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Last November, tour promotion company Live Nation initiated a $5.35 million breach of contract suit against former chairman Michael Cohl. Now, Cohl is fighting back, alleging in a countersuit that Live Nation breached that contract by interfering with Cohl’s opportunity to secure promotional rights to the Rolling Stones 2011 tour.
Cohl left Live Nation in 2008 over a disagreement with the CEO about the direction the company would take. Cohl favored signing artists to “360 deals” with Live Nation, in which Live Nation would make large up-front payments to the artists in exchange for a share of nearly all the artists’ future revenues. Live Nation’s CEO, however, wanted to cut back on the use of these controversial and largely unproven deals. Upon Cohl’s departure from the company, he signed a purchasing agreement in which he agreed to pay installments totaling $9.85 million to Live Nation in exchange for certain assets. One of those assets is a non-compete exemption that allows Cohl to continue promoting tours for certain artists, including the Rolling Stones.
According to the November lawsuit, Cohl failed to pay $5.35 million of the $9.85 million owed to Live Nation. Cohl, however, claims that Live Nation breached the agreement before he failed to pay by competing for the upcoming Rolling Stones tour. According to Cohl, Live Nation informed Cohl in February of last year that they would bid against him for the tour, and then later informed him that he could pursue the tour as a joint venture with Live Nation. Live Nation also wanted Cohl to disclose the details of his negotiations for the tour. Eventually, Live Nation proposed competing separately for the tour, which Cohl alleges is a breach of his purchasing agreement with the company.
The purchasing agreement states that for any Rolling Stones tour Cohl promotes, Live Nation will be the Exclusive Global Promoter, Cohl and Live Nation will share profits and losses with one-third going to Live Nation and two-thirds going to Cohl, and Live Nation will be granted any ancillary concert rights that Cohl controls. Cohn alleges that in the agreement he also purchases the right not to have to bid against Live Nation for the promotional rights to a Rolling Stones tour. Cohl considers the promotional rights of the tour to be the “crown jewel” of his 2008 purchasing agreement with Live Nation and contends that this asset alone more than covers the money he owes to Live Nation.
Certain sections of the agreement seem likely to be in dispute as the lawsuit moves forward. The agreement presumes that Cohl will take the lead in negotiating tour promotions with artists listed in the agreement, including the Rolling Stones, but requires Cohl to keep Live Nation advised of the terms under negotiation, as Live Nation will be work with Cohl on any promotions rights that he acquires from the listed artists, and allows the company to contact artists directly to help Cohl’s efforts to secure tour promotion rights. Live Nation may also step in if it reasonably believes Cohl will be unable to secure the rights and attempt to secure the rights for itself alone. These terms leave plenty of room for Live Nation to argue that it did not breach the agreement in contacting the Rolling Stones.
– Kate Kliebert
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