In mid-March 2020, as the unprecedented impact of the global COVID-19 pandemic became clearer, we ceased all Live Nation tours and closed our venues to support global efforts at social distancing and mitigating the spread of the virus, and to comply with restrictions put in place by various governmental entities. Other concert promoters, venue operators and sports leagues around the globe similarly shut down. Each of our segments depends on live music and sporting events in order to generate most of its revenue. While our operations in most markets have largely returned to normal, there can be no assurances that new outbreaks will not again cause operations in impacted markets to close and/or revert to restrictions on activities experienced during the height of the pandemic for an unknown duration of time.
We experienced ancillary risks and uncertainties arising from the global COVID-19 pandemic that have been reduced due to improved conditions, but may again become more acute if there are COVID-19 resurgences, many of which are more fully described in this Item 1A. whether or not such risk factors identify the global COVID-19 pandemic as the underlying cause. The risks and uncertainties described herein should be read in conjunction with those set forth below. Such additional or attendant risks and uncertainties include, among other things:
- The impact of tightening labor markets across the globe combined with supply chain issues that could impact our ability to produce tours and festivals as well as open and maintain venues without timing and cost disruptions;
- the increased risk of litigation in the current and future environment, such as lawsuits challenging aspects of our ticket refund policies and procedures;
- a reduction in the profitability of our operations, whether due to increased operating costs of complying with governmental restrictions or safety precautions and protocols voluntarily undertaken, such as the need to supply personal protective equipment or conduct health screenings, or due to a reduction in revenue arising from such precautions, such as the potential that venues may not be able to be filled to capacity due to spacing and social distancing limitations in place at such time;
- potential decreased willingness of artists to tour, or impracticability of touring due to varying restrictions from jurisdiction to jurisdiction, including the possibility that national or sub-national borders are closed to travel;
- potential changes to consumer preferences for consumption of live music or sporting events due to fears of, or restrictions on, large gatherings;
- loss of ticketing clients due to the economic impacts of the pandemic;
- the inability to pursue expansion opportunities or acquisitions due to capital constraints;
- the future availability or increased cost of insurance coverage;
- a potential shift away from live events by sponsors and advertisers; and
- the incurrence of additional expenses related to compliance, precautions and management of our company.
We may again experience intensification of these risks and uncertainties should there be a resurgence of the pandemic or significant localized endemics; the ultimate magnitude of the impact on our business would depend on the severity and length of any outbreaks.
In addition, due to the reduction in cash flows we experienced from the global COVID-19 pandemic, we proactively took a number of steps to enhance our liquidity position, including our cost-savings and cash management programs and additional debt issuances. Future outbreaks of COVID-19 at any scale may again necessitate such actions, intensifying the risks described under the “Risks Relating to Our Leverage” section of the risk factors in this report. During the height of the pandemic we experienced negative credit actions, which could again occur if there are COVID-19 resurgences. Additionally, any COVID-19 resurgences could negatively affect financial markets and adversely impact our ability to raise funds.