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SFX Entertainment Enters Sponsorship Deal With Anheuser-Busch InBev

The New York Times, December 23, 2013

By Ben Sisario

As electronic dance music festivals grow in popularity, they are attracting affluent new participants: corporate sponsors.

SFX Entertainment, a dance-focused new company founded by the media mogul Robert F.X. Sillerman, announced on Monday that it had struck a global marketing partnership with Anheuser-Busch InBev, whose brands also sponsor mainstream events like the Super Bowl and Major League Baseball games.

Terms of the deal were not disclosed. Benjamin E. Mogil, an analyst at Stifel Nicolaus in Toronto, estimated that Anheuser-Busch’s sponsorship could be worth as much as $25 million next year and $35 million in 2015, as SFX’s events grow. SFX’s festivals include Tomorrowland in Europe and TomorrowWorld and Electric Zoo in the United States.

The news follows an announcement last week by Live Nation Entertainment, the world’s largest concert promoter and an SFX rival, that it had made a deal with Motorola. As part of that deal, Live Nation’s dance festivals will include a six-story LED tower from Motorola and the Moto X Kandi Shop, where revelers can design their own bracelets.

Such deals are common at major music festivals, but mainstream sponsors have been tentative about supporting dance events, which have never shaken a long association with mass drug use. This year at least half a dozen young people died at festivals from drugs like MDMA, or ecstasy, including two people at Electric Zoo in New York City in September.

The recent deals with SFX and Live Nation may signal that big sponsors are willing to enter the dance business. Music and sponsorship executives say many more such deals are expected in 2014 as the dance world grows.

But for marketers, the demographic of the young fans of star disc jockeys like Skrillex, Deadmau5 and Tiesto is hard to ignore. The IEG Sponsorship Report, a trade publication, said $1.24 billion in sponsorship money had been spent on music events this year. Another study estimated the global dance market, including recordings, concerts and brand sponsorships, as worth $4.5 billion a year.

SFX’s stock closed at $11.02 on Monday, up 1.6 percent.

Since its initial public offering in October, SFX has closed a string of deals, including the acquisition of the Rock in Rio festival in Brazil. SFX has made clear that its business depends to a large degree on its success in attracting sponsors.

SFX, Live Nation and others also have a challenge in finding ways to integrate corporate marketers into dance events, which historically have been resistant to commercialization.

In an interview, Mr. Sillerman said that “the ability to authentically attract the attention and affection of the millennial audience” would lead SFX to strike more corporate sponsorship deals than his competition.