(from Billboard Magazine, October 29, 2012) Hurricane Sandy has caused numerous events across the east coast to have to cancel or postpone their events. The stakeholders in these events have had to take major losses due to the expenses paid and profits lost. These stakeholders have had to review their policies in order to figure out what they will be compensated for and what they will have to take as a loss. Paul Bassman, President of Dallas-based entertainment insurance firm Doodson Insurance Brokerage, has said that nothing has really happened yet. However, Bassman states that he knows everyone is going to take a hit due to the nature of the entertainment business.
The hurricane that businesses are anticipating is said to impact many people. Randy Phillips, President of AEG Live, stated that Hurricane Sandy will not only impact the work environment in which they do business, but also areas where they tour for artists. There is much potential for property damage, as well as potential for all the promoters and venues that have spent millions of dollars on marketing for the artists and their events. This is a problem because most venues do not have insurance for a loss of revenue because of the weather. Bassman comments again, saying that some venues may have a ‘loss of utilities’ coverage, however, insurance can vary and it all depends upon what they have.
Some contracts contain an ‘act of God’ clause that will cover the stakeholders if they are on both sides of the equation. If the stakeholder is a talent buyer and entertainer, their contract may have this clause and it would allow them to dismiss the guarantee they would have had to pay to the artist. Unfortunately, the promoter would still lose the money they had spent on marketing as well as the profit they could have made by putting on the show. The three biggest companies in New York City are well-insulated from these weather events, but the smaller businesses are the ones that are the most concerned.