal to either Eurodollar plus 2.5% or a base rate plus 1.5%. We are required to pay a commitment fee of 0.5% per year on the undrawn portion available under the revolving credit facility and delayed draw term loan A, 1.75% per year on the undrawn portion available under the incremental revolving credit facility and variable fees on outstanding letters of credit.

For the term loan A, we are required to make quarterly payments increasing over time from $2.5 million to $5.0 million with the balance due at maturity in October 2024. For the term loan B, we are required to make quarterly payments of $2.4 million with the balance due at maturity in October 2026. Both the existing and incremental revolving credit facilities mature in October 2024. We are also required to make mandatory prepayments of the loans under the amended credit agreement, subject to specified exceptions, from excess cash flow and with the proceeds of asset sales, debt issuances and specified other events.

There were no borrowings under the revolving credit facilities as of September 30, 2021. Based on our outstanding letters of credit of $58.7 million, $571.3 million was available for future borrowings from revolving credit facilities.

6.5% Senior Secured Notes Due 2027

In May 2020, we issued $1.2 billion principal amount of 6.5% senior secured notes due 2027. Interest on the notes is payable semi-annually in cash in arrears on May 15 and November 15 of each year and the notes will mature on May 15, 2027. We may redeem some or all of the notes, at any time prior to May 15, 2023, at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a “make-whole” premium. We may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to May 15, 2023, at a price equal to 106.5% of the aggregate principal amount, plus accrued and unpaid interest thereon, if any, to the date of redemption. In addition, on or after May 15, 2023 we may redeem some or all of the notes at any time at redemption prices starting at 104.875% of their principal amount, plus any accrued and unpaid interest to the date of redemption. We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control. The notes are secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries and 65% of each class of capital stock of any first-tier foreign subsidiaries, subject to certain exceptions.

3.75% Senior Secured Notes Due 2028

Information regarding our 3.75% senior secured notes due 2028 can be found in Part I — Financial Information — Item 1.— Financial Statements — Note 5 —Long-Term Debt.

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2.0% Convertible Senior Notes Due 2025

In February 2020, we issued $400 million principal amount of 2.0% convertible senior notes due 2025. Interest on the notes is payable semiannually in arrears on February 15 and August 15, at a rate of 2.0% per annum. The notes will mature on February 15, 2025. The notes will be convertible, under certain circumstances, until November 15, 2024, and on or after such date without condition, at an initial conversion rate of 9.4469 shares of our common stock per $1,000 principal amount of notes, subject to adjustment, which represents a 50.0% conversion premium based on the last reported sale price for our common stock of $70.57 on January 29, 2020 prior to issuing the notes. Upon conversion, the notes may be settled in shares of common stock or, at our election, cash or a combination of cash and shares of common stock. Assuming we fully settled the notes in shares, the maximum number of shares that could be issued to satisfy the conversion is currently 3.8 million.

We may redeem for cash all or a portion of the notes, at our option, on or after February 21, 2023 and before the 41st scheduled trading day before the maturity date, if the sales price of our common stock reaches specified targets as defined in the indenture. The redemption price will equal 100% of the principal amount of the notes plus accrued interest, if any.

If we experience a fundamental change, as defined in the indenture governing the notes, the holders of the notes may require us to purchase for cash all or a portion of their notes, subject to specified exceptions, at a price equal to 100% of the principal amount of the notes plus any accrued and unpaid interest.

Debt Covenants

Our amended senior secured credit facility contains a number of restrictions that, among other things, require us to satisfy a financial covenant and restrict our and our subsidiaries’ ability to incur additional debt, make certain investments and acquisitions, repurchase our stock and prepay certain indebtedness, create liens, enter into agreements with affiliates, modify the nature of our business, enter into sale-leaseback transactions, transfer and sell material assets, merge or consolidate, and pay dividends and make distributions (with the exception of subsidiary dividends or distributions to the parent company or other subsidiaries on at least a pro-rata basis with any noncontrolling interest partners). Certain of these restrictions are further limited temporarily by the July 2020 amendment. Non-compliance with one or more of the covenants and restrictions could result in the full or partial principal balance of the credit facility becoming immediately due and payable. The amended senior secured credit facility agreement has one covenant, measured quarterly, that relates to net leverage. The July 2020 amendment substitutes the consolidated net leverage ratio covenant with a liquidity covenant (as defined in the agreement) that requires our consolidated liquidity be at least $500 million until the earlier of (a) December 31, 2021 and (b) at our election, any fiscal quarter ending prior to December 31, 2021 so long as such election is made during the last month of such fiscal quarter or within 30 days following the end of such fiscal quarter. The July 2020 amendment also requires the liquidity covenant to be measured monthly beginning January 31, 2021 until the earlier of (x) November 30, 2021 and (y) the last day of the month before the consolidated net leverage ratio covenant applies. For fiscal quarters after resumption of the consolidated net leverage covenant, we will be required to maintain a ratio of consolidated total net debt to consolidated EBITDA (both as defined in the amended credit agreement) for the trailing four consecutive quarters of 6.75x with step downs to 6.25x after four quarters, 5.75x after eight quarters, 5.50x after twelve quarters and 5.25x after fourteen quarters through maturity, except that calculations of consolidated EBITDA (as defined in the agreement) for the first three fiscal quarters after resumption of the covenant will be substituted with an annualized consolidated EBITDA (as defined in the agreement). For the avoidance of doubt, the consolidated net leverage covenant will resume for the quarter ended December 31, 2021 at the latest.

The indentures governing our 6.5% senior secured notes, 3.75% senior secured notes, 4.75% senior notes, 4.875% senior notes and 5.625% senior notes contain covenants that limit, among other things, our ability and the ability of our restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of restricted subsidiaries to make payments to us, merge, consolidate or sell all of our assets, create certain liens, and engage in transactions with affiliates on terms that are not on an arms-length basis. Certain covenants, including those pertaining to incurrence of indebtedness, restricted payments, asset sales, mergers, and transactions with affiliates will be suspended during any period in which the notes are rated investment grade by both rating agencies and no default or event of default under the indenture has occurred and is continuing. All of these notes contain two incurrence-based financial covenants, as defined, requiring a minimum fixed charge coverage ratio of 2.0x and a maximum secured indebtedness leverage ratio of 3.5x.

Some of our other subsidiary indebtedness includes restrictions on entering into various transactions, such as acquisitions and disposals, and prohibits payment of ordinary dividends. They also have financial covenants including minimum consolidated EBITDA to consolidated net interest payable, minimum consolidated cash flow to consolidated debt service, maximum consolidated debt to consolidated EBITDA and minimum liquidity, all as defined in the applicable debt agreements.

As of September 30, 2021, we believe we were in compliance with all of our debt covenants related to our senior secured credit facility and our corporate senior secured notes, senior notes and convertible senior notes. We expect to remain in compliance with all of these covenants throughout 2021.

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Uses of Cash

Acquisitions

When we make acquisitions, the acquired entity may have cash on its balance sheet at the time of acquisition. All amounts related to the use of cash for acquisitions discussed in this section are presented net of any cash acquired. During the nine months ended September 30, 2021, we used $19.6 million of cash primarily for the acquisition of a venue in the United Kingdom and an artist management business in the United States.

During the nine months ended September 30, 2020, we used $37.3 million of cash primarily for the acquisitions of a festival promotion business and a venue management business, both located in the United States. As of the date of acquisition, the acquired businesses had a total of $71.1 million of cash on their balance sheets, primarily related to deferred revenue for future events.

Capital Expenditures

Venue and ticketing operations are capital intensive businesses, requiring continual investment in our existing venues and ticketing systems in order to address fan and artist expectations, technological industry advances and various federal, state and/or local regulations.

We categorize capital outlays between maintenance capital expenditures and revenue generating capital expenditures. Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems, web development and administrative offices. Revenue generating capital expenditures generally relate to the construction of new venues, major renovations to existing buildings or buildings that are being added to our venue network, the development of new ticketing tools and technology enhancements. Revenue generating capital expenditures can also include smaller projects whose purpose is to increase revenue and/or improve operating income. Capital expenditures typically increase during periods when our venues are not in operation since that is the time that such improvements can be completed.

Our capital expenditures, including accruals for amounts incurred but not yet paid for, but net of expenditures funded by outside parties such as landlords and noncontrolling interest partners or expenditures funded by insurance proceeds, consisted of the following:


	Nine Months Ended September 30,
	2021		2020
	(in thousands)
Maintenance	$	37,181	$	55,999
Revenue generating	67,417		106,784
Total capital expenditures	$	104,598	$	162,783

Maintenance capital expenditures during the first nine months of 2021 decreased from the same period of the prior year primarily due to reductions for certain office facility and technology-related projects as part of our cash savings initiatives implemented in connection with the global COVID-19 pandemic.

Revenue generating capital expenditures during the first nine months of 2021 decreased from the same period of the prior year primarily due to lower spending in our amphitheater venues and a reduction in technology-related projects as part of our cash savings initiatives implemented in connection with the global COVID-19 pandemic.

We currently expect capital expenditures to be approximately $185 million for the full year of 2021 as we have accelerated the timing of certain projects in the second half of the year in response to the reopening of our business.

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Cash Flows


	Nine Months Ended September 30,
	2021		2020
	(in thousands)
Cash provided by (used in):
Operating activities	$	1,024,697	$	(956,903)
Investing activities	$	(111,759)	$	(224,532)
Financing activities	$	1,222,321	$	1,361,636

Operating Activities

Cash provided by operating activities was $1.0 billion for the nine months ended September 30, 2021 as compared to cash used in operating activities of $956.9 million for the same period of the prior year primarily due to increases in accounts payable, client accounts and accrued expenses resulting from the resumption of events in certain markets late in the second quarter of 2021 along with a reduction of net loss year over year partially offset by increases in accounts receivable.

Investing Activities

Cash used in investing activities decreased $112.8 million for the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to less cash paid for capital expenditures, along with higher proceeds from the sale of investments in nonconsolidated affiliates partially offset by an increase in investments in nonconsolidated affiliates. See “—Uses of Cash” above for further discussion.

Financing Activities

Cash provided by financing activities decreased $139.3 million for the nine months ended September 30, 2021 as compared to the same period of the prior year primarily due to higher net proceeds in 2020 from debt issuances partially offset by proceeds from the sale of common stock and lower purchases of noncontrolling interests in 2021. See “—Sources of Cash” above for further discussion.

Seasonality

Information regarding the seasonality of our business can be found in Part I—Financial Information—Item 1.—Financial Statements—Note 1—Basis of Presentation and Other Information.

Market Risk

We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency exchange rates and interest rates.

Foreign Currency Risk

We have operations in countries throughout the world. The financial results of our foreign operations are measured in their local currencies. Our foreign subsidiaries also carry certain net assets or liabilities that are denominated in a currency other than that subsidiary’s functional currency. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations. Currently, we do not have significant operations in hyper-inflationary countries. Our foreign operations reported an operating loss of $148.1 million for the nine months ended September 30, 2021. We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating loss for the nine months ended September 30, 2021 by $14.8 million. As of September 30, 2021, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar and Canadian Dollar. This analysis does not consider the implication such currency fluctuations could have on the overall economic conditions of the United States or other foreign countries in which we operate or on the results of operations of our foreign entities. In addition, the reported carrying value of our assets and liabilities, including the total cash and cash equivalents held by our foreign operations, will also be affected by changes in foreign currency exchange rates.

We primarily use forward currency contracts, in addition to options, to reduce our exposure to foreign currency risk associated with short-term artist fee commitments. We also may enter into forward currency contracts to minimize the risks and/or costs associated with changes in foreign currency rates on forecasted operating income. At September 30, 2021, we had forward currency contracts outstanding with a notional amount of $43.6 million.

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Interest Rate Risk

Our market risk is also affected by changes in interest rates. We had $5.8 billion of total debt, excluding debt discounts and issuance costs, outstanding as of September 30, 2021, of which $5.0 billion was fixed-rate debt and $0.8 billion was floating-rate debt.

Based on the amount of our floating-rate debt as of September 30, 2021, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $2.0 million. This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of September 30, 2021 with no subsequent change in rates for the remainder of the period.

In January 2020, we entered into an interest rate swap agreement that is designated as a cash flow hedge for accounting purposes to effectively convert a portion of our floating-rate debt to a fixed-rate basis. The swap agreement expires in October 2026, has a notional amount of $500.0 million and ensures that a portion of our floating-rate debt does not exceed 3.397%.

Accounting Pronouncements

Information regarding recently issued and adopted accounting pronouncements can be found in Part I — Financial Information—Item 1.—Financial Statements—Note 1—Basis of Presentation and Other Information.

Critical Accounting Policies and Estimates

The preparation of our financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenue and expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material.

Management believes that the accounting estimates involved in business combinations, impairment of long-lived assets and goodwill, revenue recognition, and income taxes are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. These critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions are described in Part II—Financial Information—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021.

There have been no changes to our critical accounting policies during the nine months ended September 30, 2021.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Required information is within Part I — Financial Information—Item 2.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Market Risk.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to our company, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and our board of directors.

Based on their evaluation as of September 30, 2021, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) are effective to ensure that (1) the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) the information we are required to disclose in such reports is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent all possible errors and fraud. Our disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at that reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting resulting from the fact that employees are working remotely due to the global COVID-19 pandemic. We are continually monitoring and assessing the impact of the global COVID-19 pandemic on our internal controls to minimize the affects on their design and operating effectiveness.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Information regarding our legal proceedings can be found in Part I—Financial Information—Item 1. Financial Statements—Note 7—Commitments and Contingent Liabilities.

Item 1A. Risk Factors

While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. Part I—Item 1A.—Risk Factors of our 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021, describes some of the risks and uncertainties associated with our business which could materially and adversely affect our business, financial condition, cash flows and results of operations, and the trading price of our common stock could decline as a result. We do not believe that there have been any material changes to the risk factors previously disclosed in our 2020 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchase of Equity Securities

The following table provides information regarding repurchases of our common stock during the three months ended September 30, 2021:


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)	Total Number of Shares Purchased as Part of Publicly Announced Program (2)	Maximum Fair Value of Shares that May Yet Be Purchased Under the Program (2)
July 2021	402	$78.53
August 2021	1,514	$83.31
September 2021	440	$86.69
	2,356

(1) Represents shares of common stock that employees surrendered as part of the default option to satisfy withholding taxes in connection with the vesting of restricted stock awards under our stock incentive plan. Pursuant to the terms of our stock plan, such shares revert to available shares under the plan.
(2) We do not have a publicly announced program to purchase shares of our common stock. Accordingly, there were no shares purchased as part of a publicly announced program.

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit Description

Incorporated by Reference

Filed
Herewith

Exhibit
No.

Form

File No.

Exhibit No.

Filing Date

2.1

Stock Purchase Agreement dated July 24, 2019, by and among Corporación Interamericana de Entretenimiento, S.A.B. de C.V. as Seller, Ticketmaster New Ventures, S. de R.L. de C.V. as Purchaser, Live Nation Entertainment, Inc. as joint obligor of Purchaser, and OCESA Entretenimiento, S.A. de C.V.

10-Q

001-32601

2.1

10/31/2019

2.2

First Amendment to the Stock Purchase Agreement dated September 13, 2021, by and among Corporación Interamericana de Entretenimiento, S.A.B. de C.V. as Seller, Ticketmaster New Ventures, S. de R.L. de C.V. as Purchaser, Live Nation Entertainment, Inc. as j oint o bligor of Purchaser , and OCESA Entretenimiento, S.A. de C.V.

2.3

Stock Purchase Agreement dated July 24, 2019, by and among Grupo Televisa, S.A.B. and Promo-Industrias Metropolitanas, S.A.de R.L. de C.V., the Sellers, Ticketmaster New Ventures, S. de R.L. de C.V. and Ticketmaster New Ventures Holdings, Inc., the Purchasers, Live Nation Entertainment, Inc. as joint obligor of Purchasers, and OCESA Entretenimiento, S.A. de C.V.

10-Q

001-32601

2.2

10/31/2019

2.4

F i rst Amendment to the Stock Purchase Agreement dated September 13, 2021, by and among Grupo Televisa, S.A.B. and Promo-Industrias Metropolitanas, S.A. de C.V. the Sellers, Ticketmaster New Ventures, S. de R.L. de C.V. and Ticketmaster New Ventures Holdings, Inc. the Purchasers, Live Nation Entertainment, Inc. as j oint o bligor of Purchasers , and OCESA Entretenimiento, S.A. de C.V.

31.1

Certification of Chief Executive Officer.

31.2

Certification of Chief Financial Officer.

32.1

Section 1350 Certification of Chief Executive Officer.

32.2

Section 1350 Certification of Chief Financial Officer.

101.INS

XBRL Instance Document - this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Schema Document.

101.CAL

XBRL Taxonomy Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Definition Linkbase Document.

101.LAB

XBRL Taxonomy Label Linkbase Document.

101.PRE

XBRL Taxonomy Presentation Linkbase Document.

104

Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 4, 2021.


LIVE NATION ENTERTAINMENT, INC.

By:			/s/ Brian Capo
			Brian Capo
			Chief Accounting Officer (Duly Authorized Officer)