Festival promotor Synergy Global Entertainment (SGE) has filed for Chapter 7 bankruptcy in California court. According to documents acquired by Billboard, the filing was entered August 29 and claims that the company owes $8.4 million to their creditors with only $1 million in assets and $54,000 in the bank. The company took in nearly $17 million in gross revenue over the last eight months.
Founded by John Reese, who helped co-found the Rockstar Mayhem Festival and has recently worked on Ozzfest Meets Knotfest, MusINK festival and this past summer’s Rockstar Disrupt Festival, SGE has been successfully working on festivals for the last 15 years. However, this past summer has been a difficult one for the company because of what Reese called a statement a “perfect storm of adverse market conditions,” citing a “massive drop in ticket sales and revenue per ticket since late April” as the reasons for the filing. Reportedly, the Disrupt Festival, a Warped Tour-like pop punk tour in its inaugural run featuring The Used, Thrice and Sum 41, was plagued by low returns on ticket sales. On top of that, the company had to cancel their Mad Decent festival in Massachusetts, which was set to feature Billie Eilish, G-Eazy, Major Lazer and Miguel, due to “poor advances.”
This year’s snafus were in stark contrast to the success the company has been having over the last couple of years. In 2017, they brought in $15 million in gross sales, a number that went up to $20 million the next year.
Sumerian Records’ Ash Avildsen is the only secured creditor the company had, loaning SGE $1 million back on June 24 when the company was having “a liquidity crisis.” Said Avildsen in a statement 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.”
Of course, Avildsen isn’t the only person SGE owes money to. The filing shows that the company still needed to pay vendors, publicists, lawyers, artists fees and staging and rental companies for their work on their events, including $1.7 million to Front Gate Tickets and $1 million to Groupon for “ticket refunds,” as well as approximately half-a-million dollars in credit card debt.
Signs of collapse at SGE were already being seen in early August. Just before the Real Street festival in Anaheim on August 10, the company quietly dissolved itself, pulling financial support (though still helping to produce the show) and laying off staff. The company also cancelled its On The Water festival, which was supposed to take place in October, as well as took down all of their websites.
“After having creative impact in over 45 Festival Brands and Tours in the company’s history,” Reese ends his statement to Billboard, “we most appreciate the years of partnerships with fans, artists, brands and vendors.”
