Rock festivals fighting financial washout
By Marton Dunai
BUDAPEST (Reuters) - The Prodigy or Fatboy Slim are not enough to persuade Dorina Keresztes to fork out for a rock festival ticket this summer. She says she will find other ways to party.
"Lounging in a park drinking wine with friends is, you know, free," said the 22-year old student from Budapest.
Glastonbury in Britain may be a sell-out, but in the north and east of Europe from Denmark's Roskilde to Romania's B'esfest and Hungary's Sziget, the uncertainties of recession are making 2009 as a rock festival 'summer of love' a hard sell.
As some sponsors pull out, the discounts on offer look geared to publicity. Bring 45 people to Sziget -- usually Europe's third-largest event after Roskilde and Glastonbury -- and all can go half price, organizers say.
Other festivals are postponing planned price hikes, particularly in eastern Europe where the crisis has fallen on countries with already much slimmer economic cushions than in the West. Many have had to scale back.
As a purely discretionary pastime, festivals have to strike the right balance between price and value, says Christof Huber, general secretary of Yourope, an organization of Europe's summer festivals. "That could be difficult this year."
Hungary's unemployment rate is near 10 percent, its highest in at least 13 years, and economic growth indicators are at their weakest since the end of Communism. The country is dependent on a $25 billion IMF loan. Public sentiment is in an abyss.
Luring foreigners by highlighting eastern Europe's relative affordability is just about the best hope some festivals have.
"As we raise prices to catch up with festivals in western Europe, the Hungarian audience slowly melts," said Gabor Takacs, financial director of Sziget. "But to westerners, this is still cheap."
Sziget has in recent years drawn French, German, Dutch and British visitors by its affordability relative to their home events, he said.
A six-day pass for Sziget, which means "island" and takes place on an island in the Danube river, costs 150 euros ($208) -- more affordable to a German on average take-home pay of 2,140 euros per month than to a Hungarian, who earns an average of 475 euros, according to the latest Eurostat data.
"That (price) is obscene," said Keresztes. "The ticket price is only the beginning. You have to eat, drink, smoke..."
However, the cost of staging a festival also rises if, like Hungary's, your currency has weakened sharply. Sziget's Takacs said foreign headliners' fees -- the biggest expense, which can reach as much as $1 million -- grew by about 20 percent as the forint weakened this year.
And if Hungary is an indication, Western tourists are also slowing: Hungary's Statistical Bureau said on its Web site foreign visits were down by a fifth so far in 2009 and the Tourism Board expects a 5 percent drop for the season, it said in a statement.
In Bucharest, the B'esfest festival was scheduled to break even this year -- a plan organizers revised because of the crisis. Profitability is now not expected before 2011.
"This is only our third year," said B'esfest spokesman Guido Janssens. "We wanted to raise prices a bit, but most of our audience is from Romania, so in this economy, we would have scared them off. Even now, we probably will not sell out."
Denmark's Roskilde, the largest festival in Europe by visitor days, is feeling the Nordic chill, spokesman Esben Danielsen said.
"Sales in Denmark are going very well," Danielsen said. "But a third of our audience comes from other parts of Northern Europe. These days in Iceland, which nearly went bankrupt, or in Sweden, where the krone weakened a lot, we don't do so well."
Even among festivals that fill up months before opening day, there is an urgency. Glastonbury, Britain's largest festival with about 600,000 visitor days, managed to sell out by putting tickets on sale in October to avoid falling behind rival events. According to spokesman Chris Aubrey, the last stubs this year were gone by April.
On the bright side the prospect of dry, sunny weather is a lure for the Britons who might opt out of the traditional Glastonbury mudfest. Spain's Benicassim festival, offering a Mediterranean beach a few steps away, also sold out by April.
Glastonbury is unusual in Europe as almost its entire audience is British. Elsewhere, the crowd is more international and many festival organizers said overseas fans might become more selective this year and choose one or two events, rather than festival-surf as in years before.
"People used to go to two, three, or four (festivals each year)," said Mikolaj Ziolkowski, a festival organizer in Poland. "Now they might choose just the biggest one with the best lineup."
B'esfest's Janssens said sponsors had also scaled back some budgets: for the Romanian festival, which relies on corporate partners for over half its revenue, such cuts are painful.
A mature festival typically receives less than 10 percent of its budget from sponsors, relying instead on ticket sales and concessions. Sponsors put up nearer a quarter of the budget of many eastern European festivals.
"They (are) playing it safe," said Mikolaj Ziolkowski, who founded Poland's largest festival, Open'er, in the Baltic coast town of Gdynia. "They want the best crowds. They will speak with the best established festivals."
Open'er has been around since 2002 and its venue, at a military airport, allows for an audience of 220,000 over 4 days, putting it among the top tier of European events.
But size is no guarantee of safety. Sziget, twice the size of Open'er, has seen some corporate sponsors including Nokia and Magyar Telekom pull out.
A Nokia spokeswoman declined to comment. Magyar Telekom said in a statement it would "focus on business communications."
Among sponsors who are sticking with the festival market, brewers in general are keen: with the world's top four beer makers headquartered in Europe, the festival landscape is a patchwork of labels.
"It's a natural fit," said Keld Strudahl, the global sponsorship director of Carlsberg, whose brands back festivals from Glastonbury in Britain to Exit in Serbia. "A festival is the natural environment for drinking beer."
In Hungary Dreher, a unit of SAB Miller, considers the festival vital to its strategy despite a steep drop in beer sales, according to spokeswoman Monika Agocs.
"We reach our target audience very directly," she said. "The effects go far beyond the festival."
And weaker local currencies do have the benefit of translating into cheaper beer prices: "Last year, a pint of beer cost 2 euros," Takacs said. "This year, it will be 1.50."
(Editing by Sara Ledwith)