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12 Jul, 2007 02:42

Big stars, big bucks and big risks in Russian gigs

Growing number of foreign stars, like George Michael, Aerosmith and Metallica, are making their way to Russia to play its stadiums, clubs and private corporate parties, but the promotion industry has to face a lot of tough challenges to put on all these s

The concert bookers say that getting the big names is all about personal contacts.

“There some people, but they are very few, you can count them on one hand, who bring stars in on a regular basis. They can contact any big artist, who'll come, no problem,” Dmitry Frolov, Rai Club Concert Director, explained.

Bringing big stars to Russia is big bucks and big business, and promoters will do whatever they can to get them here. But the stakes are high and if the concert gets cancelled, someone has to foot the bill. Promoters the world over are liable for cancelled gigs. But the Russian market holds additional risks.

“To set up a concert here you've got to sign loads of papers and agreements with local authorities, police, and so on. Even the fire department can stop you holding a concert in a certain place. It all takes tons of time and causes a huge amount of stress. Many concerts have been cancelled because of this,” Dmitry Shalya, Znaki Promo Group Promoter, said.

Dmitry says this bureaucratic uncertainty makes concert promotion in Russia a gamble and it doesn't stop there. The tax legislation in most developed markets has a special provision for calculating tax for entertainers, but Russia doesn't.

Because of this, in theory performers could be charged anything up to twenty percent tax on concert earnings in the country.

Tax specialist Alan Broach says in practice, promoters get around this by making sure all payments are made outside Russia, so the tax authorities here can't touch them.

“The loss to the budget, I would imagine, is now starting to be significant. But if you think about the history of international rock tours, the big stadium concerts where the real money gets made, it's a pretty recent phenomenon in Russia,” Alain Broach, Deloitte CIS Tax Partner, commented. 

This phenomenon may be new but as it gets more established more clarity will need to take centre stage.