Lawyers for Synergy Global Entertainment, the independent concert promotion company started by Southern California promoter John Reese, have filed for Chapter 7 bankruptcy protect in U.S. Bankruptcy Court in California's Central District.
SGE owes $8.4 million to its creditors, according to the filing, and has about $1 million in assets and $54,000 dollars in the bank. The lengthy filing, entered in the courts on Aug. 29, lists a Laguna Hills, California address for SGE and shows the company brought in nearly $17 million in gross revenue for last eight months of the year.
Reese was hoping to expand in 2019, taking his model for building singe-genre sponsor-driven festivals, often in tandem with artists like Travis Barker from Blink 182 and Fat Mike from NOFX and EDM act Excision. SGE brought in $15 million in 2017 and grew by more than 30% in 2018, with $20 million in gross sales from events like MusInk and Lost Lands.
Instead of replicating his success, Reese was hit with large losses from the 25-date Disrupt Festival Tour, a summer amphitheater run headlined by The Used, Thrice, Sum 41. Also not helping was the cancellation of the Mad Decent Block Party Festival, headlined by Billie Eilish, Major Lazer and Miguel at Gillette Stadium in Foxborough, Massachusetts.'
Reese told Billboard he was "hit by a perfect storm of adverse market conditions" this year, seeing a “massive drop” in ticket sales and a decline in revenue per ticket compared to previous years. Reese said problems started appearing on the horizon in April, only to worsen through the summer and ultimately become “untenable.”
“After having creative impact in over 45 Festival Brands and Tours in the company’s history, we most appreciate the years of partnerships with fans, artists, brands and vendors,” Reese wrote in a statement to Billboard.
The company lists Ash Avildsen as SGE’s sole secured creditor. A long time friend of Reese, Avildsen owns Sumerian Records and loaned Reese $1 million on June 24 as SGE faced “a liquidity crisis” and “needed help,” he wrote in an email to Billboard.
“All of his summer events were already booked and on sale so there was no time to do proper due diligence, hence it was a very risky investment but I care about John and the SGE family dearly,” he wrote. Avildsen called the bankruptcy “heartbreaking” for artists, fans and SGE’s “truly brilliant, remarkable staff.”
Last month's Real Street festival in Anaheim was his last event — weeks early, Reese had quietly disolved his company and his staff has mostly been picked up by fellow indie promoter Danny Wimmer Presents (DWP). Reese, who had been a partner in Real Street with the company that operates the Honda Center arena, had to withdraw his financial support for the event but did help produce the festival, listing his losses as "ammount not yet known." The company's On the Water festival, slated for October in Huntington Beach, California has also been cancelled and most websites controlled by SGE have come down.
According to the filing, SGE mostly owes money to vendors, publicists, lawyers, and staging and rental companies tied to his events, along with about $500,000 to American Express. His biggest creditors are Front Gate Tickets, who he owes about $1.7 million and Groupon, who he owes $1 million, both for "ticket refunds." He also owes $445,000 to concessionaire Outer Springs of Anaheim and $227,142 to Rat Sound Systems of Camarillo.
The filing shows he owes about $180,000 in artist fees to Paradigm and $162,000 to WME. He’s also believed to have an outstanding debt to Sound Talent Group. The full bankruptcy filing can be found here.
Reese’s entire statement on the bankruptcy is below:
It is with deep regret and after exhaustive efforts to save the business, SGE is now closed.
After 15 years as a successful festival promoter, SGE was hit by a perfect storm of adverse market conditions and a massive drop in ticket sales and RPT (Revenue Per Ticket) since late April of this year compared to historical ticket sales metrics. As a result of these issues, the negative economic impact for SGE became untenable.
After having creative impact in over 45 Festival Brands and Tours in the company’s history, we most appreciate the years of partnerships with fans, artists, brands and vendors”
