“The way this place is working, the landlord business may be more profitable than the bar.”
That’s the critical quote from an accountant interviewed for a CNN profile on a relatively new bar in Detroit, P.J.’s Lager House.
Owner P.J. Ryder opened up the place two years ago after running a record store for fifteen years, then working in the real estate field. He told CNN that he knew a music-oriented club would be a tough way to make a living, and the numbers he shares shed some light on why the talent bookers you’re talking to really want to know whether you can deliver a big crowd:
- The bar’s monthly lease is $3,000. In most cities, that number is dramatically higher.
- P.J. spends $7,000 per month on alcohol. Factor in the beer specials, like $1 PBR tallboys, and you can start to see why he needs big crowds to build profit at the bar.
- $26,370 has to come through the bar to keep the place open, because P.J. uses the cash flow from live acts to pay musicians, techs, and bouncers. He usually charges a $5.00 cover and pays bands $4.50, which is surprisingly generous. Most clubs I have worked with lean closer to 50/50.
- On nights when P.J. doesn’t charge a cover, bands get 25% of the bar sales. That might actually be a bigger win for most acts, even though it strains the club’s profit margin.
When you’re trying to book clubs, are you really thinking about how you can partner with your talent buyer? Remember that few clubs have “foot traffic” or built-in audiences anymore. Even the team of business students that wrote P.J.’s business plan assumed that bands would bring lots of audience members to the club.
If a talent buyer takes too many risks that don’t pan out, the club shuts down.
Yes, I have heard plenty of stories of club owners that love to gouge bands or deflate door numbers. But I know of way more club owners who are really in it because they love the lifestyle and they want to have fun. Help those club owners make money by delivering a solid audience to your gigs, and you’ll develop partnerships that will sustain your music career for years.