Randy Phillips and Gary Richards talk turnaround at dance music company

It’s been nearly two years since LiveStyle emerged out of the SFX bankruptcy with longtime entertainment veteran Randy Phillips and later HARD founder and touring artist Gary Richards at the helm. Now under the control of the senior creditors who funded Bob Sillerman’s plan to buy dance music promoters in North America and Europe and make a failed stock play that ultimately ended with the company booting Sillerman and reorganizing its debt, Phillips says the dance music promoter has returned to profitability and has doubled down on marquee events and the expansion of Beatport, an online marketplace for DJs and music creators.

“This year was the year when everything kind of really came together for us,” said Phillips, citing the success of the company’s marquee events Electric Zoo in New York and Spring Awakening in Chicago, as well as the sale of the company’s stake in Rock in Rio to Live Nation. On the ticketing front, LiveStyle signed a deal with Vivendi-back See Tickets to sell both the Paylogic ticketing system and sign a company-wide agreement to sell tickets for all LiveStyle events through See tickets, following a 2016

This year, Phillips estimates LiveStyle grossed between $250 to $300 million in revenue with an EBITA between $15 to $20 million — not bad for a company that was pushed into bankruptcy two years prior and has managed to retain some of the major promoters in leadership positions, including “Disco” Donnie Estopinal.

“From the ashes of shit, we’ve now built a real company,” says Phillips, who singles out Beatport as driving much of the company’s growth, saying “it has 36 million active users and makes a shitload of money each year.”

That’s partially thanks to growth of Beatport’s Stems business, selling downloadable multi-channel audio files split into four musical elements that can be mixed live and changed on the fly. LiveStyle hired Ingrooves founder Robb McDaniels to serve as Beatport chief executive and said the service’s charting capability keeps the company tuned into music trends.

“It’s not core to the live side of our business, but it’s core to the electronic music culture and because we have it, it helps give us a lot of credibility to our company,” Phillips said.

Phillips and Richards have also moved to shut down several unsuccessful festivals, including the U.S. version of Mysteryland, held at Bethel Woods, New York. Phillips said he shut the event down two months before it was to take place, absorbing a $3.5 million loss in artists deposits, marketing and loss revenue.

“Every artist got paid and that did more for us than $3.5 million spent on PR,” said Phillips, who said the 2017 cancellation marked the beginning of a turnaround moment for LiveStyle. “It made a statement about this company being vital and real again and a member of the industry in good standing.”

Phillips said the company’s bankruptcy and subsequent restructuring is ultimately what saved LiveStyle, saying Sillerman overpaid hundreds of millions of dollars on assets to build the company, running up a debt that approached $900 million.

“If we had to service the debt, we would never have survived,” Phillips says, noting that iHeartMedia filed for bankruptcy in March as it struggled to deal with $20 billion in debt that had been accrued building the company.

Today, the company is privately held by Axar Capital Management and an investment arm of the German insurance giant Allianz.

“Sillerman ran the company through press releases because he was raising money and looking for an exit strategy through an IPO,” Phillips said. “I thought this company was so damaged by that, one of the first things we did was change the name. Every time I said ‘SFX’ to an agent or a lawyer, I would get the sign of the cross.”

Phillips said the make-good payments, the name change and the hiring of Richards in 2017 from Live Nation gave the company credibility in the dance music space “and showed everyone we’re not just a bunch of carpet-baggers,” Phillips said.

Richards got to work, and worked with Estopinal to led a push to convert their co-promotion agreement for Sunset Music Festival in Tampa into a 50-50 joint venture with co-founder John Santoro. Richards and Estopinal sunset two underperforming events in Texas and launched Freaky Deaky in Houston, expanding on the brand created by LiveStyle’s React Presents team in Chicago. The two also postponed Something Wonderful in Dallas in 2018 and are bringing it back next year as Ubbi Dubbi.

In Los Angeles, Richards set out to create his next festival brand after parting ways with HARD, which he sold to Live Nation. In August Richards launched All My Friends at ROW in Downtown Los Angeles featuring RL Grime, Gucci Mane, Ravyn Lenae, M.I.A., Jamie xx and Armand Van Helden with a crowd of 10,000 per day.

“I have to come up with the new concepts and new ways of doing things. I can’t just try to recreate what I did in the past,” he explains. “So I really figured out what All My Friends really means and it’s really simple — it is my friends. I make music with people that I DJ with and the people who come to the shows that are all aligned through the event.”

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Earlier this week, Richards embarked on Friendship, a Florida to the Bahamas cruise aboard the Celebrity Equinox created as an alternative to Holy Ship, which Richards co-founded and is now held by Live Nation. When Friendship went onsale in May, it sold out in 24 hours without a single artist announced.

“I’m involved in all aspects, not just marketing and booking, but production and design,” he says. “So when people get on the boat, they’re going to see a different experience than they’ve had in the past on cruises of mine.”

He’s also facing competition from Live Nation and AEG backed Coachella, who’s Sahara Tent has become an EDM juggernaut with a radius clause that blocks artists from playing other North American festivals for six months out of the year.

“Gary’s got to go out there and find the next big thing,” Phillips said. “It’s much more of an A&R type job and curation profession.”

What’s ahead for 2019?

“New markets,” explains Richards. “There’s definitely places in the country where this kind of music is being underserved. So instead of trying to battle my old brands, I’m going to maneuver around and hit some other markets that aren’t getting this kind of music. The United States is a big place and all events don’t have to be in Los Angeles.”