No Money on the Horizon for U2

No Money on the Horizon for U2

3 million tickets sold, $300 million in grosses — and they still haven't broken even on their current tour.

When U2 takes the stage of the Rose Bowl on Sunday night, the Irish band will have performed 42 shows on its "360°" tour. They will have played in front of almost 3 million fans, broken dozens of attendance records and grossed close to $300 million.

They will have drawn rapturous reviews, made the cover of Rolling Stone and given the troubled concert business a gigantic shot of adrenaline.

What they won’t have done is make any money.

The U2 tour is so elaborate, its 170-ton, $40 million, four-pronged stage so enormous, its overhead so costly that the band has been on the road for four months just to cover its startup costs.

They’re finally on the verge of hitting the break-even mark — just in time to shut down for the winter, because the weather’s getting too cold for outdoor shows and their stage is far too big for indoor arenas.

Even when the band heads back out next spring and starts earning a profit, they’ll be burning $750,000 a day in overhead as three separate models of the biggest stage in rock history hopscotch around the world, each attended by a separate crew and each requiring close to two full days just to dismantle.

The financial picture is not completely unprecedented — the most extravagant of U2's past tours, such as the "Zoo TV" and "Pop Mart" excursions in the 1990s, also took some time to break even — but the band has never before had to work for this long before seeing a profit.  

And their two previous tours in this decade were relatively stripped-down affairs that took place mostly in indoor stadiums and didn't require anywhere near as much overhead.  

This extravagance comes in an economic climate that argues against grandiose undertakings. And it comes at a time when U2’s latest album, “No Line on the Horizon,” is suffering from the effects of the record industry meltdown.

The album’s first two singles weren’t hits, its songs aren’t getting the radio airplay of past smashes like “Vertigo” and “Elevation,” and overall sales have been slow. Released in March, it took seven months to reach sales of 1 million, a significant disappointment by usual U2 standards.

In the past, it wasn't unusual for a band to lose money touring because the shows would help boost record sales, where the real money was made.  But these days, with music sales a digital catastrophe, the reverse often is true: You put out CDs that won't make money so that you can earn your living on the road. 

So U2 is flying in the face of conventional wisdom by launching the most expensive tour in history during the worst economic climate in decades. At a time when their sales figures would argue for a no-frills show to maximize the profits they aren’t getting from music sales, they decided instead to go for broke.

Are these guys nuts?

In a way, yes. “Will it sell out? Who knows?” drummer Larry Mullen Jr. said to Rolling Stone before the tour began. “Will the economic woes have an impact? Probably. But that’s not going to stop us.”

So far, every show has sold out, at prices that start at $30 and go up to $250, plus special seats that are auctioned off for charity. The huge concert promotion firm Live Nation is a backer as part of a 12-year deal with the band, and U2 signed a sponsorship deal with BlackBerry to offset other costs.

And U2 is taking advantage of other opportunities to lure music buyers: The Rose Bowl show, which will draw the biggest concert audience in the venue’s history because its in-the-round staging allows more seats to be filled, will stream live on YouTube and be filmed for a subsequent DVD release.

In a way, this is nothing new for a band that has always taken big risks with its tours.

In 1987, when U2 wrapped up its “Joshua Tree” tour with two Phoenix stadium shows that were filmed for Phil Joanou's movie “Rattle and Hum,” the band members financed the shows and the filming themselves, without the benefit of studio backing (though Paramount later picked up the film) or even much box office income.

Tickets were priced at only $5, because the band was worried about attracting a crowd and about charging full price for a show where the musicians might occasionally be obscured by the cameras.

“It’s like ‘Apocalypse Now,’ without so many helicopters,” laughed Bono on the afternoon of the first of those shows, as he surveyed what was for its time a huge stage, with 12 cameras, cranes and, yes, a helicopter for aerial shots.

U2 spent so much that at the end of that tour, which came on the heels of an album that had sold 14 million copies, Mullen remembered walking away with about $20,000.

Five years later, the band took even bigger financial risks with the exponentially more elaborate “Zoo TV” tour.

When they planned the first leg of the tour, they didn’t know if ticket or album sales would be strong enough to pay for more than a couple of months’ worth of shows; if attendance had been even slightly down, U2 would have ended the tour bankrupt.

Instead, they toured for more than a year and ended up making money, though not nearly as much as they could have with a simpler show. Before the 157th and final show of that tour, Mullen addressed the topic with writer Bill Flanagan. “In comparison to a lot of people in our position, we don’t make a lot of money … but that’s irrelevant,” he said.

"In the end it’s investing in our future. Not in our future financially, in our future musically – ‘cause at the end of the day that’s what it’s all about. We’ve all made enough money to live for the rest of our lives quite comfortably.”

In a sense, that’s the lesson the band is now applying on the "360°" tour: As long as you come out in the black, maximizing profits should take a back seat to creating a startling, fresh show that, in the words of guitarist the Edge, “makes sense of playing stadiums.”

(On that front, by all accounts they’ve succeeded: Reviews have been almost unanimously rapturous about the show, and the staging. “The concert was high-minded and earthy, exalted and playful, sometimes even goofy, wielding rock-star prerogatives while undercutting them with disarming informality,” wrote Jon Pareles in the New York Times.)

Before the tour ends (probably late next year), U2 manager Paul McGuinness has said, it will likely top the Rolling Stones’ $558 million "Bigger Bang" tour to become the highest-grossing tour of all time — not the biggest moneymaker, mind you, but the highest-grossing.

It may not leave U2 as rich as they could get if their touring tastes weren’t quite so extravagant – but then, the band members have said they’re fine with that.

To a degree.

Bono summed up the delicate balance in an interview with USA Today at the beginning of the U.S. tour. “I want to put on an extraordinary show,” he said, “but I’d like to own my house when it’s over.”

(Photo on this page by Ralph Larmann, photo on homepage by Diana Scrimgeour; both © 2009 U2 Limited.)