On the Heels of Lady Gaga, the Economics of Las Vegas Residencies Reach New Highs

The race to lock down Las Vegas’ highest-paying residency is heating up with Lady Gaga announcing a two-year engagement at the MGM Park Theater. According to two well-placed sources, Gaga is guaranteed just over a million dollars per show, and is committed to 74 appearances. Should all go well with ticket sales, she could extend that run, inching closer to the $100 million mark, a new — and record — threshold for the city and for even the biggest of current pop artists. Gaga stands to earn even more on merchandise sales — typically a 50/50 split with the venue — and VIP offerings.

The price tag for a superstar artist’s residency has been inching up steadily in the post-recession years and as more and more acts, both contemporary (like Bruno Mars, also performing a run of shows at the MGM Park Theater, and Pitbull) and heritage (Cher), nostalgic (Backstreet Boys) and somewhere in between (Jennifer Lopez, Britney Spears), plant semi-permanent roots in the desert outpost.

It’s a rite of passage that goes back to the days of Elvis Presley and Dean Martin, the hottest acts of their respective days, but one that eventually gave way to those whose careers were careening to a halt. Which is why in recent decades Las Vegas was viewed more as a destination for also-rans — where a musician goes to die, was a common crack. Not so any more.

“Years ago, artists would put up their noses if I mentioned the thought of a Vegas residency,” says Grammys producer Ken Ehrlich, who has helmed Celine Dion’s Vegas production at Caesars Palace’s Colosseum and, with Raj Kapoor, also produced Mariah Carey’s Colosseum residency and John Fogerty’s Wynn residency. “Honestly, Celine changed all that in one fell swoop and now everyone wants in. I think acts are reacting to the rigors of the road, the uncertainty of fickle audiences today, and the advantages of being in one place for a defined period of time. Frankly, I’d love to do Gaga there… We’ve had some great moments with her over the years and she’s an absolutely perfect act for Las Vegas.”

But industry insiders contend that the Gaga numbers don’t add up in a way that makes financial sense for MGM Resorts, the hotel and casino giant with a current valuation of over $30 billion. “At the very high range, an act might clear $500,000,” says one representative of major music artists who’s familiar with the economics of Vegas residencies. “And that’s at a complete sell-out.” Whether the act draws people to the hotel’s and casino’s bars and restaurants doesn’t get factored into such a talent buy. Rather, it’s a matter of ticket pricing and being able to offer a more affordable tier — or not. At the reported Gaga rate, that means a seat in the 5,200-capacity theater would cost the ticket buyer at least $200 just to clear Gaga’s take-home, a steep price, her production value notwithstanding.

For comparison, tickets to Jennifer Lopez’s residency at the Axis Planet Hollywood range in price from $54 to $412. A recent three-night bow grossed $2.1 million, according to concert industry trade Pollstar, with the venue at 90% capacity and 11,408 in attendance. Also at the Axis is Britney Spears’ “Piece of Me” show (pictured below), which has been running since 2013. This year, it surpassed $135 million in box office gross. When Spears re-upped her commitment to Planet Hollywood in Sept. 2015, the deal was reported to be worth $35 million, a new bar at that time.

The music stars who offer the biggest bang for a host hotel’s buck in Las Vegas? Dance music DJs like Calvin Harris, David Guetta and Avicii. Paydays for top names in EDM can add up to $400,000 per night, on the high end, but that’s without the expensive set-up of a pop star’s show. “One guy and a laptop,” cracks the insider. “It’s like printing money.”

But Vegas, like the stock market, fluctuates with the times, and it wasn’t all that long ago that the city experienced a bloody and tragic occurrence outside the Mandalay Bay Hotel and Casino. On Oct. 1, Stephen Paddock opened fire on attendees of the Route 91 Harvest music festival, killing 58. No doubt the extra efforts put towards security for all major music events will also mean an added expense for the proprietor — perhaps one that is passed down to the consumer. There’s also the lingering PTSD of the local community to contend with.

On the other hand, escapist pop art like Lady Gaga’s may be just what the city needs. “Lady Gaga is a phenomenal performer and her shows transport you to another world night after night,” says Mike Snedegar, a marketing executive at the Tao Group, which operates Vegas’ Tao and Marquee, hot spot favorites of celebrities (actress Priyanka Chopra is pictured below) and music stars.

It’s a sentiment echoed by Insomniac founder Pasquale Rotella, who puts on the enormous Electric Daisy Carnival catering to a young, dance-minded crowd: “We want to create a fantasy world for people.”

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