SFX Entertainment Announces Five Major Acquisitions.
FAME was founded in 1992 by its CEO, David Falk, and its President, Curtis Polk. It has a client list that includes an all-star roster of some of the leading players in the NBA (see attached for complete list). Recently, FAME represented an unprecedented 6 first-round draft picks in the NBA, negotiated over $400 million in contracts for its free agent clients and negotiated 4 of the 5 largest contracts in team sports history. FAME also manages stars from other sports including football. In addition to contract negotiation, the company has been a pioneer in the area of endorsement marketing, originating the concept of "Air Jordan."
Don Law is a leading concert promoter in New England where it owns and operates the Great Woods Center for the Performing Arts, a 20,000 seat amphitheater between Boston and Providence. Great Woods has consistently been one of the country's top amphitheaters in both financial performance and artistic preference. In recent years, the facility has averaged approximately 60 shows annually with over 600,000 in attendance. Additionally, Don Law operates the Harborlights Pavilion, a 4,600 seat venue in Boston and the Orpheum Theater, a 2,800 seat facility specializing in theater production and smaller concert acts. The company also promotes other shows throughout the region, recently averaging over 160 events each year. Included in the acquisition is Next Ticketing, which is the sole ticketing operator for all Don Law events as well as for several third party venues.
Avalon Attractions is a premiere promoter in Los Angeles and frequently extends its activities to promote major tours, such as the Rolling Stones and U2, throughout the Southwest. It is in a fifty-fifty partnership with Pace Entertainment, a current SFX Entertainment subsidiary, operating the 15,000 seat Irvine Meadows Amphitheater and the 25,000 capacity Glen Helen Amphitheater. Avalon also co- promotes shows at the LA Forum, and it has a long-term exclusive agreement to present commercial events at the Thousand Oaks Performing Arts Center. Avalon has also secured the rights to build a 16,000 seat amphitheater serving the area north and west of Los Angeles.
The Oakdale Theater includes a new state-of-the-art 4,800 seat indoor facility specializing in both concerts and live theater presentations as well as an original dome facility that has held concerts in the round for many years. The new theater, which was opened in mid-1996, was designed to emphasize ancillary revenue opportunities with luxury box seats, platinum club facilities and specially designed sponsor suites built into the original construction. In 1997, paid attendance was approximately 385,000 with recent presentations including Lord of the Dance, Rugrats and Leann Rimes. The original facility remains a popular presentation venue for trade shows and corporate events.
EMI, one of the leading merchandising contractors in the country, has long-term contracts with 26 leading North American amphitheaters. Among the many prestigious venues where EMI has merchandising deals are the PNC Bank Arts Center, Hollywood Bowl, Jones Beach Marine Amphitheater and the Irvine Meadows Amphitheater, as well as 13 other SFX controlled venues.
Commenting on the transactions, Robert F. X. Sillerman, Executive Chairman of SFX Entertainment, Inc., said, "Each of these acquisitions represents an important strategic step for the company. Our acquisition of FAME is a significant entry point for us into the high growth sports entertainment business, an area of striking similarity to our other live entertainment interests. FAME is a leader in this rapidly growing new arena where sports and entertainment are married, creating significant marketing and promotion potential available for any corporation seeking unique, high-profile brand recognition. David Falk and his team, especially, have expanded the boundaries of endorsement possibilities, where whole new products can be created on the strength of the marketing image of their star clients. We believe that this addition to our product line of entertainment events serving as marketing delivery vehicles not only strengthens our position as a marketing medium but also helps to diversify our base of assets. This is an area we have certainly been interested in for some time, and we will continue to explore additional opportunities. We have already made overtures to the Marquee Group, a sports marketing company I helped found, regarding our possible purchase of that company.
"We are also very pleased with our other acquisitions, adding important venues and capabilities to our existing operations in New England and California. Don Law, Avalon and Oakdale all bring the strength of their eminent status as promoters and operators of premier venues. These acquisitions will allow us to achieve synergies and add depth to our operations in these vibrant markets as well as to enjoy the unique perspectives and management experience that each of these entities brings to our organization. Adding the expertise and marketing of EMI is also a natural expansion for us. We know them well as a `supplier' to SFX, and we now look forward to further strengthening our relationship with them and extending their reach in the important merchandising area."
In a separate announcement, SFX Entertainments expected tax indemnification liability, with respect to the taxable gain to be realized by SFX Broadcasting upon the spinoff of SFX Entertainment, will be approximately $120 million. Most of the tax liability relates to certain deferred inter-company transactions creating taxable income for SFX Entertainment. Management believes that these deferred inter-company transactions will give rise to significant additional taxable basis which will be available to offset future taxable income of SFX Entertainment. Although managements estimates of the amounts of the indemnity payment and additional tax basis are based on certain assumptions which management believes are reasonable, the actual amounts could vary significantly.
SFX Entertainment is a leading promoter, producer and venue operator for live entertainment events. It owns and/or operates the largest network of venues in the country used principally for music concerts and other live entertainment events. Upon completion of all pending acquisitions, it will have 46 venues either directly owned or operated under lease or exclusive booking arrangements in 22 of the top 50 markets, including 12 amphitheaters in 7 of the top 10 markets. Through its large number of venues, its strong market presence and the long operating histories of the businesses it has acquired, SFX operates an integrated franchise that promotes and produces a broad variety of live entertainment events locally, regionally and nationally. Pro forma for all completed and pending acquisitions, during 1997, approximately 45 million people visited events promoted and/or produced by SFX, including music concerts, theatrical shows and specialized motor sports events.
A registration statement relating to SFX Class A Common Stock has been previously filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers be accepted prior to the time the registration statement becomes effective. This press release does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
Client List for Falk Associates Management Enterprises (as of January 15, 1998) Client: Team Playing For: Kenny Anderson Portland Trailblazers Vin Baker Seattle SuperSonics Tyrone "Mugsy" Bogues Golden State Warriors Keith Booth Chicago Bulls Shawn Bradley Dallas Mavericks Rex Chapman Phoenix Suns Calbert Cheaney Washington Wizards Antonio Daniels Vancouver Grizzlies Patrick Ewing New York Knicks Danny Ferry Cleveland Cavaliers Adonal Foyle Golden State Warriors Chris Gatling New Jersey Nets Matt Geiger Charlotte Hornets Armon Gilliam Milwaukee Bucks Othella Harrington Houston Rockets Juwan Howard Washington Wizards Bobby Hurley Sacramento Kings Allen Iverson Philadelphia 76ers Michael Jordan Chicago Bulls Arturas Karnishovas Olympiakos (Greece) Kerry Kittles New Jersey Nets Lee Mayberry Vancouver Grizzlies Walter McCarty Boston Celtics Ron Mercer Boston Celtics Alonzo Mourning Miami Heat Dikembe Mutombo Atlanta Hawks Vitaly Potapenko Cleveland Cavaliers Bryant "Big Country" Reeves Vancouver Grizzlies Glen Rice Charlotte Hornets Roy Rogers Boston Celtics Dennis Scott Dallas Mavericks Rod Strickland Washington Wizards Bob Sura Cleveland Cavaliers Dragan Tarlac Chicago Bulls Keith Van Horn New Jersey Nets Antoine Walker Boston Celtics Monty Williams San Antonio Spurs Sharone Wright Toronto Raptors
CONTACT: Timothy J. Klahs
Director, Investor Relations
SFX Entertainment, Inc.