Item 1. Financial Statements

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Item 1. Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	September 30, 2021		December 31, 2020
	(in thousands)
ASSETS
Current assets
Cash and cash equivalents	$	4,628,880	$	2,537,787
Accounts receivable, less allowance of $53,116 and $72,904, respectively	1,182,242		486,734
Prepaid expenses	691,086		577,130
Restricted cash	4,317		8,652
Other current assets	48,766		39,465
Total current assets	6,555,291		3,649,768
Property, plant and equipment, net	1,041,854		1,101,414
Operating lease assets	1,390,650		1,424,223
Intangible assets
Definite-lived intangible assets, net	732,276		855,600
Indefinite-lived intangible assets	369,016		369,058
Goodwill	2,109,719		2,129,203
Long-term advances	651,794		668,756
Other long-term assets	480,144		391,281
Total assets	$	13,330,744	$	10,589,303
LIABILITIES AND EQUITY
Current liabilities
Accounts payable, client accounts	$	1,499,131	$	744,096
Accounts payable	111,142		86,356
Accrued expenses	1,445,840		894,149
Deferred revenue	2,303,373		1,839,323
Current portion of long-term debt, net	46,214		53,415
Current portion of operating lease liabilities	111,090		107,147
Other current liabilities	41,314		72,083
Total current liabilities	5,558,104		3,796,569
Long-term debt, net	5,686,905		4,855,096
Long-term operating lease liabilities	1,448,270		1,445,674
Long-term deferred income taxes	174,083		170,759
Other long-term liabilities	242,811		182,508
Commitments and contingent liabilities
Redeemable noncontrolling interests	262,347		272,449
Stockholders' equity
Common stock	2,218		2,145
Additional paid-in capital	2,903,613		2,386,790
Accumulated deficit	(3,132,813)		(2,676,833)
Cost of shares held in treasury	(6,865)		(6,865)
Accumulated other comprehensive loss	(170,997)		(177,009)
Total Live Nation stockholders' equity	(404,844)		(471,772)
Noncontrolling interests	363,068		338,020
Total equity	(41,776)		(133,752)
Total liabilities and equity	$	13,330,744	$	10,589,303

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

	(in thousands except share and per share data)
Revenue	$	2,698,722	$	184,018	$	3,565,277	$	1,623,795
Operating expenses:
Direct operating expenses	1,969,912		130,749		2,346,998		1,199,126
Selling, general and administrative expenses	446,929		405,934		1,098,676		1,243,307
Depreciation and amortization	101,235		119,938		313,758		364,785
Loss (gain) on disposal of operating assets	(1,148)		208		(1,038)		897
Corporate expenses	44,649		31,630		100,195		80,858
Operating income (loss)	137,145		(504,441)		(293,312)		(1,265,178)
Interest expense	70,407		66,093		210,146		162,781

Interest income	(1,333)		(2,810)		(3,953)		(9,712)
Equity in losses (earnings) of nonconsolidated affiliates	(7,025)		2,615		(4,608)		6,656
Gain from sale of investments in nonconsolidated affiliates	(30,633)		(2,514)		(83,580)		(2,479)
Other expense (income), net	12,441		(8,463)		19,903		(9,043)
Income (loss) before income taxes	93,288		(559,362)		(431,220)		(1,413,381)
Income tax expense (benefit)	6,421		(16,904)		15,095		(49,417)
Net income (loss)	86,867		(542,458)		(446,315)		(1,363,964)
Net income (loss) attributable to noncontrolling interests	39,989		(13,556)		9,665		(82,761)
Net income (loss) attributable to common stockholders of Live Nation	$	46,878	$	(528,902)	$	(455,980)	$	(1,281,203)

Basic net income (loss) per common share available to common stockholders of Live Nation	$	0.20	$	(2.45)	$	(2.13)	$	(6.08)
Diluted net income (loss) per common share available to common stockholders of Live Nation	$	0.19	$	(2.45)	$	(2.13)	$	(6.08)

Weighted average common shares outstanding:
Basic	216,888,355		212,593,719		215,716,239		211,781,620
Diluted	223,800,400		212,593,719		215,716,239		211,781,620


Reconciliation to net income (loss) available to common stockholders of Live Nation:
Net income (loss) attributable to common stockholders of Live Nation	$	46,878	$	(528,902)	$	(455,980)	$	(1,281,203)
Accretion of redeemable noncontrolling interests	(4,245)		6,990		(4,210)		(5,955)
Basic and diluted net income (loss) available to common stockholders of Live Nation	$	42,633	$	(521,912)	$	(460,190)	$	(1,287,158)

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Net income (loss)	$	86,867	$	(542,458)	$	(446,315)	$	(1,363,964)
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on cash flow hedge	852		(2,249)		10,160		(38,845)
Realized loss on cash flow hedge	1,991		1,854		5,853		3,207
Foreign currency translation adjustments	(12,008)		21,983		(10,001)		(40,866)
Comprehensive income (loss)	77,702		(520,870)		(440,303)		(1,440,468)
Comprehensive income (loss) attributable to noncontrolling interests	39,989		(13,556)		9,665		(82,761)
Comprehensive income (loss) attributable to common stockholders of Live Nation	$	37,713	$	(507,314)	$	(449,968)	$	(1,357,707)

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)


	Live Nation Stockholders’ Equity
	Common Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Cost of Shares Held in Treasury		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	(in thousands, except share data)															(in thousands)
Balances at June 30, 2021	216,388,477	$	2,164	$	2,433,462	$	(3,179,691)	$	(6,865)	$	(161,832)	$	333,159	$	(579,603)	$	250,767

Non-cash and stock-based compensation	—	—		27,318		—		—		—		—		27,318		—
Common stock issued under stock plans, net of shares withheld for employee taxes	151,280	1		(4,523)		—		—		—		—		(4,522)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	70,011	1		2,238		—		—		—		—		2,239		—
Sale of common shares	5,239,259	52		449,363		—		—		—		—		449,415		—
Acquisitions	—	—		—		—		—		—		7,117		7,117		230



Redeemable noncontrolling interests fair value adjustments	—	—		(4,245)		—		—		—		—		(4,245)		4,245
Contributions received	—	—		—		—		—		—		1,329		1,329		—
Cash distributions	—	—		—		—		—		—		(8,341)		(8,341)		(2,749)
Other	—	—		—		—		—		—		(331)		(331)		—
Comprehensive income (loss):
Net income	—	—		—		46,878		—		—		30,135		77,013		9,854
Unrealized gain on cash flow hedge	—	—		—		—		—		852		—		852		—
Realized loss on cash flow hedge	—	—		—		—		—		1,991		—		1,991		—
Foreign currency translation adjustments	—	—		—		—		—		(12,008)		—		(12,008)		—
Balances at September 30, 2021	221,849,027	$	2,218	$	2,903,613	$	(3,132,813)	$	(6,865)	$	(170,997)	$	363,068	$	(41,776)	$	262,347

See Notes to Consolidated Financial Statements


	Live Nation Stockholders’ Equity
	Common Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Cost of Shares Held in Treasury		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	(in thousands, except share data)															(in thousands)
Balances at December 31, 2020	214,466,988	$	2,145	$	2,386,790	$	(2,676,833)	$	(6,865)	$	(177,009)	$	338,020	$	(133,752)	$	272,449

Non-cash and stock-based compensation	—	—		80,165		—		—		—		—		80,165		—
Common stock issued under stock plans, net of shares withheld for employee taxes	812,829	8		(24,593)		—		—		—		—		(24,585)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	1,329,951	13		12,162		—		—		—		—		12,175		—
Sale of common shares	5,239,259	52		449,363		—		—		—		—		449,415		—
Acquisitions	—	—		—		—		—		—		7,117		7,117		828

Purchases of noncontrolling interests	—	—		3,775		—		—		—		(2,577)		1,198		(1,698)
Sales of noncontrolling interests	—	—		161		—		—		—		8,868		9,029		—
Redeemable noncontrolling interests fair value adjustments	—	—		(4,210)		—		—		—		—		(4,210)		4,210
Contributions received	—	—		—		—		—		—		16,522		16,522		95
Cash distributions	—	—		—		—		—		—		(20,852)		(20,852)		(4,780)
Other	—	—				—		—		—		(2,452)		(2,452)		—
Comprehensive income (loss):
Net income (loss)	—	—		—		(455,980)		—		—		18,422		(437,558)		(8,757)
Unrealized gain on cash flow hedge	—	—		—		—		—		10,160		—		10,160		—
Realized loss on cash flow hedge	—	—		—		—		—		5,853		—		5,853		—
Foreign currency translation adjustments	—	—		—		—		—		(10,001)		—		(10,001)		—
Balances at September 30, 2021	221,849,027	$	2,218	$	2,903,613	$	(3,132,813)	$	(6,865)	$	(170,997)	$	363,068	$	(41,776)	$	262,347

See Notes to Consolidated Financial Statements


	Live Nation Stockholders’ Equity
	Common Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Cost of Shares Held in Treasury		Accumulated Other Comprehensive Loss		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	(in thousands, except share data)															(in thousands)
Balances at June 30, 2020	212,523,147	$	2,125	$	2,295,069	$	(1,704,599)	$	(6,865)	$	(243,805)	$	341,605	$	683,530	$	334,228
Non-cash and stock-based compensation	—	—		56,696		—		—		—		—		56,696		—
Common stock issued under stock plans, net of shares withheld for employee taxes	979,124	10		(25,489)		—		—		—		—		(25,479)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	320,731	3		6,683		—		—		—		—		6,686		—


Acquisitions	—	—		—		—		—		—		10,480		10,480		7,349
Divestitures	—	—		—		—		—		—		(1)		(1)		—
Purchases of noncontrolling interests	—	—		20,882		—		—		—		(426)		20,456		(33,406)
Redeemable noncontrolling interests fair value adjustments	—	—		6,990		—		—		—		—		6,990		(6,990)
Contributions received	—	—		—		—		—		—		1,101		1,101		446
Cash distributions	—	—		—		—		—		—		(3,242)		(3,242)		(1,916)
Other	—	—		184		—		—		—		(2,247)		(2,063)		16
Comprehensive loss:
Net loss	—	—		—		(528,902)		—		—		(816)		(529,718)		(12,740)
Unrealized loss on cash flow hedge	—	—		—		—		—		(2,249)		—		(2,249)		—
Realized loss on cash flow hedge	—	—		—		—		—		1,854		—		1,854		—
Foreign currency translation adjustments	—	—		—		—		—		21,983		—		21,983		—
Balances at September 30, 2020	213,823,002	$	2,138	$	2,361,015	$	(2,233,501)	$	(6,865)	$	(222,217)	$	346,454	$	247,024	$	286,987

See Notes to Consolidated Financial Statements


	Live Nation Stockholders’ Equity
	Common Shares Issued	Common Stock		Additional Paid-In Capital		Accumulated Deficit		Cost of Shares Held in Treasury		Accumulated Other Comprehensive Income		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
	(in thousands, except share data)															(in thousands)
Balances at December 31, 2019	211,262,062	$	2,113	$	2,245,619	$	(949,334)	$	(6,865)	$	(145,713)	$	318,134	$	1,463,954	$	449,498
Cumulative effect of change in accounting principle	—	—		—		(2,964)		—		—		—		(2,964)		—
Non-cash and stock-based compensation	—	—		106,975		—		—		—		—		106,975		—
Common stock issued under stock plans, net of shares withheld for employee taxes	1,320,373	13		(33,154)		—		—		—		—		(33,141)		—
Exercise of stock options, net of shares withheld for option cost and employee taxes	1,240,567	12		8,402		—		—		—		—		8,414		—
Fair value of convertible debt conversion feature, net of issuance cost	—	—		33,347		—		—		—		—		33,347		—

Acquisitions	—	—		—		—		—		—		45,802		45,802		19,248
Divestitures	—	—		—		—		—		—		592		592		—
Purchases of noncontrolling interests	—	—		13,943		—		—		—		(1,458)		12,485		(129,596)
Sales of noncontrolling interests	—	—		(8,161)		—		—		—		39,161		31,000		—
Redeemable noncontrolling interests fair value adjustments	—	—		(5,955)		—		—		—		—		(5,955)		5,955
Contributions received	—	—		—		—		—		—		2,568		2,568		446
Cash distributions	—	—		—		—		—		—		(15,925)		(15,925)		(15,548)
Other	—	—		(1)		—		—		—		(2,692)		(2,693)		17
Comprehensive loss:
Net loss	—	—		—		(1,281,203)		—		—		(39,728)		(1,320,931)		(43,033)
Unrealized loss on cash flow hedge	—	—		—		—		—		(38,845)		—		(38,845)		—
Realized loss on cash flow hedge	—	—		—		—		—		3,207		—		3,207
Foreign currency translation adjustments	—	—		—		—		—		(40,866)		—		(40,866)		—
Balances at September 30, 2020	213,823,002	$	2,138	$	2,361,015	$	(2,233,501)	$	(6,865)	$	(222,217)	$	346,454	$	247,024	$	286,987

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Nine Months Ended September 30,
	2021		2020
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(446,315)	$	(1,363,964)
Reconciling items:
Depreciation	167,170		184,391
Amortization	146,588		180,394
Amortization of non-recoupable ticketing contract advances	49,214		38,833
Deferred income tax expense (benefit)	4,365		(22,615)
Amortization of debt issuance costs and discounts	27,916		24,201

Non-cash compensation expense	80,165		106,965
Unrealized changes in fair value of contingent consideration	(6,998)		(25,745)

Equity in losses of nonconsolidated affiliates, net of distributions	6,396		8,266
Provision for uncollectible accounts receivable	(14,006)		48,413
Gain on sale of investments in nonconsolidated affiliates	(83,580)		(2,479)
Other, net	2,015		(12,681)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (increase) in accounts receivable	(690,105)		406,202
Decrease (increase) in prepaid expenses and other assets	(92,635)		1,793

Increase (decrease) in accounts payable, accrued expenses and other liabilities	1,323,448		(1,213,409)
Increase in deferred revenue	551,059		684,532
Net cash provided by (used in) operating activities	1,024,697		(956,903)
CASH FLOWS FROM INVESTING ACTIVITIES
Advances of notes receivable	(24,476)		(12,232)
Collections of notes receivable	16,500		13,838

Investments made in nonconsolidated affiliates	(55,246)		(9,728)
Purchases of property, plant and equipment	(103,914)		(187,036)

Cash paid for acquisitions, net of cash acquired	(19,594)		(37,283)

Proceeds from sale of investments in nonconsolidated affiliates	80,593		3,753
Other, net	(5,622)		4,156
Net cash used in investing activities	(111,759)		(224,532)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt, net of debt issuance costs	904,164		1,608,462
Payments on long-term debt	(93,168)		(24,202)
Contributions from noncontrolling interests	15,985		2,568
Distributions to noncontrolling interests	(25,632)		(31,473)
Purchases and sales of noncontrolling interests, net	(3,273)		(106,971)
Proceeds from sale of common stock, net of issuance costs	449,415		—
Proceeds from exercise of stock options	30,322		18,092
Taxes paid for net share settlement of equity awards	(42,731)		(42,818)
Payments for deferred and contingent consideration	(12,845)		(62,035)
Other, net	84		13
Net cash provided by financing activities	1,222,321		1,361,636
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(48,501)		(20,952)
Net increase in cash, cash equivalents, and restricted cash	2,086,758		159,249
Cash, cash equivalents and restricted cash at beginning of period	2,546,439		2,474,242
Cash, cash equivalents and restricted cash at end of period	$	4,633,197	$	2,633,491

See Notes to Consolidated Financial Statements

LIVE NATION ENTERTAINMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION AND OTHER INFORMATION

Preparation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X issued by the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, they include all normal and recurring accruals and adjustments necessary to present fairly the results of the interim periods shown. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2020 Annual Report on Form 10-K filed with the SEC on March 1, 2021.

Seasonality

Our Concerts and Sponsorship & Advertising segments typically experience higher revenue and operating income in the second and third quarters as our outdoor venues and festivals are primarily used in or occur from May through October. In addition, the timing of when tickets are sold and the tours of top-grossing acts can impact comparability of quarterly results year over year, although annual results may not be impacted. Our Ticketing segment revenue is impacted by fluctuations in the availability of events for sale to the public, which vary depending upon scheduling by our clients.

Cash flows from our Concerts segment typically have a slightly different seasonality as payments are often made for a portion of artist performance fees and production costs for tours in advance of the date the related event tickets go on sale. These artist fees and production costs are expensed when the event occurs. Once tickets for an event go on sale, we generally begin to receive payments from ticket sales at our owned or operated venues and festivals and in some cases from third-party venues in advance of when the event occurs. We record these ticket sales as revenue when the event occurs. Our seasonality also results in higher balances in cash and cash equivalents, accounts receivable, prepaid expenses, accrued expenses and deferred revenue at different times in the year.

Due to the unprecedented global stoppage of our concert and other events beginning in mid-March 2020 resulting from the global COVID-19 pandemic, we did not experience our typical seasonality trends in 2020 and do not expect 2021 will follow our typical seasonality trends even with the resumption of events late in the second quarter of 2021.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents include all highly liquid investments with an original maturity of three months or less. Our cash and cash equivalents include domestic and foreign bank accounts as well as interest-bearing accounts consisting primarily of bank deposits and money market accounts managed by third-party financial institutions. These balances are stated at cost, which approximates fair value.

Included in the September 30, 2021 and December 31, 2020 cash and cash equivalents balance is $1.3 billion and $673.5 million, respectively, of cash received that includes the face value of tickets sold on behalf of ticketing clients and their share of service charges (“client cash”), which amounts are to be remitted to these clients. We generally do not utilize client cash for our own financing or investing activities as the amounts are payable to our clients on a regular basis. These amounts are included in accounts payable, client accounts.

Restricted cash primarily consists of cash held in escrow accounts to fund capital improvements of certain leased or operated venues. The cash is held in these accounts pursuant to the related lease or operating agreement.

Nonconsolidated Affiliates

In general, nonconsolidated investments in which we own more than 20% of the common stock or otherwise exercise significant influence over an affiliate are accounted for under the equity method. We review the value of equity method investments and record impairment charges in the statements of operations for any decline in value that is determined to be other-than-temporary. If we obtain control of a nonconsolidated affiliate through the purchase of additional ownership interest or changes in the governing agreements, we remeasure our investment to fair value first and then apply the accounting guidance for business combinations. Any gain or loss resulting from the remeasurement to fair value is recorded as a component of other expense (income), net in the statements of operations. At September 30, 2021 and December 31, 2020, we had investments in nonconsolidated affiliates of $246.3 million and $170.5 million, respectively, included in other long-term assets on our consolidated balance sheets.

Income Taxes

Each reporting period, we evaluate the realizability of our deferred tax assets in each tax jurisdiction. As of September 30, 2021, we continued to maintain a full valuation allowance against our net deferred tax assets in certain jurisdictions due to cumulative pre-tax losses. As a result of the valuation allowances, no tax benefits have been recognized for losses incurred, if any, in those tax jurisdictions for the first nine months of 2021 and 2020.

Accounting Pronouncements - Not Yet Adopted

In August 2020, the FASB issued guidance that simplifies the accounting for convertible instruments and its application of the derivatives scope exception for contracts in an entity’s own equity. The new guidance reduces the number of accounting models that require separating embedded conversion features from convertible instruments. As a result, only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately. For contracts in an entity’s own equity, the new guidance eliminates some of the current requirements for equity classification. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. The guidance is effective for annual periods beginning after December 15, 2021 and interim periods within that year. The guidance should be applied using either a modified retrospective method or a full retrospective method. We will adopt this guidance on January 1, 2022, and are currently assessing which implementation method we will apply and the impact that adoption will have on our financial position and results of operations.

NOTE 2—IMPACT OF THE GLOBAL COVID-19 PANDEMIC

The unprecedented and rapid spread of COVID-19 and the related government restrictions and social distancing measures implemented throughout the world significantly impacted our business through the first half of this year. Late in the second quarter, however, we began to see the positive impacts of successful vaccination rollouts in many of our key markets, mainly the United States and United Kingdom, with social distancing restrictions easing and live events resuming. In the third quarter, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in the United States and United Kingdom. The restart of our operations has been executed with careful consideration of the safety and health of our fans, artists and employees through a mix of masking, testing and vaccination protocols at our events, venues and offices around the world.

Operating Results

While the first half of the year saw a material impact from the global COVID-19 pandemic, in the third quarter, ticket sales grew, new sponsor partners were signed and shows began to resume, primarily in the United States and United Kingdom. Our overall revenue for the quarter increased by $2.5 billion to $2.7 billion and for the nine months increased by $1.9 billion to $3.6 billion as compared to the same period of the prior year. The revenue increase during the quarter was across all of our segments as a result of more events going on sale and occurring globally, along with lower refunds, during the third quarter of 2021 as compared to the same period of the prior year. The increase in revenue during the first nine months of 2021 was primarily in our Concerts and Ticketing segments largely due to the resumption of shows and festivals late in the second quarter of 2021 and continuing into the third quarter of 2021 primarily in the United States and United Kingdom.

The event-related deferred revenue for our Concerts segment, which is reported as part of deferred revenue on our consolidated balance sheets, includes the face value and Concerts’ share of service charges for all tickets sold by September 30, 2021 for shows expected to occur in the next 12 months. Any refunds committed to for shows cancelled or rescheduled during the first nine months of 2021 have either been returned to fans or are reflected in accrued expenses on the consolidated balance sheets. In addition, we have recorded an estimate of $20 million in Concerts for refunds that may occur in the future for shows we believe may be cancelled or rescheduled based on the data available on refunds resulting from the global shutdown of our live events. This estimate only impacts our financial position as a reclassification from deferred revenue to accrued expenses. We expect that the majority of our shows postponed due to the pandemic will be rescheduled. Event-related deferred revenue for tickets sold for shows expected to occur after September 30, 2022 totaled $100.9 million and is reflected in other long-term liabilities on our consolidated balance sheets.

The revenue recognized in our Ticketing segment during the first nine months of 2021 includes our share of ticket service charges for tickets sold during the period for third-party clients and for shows that occurred in the period for our Concerts segment where our promoters control the ticketing. Revenue has been reduced for any shows that were cancelled and for refunds requested on rescheduled shows up to the time of the filing of these consolidated financial statements, and funds have either been returned to the customer or are reflected in accrued expenses on the consolidated balance sheets. Our ticketing clients determine if shows will be rescheduled or cancelled and what the refund policy will be for those shows. We have not recorded an estimate for refunds that may occur in the future since our clients, not Ticketmaster, determine when shows are

cancelled or rescheduled and we have a limited amount of historical data of refunds resulting from a global shutdown of live events on which to reliably determine an estimate.

For events that are cancelled, our standard policy is to refund the fans within 30 days, subject to regulations in various markets and in some cases at the discretion of our venue or event organizer clients. Our ticket refund policies for rescheduled shows vary by ticketing client and country. In multiple international markets, including Germany, Italy and Belgium, governmental regulations which allow for the issuance of vouchers in place of cash refunds for rescheduled shows, and in some cases for cancelled shows, have been put in place in response to the global COVID-19 pandemic. The volume and pace of cash refunds has had and may continue to have a material negative effect on our liquidity and capital resources.

The restart of our operations is now well underway in the United States and United Kingdom and we expect the same to happen in other parts of the world as vaccination efforts gain momentum in mainland Europe, Asia-Pacific and Latin America. The reduction in live events due to the pandemic has had a negative impact on our operating results for the first nine months of 2021 and we expect certain markets to continue to be impacted in the fourth quarter as there is still uncertainty on the exact timing and pace of the recovery in certain markets where vaccination efforts are still underway.

NOTE 3—LONG-LIVED ASSETS

We reviewed our long-lived assets for potential impairment indicators due to the suspension of our live events resulting from the global COVID-19 pandemic. Our venues are either owned or we have long-term operating rights under lease or management agreements typically with terms ranging from 5 to 25 years at inception. Many of our definite-lived intangible assets are based on revenue-generating contracts and client or vendor relationships associated with live events and have useful lives, established at the time of acquisition, typically ranging from 3 to 10 years. Our more significant investments in nonconsolidated affiliates are in the concert event promotion, venue operation or ticketing businesses, and these businesses have been experiencing similar impacts to their operations, in line with what we are experiencing as a result of the pandemic. Based on our assessments, we have recorded impairment charges on certain of our definite-lived intangible assets, which are discussed below.

Late in the second quarter we began to see the positive impacts of successful vaccination rollouts in many of our key markets, mainly the United States and United Kingdom, with social distancing restrictions easing and live events resuming. In the third quarter, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in both the United States and United Kingdom. We expect the same to happen in other parts of the world as vaccination efforts gain momentum in mainland Europe, Asia-Pacific and Latin America. The reduction in live events due to the pandemic has had a negative impact on our operating results for the first nine months of 2021 and we expect certain markets to continue to be impacted in the fourth quarter as there is still uncertainty on the exact timing and pace of the recovery in certain markets where vaccination efforts are still underway. As our larger venues have reopened and tours have resumed in the United States and United Kingdom and we expect other markets to reopen in the last quarter of 2021 and throughout 2022, we believe the underlying business supporting all of our long-lived assets will begin generating operating income once again.

Property, Plant and Equipment, Net

Property, plant and equipment, net, consisted of the following:


	September 30, 2021		December 31, 2020
	(in thousands)
Land, buildings and improvements	$	1,292,025	$	1,239,696
Computer equipment and capitalized software	901,725		887,637
Furniture and other equipment	423,517		424,363
Construction in progress	149,184		151,830
	2,766,451		2,703,526
Less: accumulated depreciation	1,724,597		1,602,112
	$	1,041,854	$	1,101,414

Definite-lived Intangible Assets

The following table presents the changes in the gross carrying amount and accumulated amortization of definite-lived intangible assets for the nine months ended September 30, 2021:


	Client / vendor relationships		Revenue- generating contracts		Venue management and leaseholds		Trademarks and naming rights		Technology		Other (1)		Total
	(in thousands)
Balance as of December 31, 2020:
Gross carrying amount	$	496,074	$	578,664	$	147,956	$	150,344	$	72,283	$	17,413	$	1,462,734
Accumulated amortization	(146,397)		(277,710)		(51,924)		(73,604)		(45,799)		(11,700)		(607,134)
Net	349,677		300,954		96,032		76,740		26,484		5,713		855,600
Gross carrying amount:
Acquisitions—current year	15,308		—		—		—		10,407		2,650		28,365
Acquisitions—prior year	5,558		—		—		—		—		—		5,558

Foreign exchange	(4,658)		(10,249)		(1,716)		(1,448)		158		2		(17,911)
Other (2)	(31,454)		(35,846)		(19,954)		(8,790)		(29,272)		(9,335)		(134,651)
Net change	(15,246)		(46,095)		(21,670)		(10,238)		(18,707)		(6,683)		(118,639)
Accumulated amortization:
Amortization	(55,420)		(49,813)		(11,444)		(11,106)		(15,357)		(3,448)		(146,588)

Foreign exchange	2,396		4,427		556		521		(189)		(4)		7,707
Other (2)	31,454		34,709		19,969		8,632		29,936		9,496		134,196
Net change	(21,570)		(10,677)		9,081		(1,953)		14,390		6,044		(4,685)
Balance as of September 30, 2021:
Gross carrying amount	480,828		532,569		126,286		140,106		53,576		10,730		1,344,095
Accumulated amortization	(167,967)		(288,387)		(42,843)		(75,557)		(31,409)		(5,656)		(611,819)
Net	$	312,861	$	244,182	$	83,443	$	64,549	$	22,167	$	5,074	$	732,276

(1) Other primarily includes intangible assets for non-compete agreements.

(2) Other primarily includes netdowns of fully amortized or impaired assets.

Included in the current year acquisitions amounts above are definite-lived intangible assets primarily associated with the acquisition of an artist management business in the United States and certain purchased software licenses.

The 2021 additions to definite-lived intangible assets from acquisitions have weighted-average lives as follows:


			Weighted- Average Life (years)

Client/vendor relationships			5

Non-compete agreements			2



All categories			4

The current year acquisitions amount above for technology intangibles includes software licenses acquired in the normal course of business.

We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a significant reduction in operating cash flow or a change in the manner in which the asset is intended to be used, which may indicate that the carrying amount of the asset may not be recoverable. During the nine months ended September 30, 2021 and 2020, we reviewed definite-lived intangible assets that management determined had an indicator that remaining future operating cash flows over the acquisition-date estimated useful life may not support their carrying value, as a result of the expected impacts from the global COVID-19 pandemic, and it was determined that certain of those assets were impaired since the estimated undiscounted operating cash flows associated with those assets were less than their carrying value.

For the nine months ended September 30, 2021, there were no significant impairment charges. For the nine months ended September 30, 2020, we recorded impairment charges related to definite-lived intangible assets of $15.3 million as a component of depreciation and amortization primarily related to intangible assets for revenue-generating contracts and client/vendor relationships in the Concerts segment. See Note 6—Fair Value Measurements for further discussion of the inputs used to determine the fair value.

Amortization of definite-lived intangible assets for the three months ended September 30, 2021 and 2020 was $46.1 million and $58.4 million, respectively, and for the nine months ended September 30, 2021 and 2020 was $146.6 million and $180.4 million, respectively. As acquisitions and dispositions occur in the future and the valuations of intangible assets for recent acquisitions are completed, amortization will vary.

Goodwill

We review goodwill for impairment annually, as of October 1. As such, we completed our annual review in the fourth quarter of 2020 and, as reported in our December 31, 2020 Form 10-K, no impairments were recorded as the fair value of each reporting unit was determined to be in excess of its carrying value for all reporting units. There were no indicators of impairment during the interim periods of 2021.

The following table presents the changes in the carrying amount of goodwill in each of our reportable segments for the nine months ended September 30, 2021:


	Concerts		Ticketing		Sponsorship & Advertising		Total
	(in thousands)
Balance as of December 31, 2020:
Goodwill	$	1,318,273	$	782,559	$	463,734	$	2,564,566
Accumulated impairment losses	(435,363)		—		—		(435,363)
Net	882,910		782,559		463,734		2,129,203

Acquisitions—current year	5,947		—		—		5,947
Acquisitions—prior year	(1,817)		(3,888)		419		(5,286)

Dispositions	(150)		—		—		(150)
Foreign exchange	(9,541)		(4,791)		(5,663)		(19,995)

Balance as of September 30, 2021:
Goodwill	1,312,712		773,880		458,490		2,545,082
Accumulated impairment losses	(435,363)		—		—		(435,363)
Net	$	877,349	$	773,880	$	458,490	$	2,109,719

We are in various stages of finalizing our acquisition accounting for recent acquisitions, which may include the use of external valuation consultants, and the completion of this accounting could result in a change to the associated purchase price allocations, including goodwill and our allocation between segments.

Investments in Nonconsolidated Affiliates

During the nine months ended September 30, 2021, we sold certain investments in nonconsolidated affiliates for $101.1 million in cash and noncash consideration resulting in a gain on sale of investments in nonconsolidated affiliates of $83.6 million.

During the nine months ended September 30, 2021, we entered into certain agreements whereby we received equity in the counterparty to those agreements primarily in exchange for providing sponsorship and marketing programs and support. We recognized $25.0 million of noncash additions to investments in nonconsolidated affiliates which are included in other long-term assets on our consolidated balance sheets associated with these agreements.

NOTE 4—LEASES

The significant components of operating lease expense are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Operating lease cost	$	56,662	$	59,923	$	168,538	$	180,478
Variable and short-term lease cost	44,552		10,545		57,548		43,275
Sublease income	(1,346)		(3,682)		(4,864)		(11,944)
Net lease cost	$	99,868	$	66,786	$	221,222	$	211,809

Many of our leases contain contingent rent obligations based on revenue, tickets sold or other variables, while others include periodic adjustments to rent obligations based on the prevailing inflationary index or market rental rates. Contingent rent obligations are not included in the initial measurement of the lease asset or liability and are recorded as rent expense in the period that the contingency is resolved.

Supplemental cash flow information for our operating leases is as follows:


	Nine Months Ended September 30,
	2021		2020
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	142,243	$	154,471
Lease assets obtained in exchange for lease obligations, net of terminations	$	79,703	$	149,817

Future maturities of our operating lease liabilities at September 30, 2021 are as follows:


	(in thousands)
October 1 - December 31, 2021	$	39,264
2022	207,883
2023	210,108
2024	193,320
2025	181,720
Thereafter	1,543,848
Total lease payments	2,376,143
Less: Interest	816,783
Present value of lease liabilities	$	1,559,360

The weighted average remaining lease term and weighted average discount rate for our operating leases are as follows:


	September 30, 2021		December 31, 2020
Weighted average remaining lease term (in years)	13.5		13.9
Weighted average discount rate	6.36	%	6.31	%

As of September 30, 2021, we have additional operating leases that have not yet commenced, with total lease payments of $266.7 million. These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from October 2021 to June 2030, with lease terms ranging from 1 to 20 years.

In response to the impacts we are experiencing from the global COVID-19 pandemic, we have amended certain of our lease agreements and are continuing negotiations with certain of our landlords for deferral or abatement of fixed rent payments. These lease concessions are not expected to substantially increase our obligations under the respective lease agreements. Therefore, we have elected to account for these lease concessions as though enforceable rights and obligations for those concessions existed in our lease agreements as clarified by the FASB rather than applying the lease modification guidance.

NOTE 5—LONG-TERM DEBT

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028. A portion of the proceeds were used to pay fees of $7.7 million and repay $75.0 million aggregate principal amount of our senior secured term loan B facility, leaving approximately $417.3 million for general corporate purposes, including acquisitions and organic investment opportunities.

In September 2021, we elected to draw down the $400 million term loan A under the amended senior secured credit facility prior to expiration of the drawdown period on October 17, 2021. We intend to use the proceeds from the drawdown for general corporate purposes.

Long-term debt, which includes finance leases, consisted of the following:


		September 30, 2021		December 31, 2020
		(in thousands)
Senior Secured Credit Facility:

	Term loan A	$	397,500	$	—
	Term loan B	856,570		938,125

6.5% Senior Secured Notes due 2027		1,200,000		1,200,000
3.75% Senior Secured Notes due 2028		500,000		—
4.75% Senior Notes due 2027		950,000		950,000
4.875% Senior Notes due 2024		575,000		575,000
5.625% Senior Notes due 2026		300,000		300,000
2.5% Convertible Senior Notes due 2023		550,000		550,000
2.0% Convertible Senior Notes due 2025		400,000		400,000
Other long-term debt		112,930		125,226
Total principal amount		5,842,000		5,038,351
Less unamortized discounts and debt issuance costs		(108,881)		(129,840)
Total long-term debt, net of unamortized discounts and debt issuance costs		5,733,119		4,908,511
Less: current portion		46,214		53,415
Total long-term debt, net		$	5,686,905	$	4,855,096

Future maturities of long-term debt at September 30, 2021 are as follows:


	(in thousands)
October 1, 2021 - December 31, 2021	$	21,678
2022	589,658
2023	66,375
2024	1,351,506
2025	37,782
Thereafter	3,775,001
Total	$	5,842,000

All long-term debt without a stated maturity date is considered current and is reflected as maturing in the earliest period shown in the table above. See Note 6—Fair Value Measurements for discussion of the fair value measurement of our long-term debt.

3.75% Senior Secured Notes due 2028

In January 2021, we issued $500 million principal amount of 3.75% senior secured notes due 2028. Interest on the notes is payable semi-annually in cash in arrears on January 15 and July 15 of each year and began on July 15, 2021, and the notes will mature on January 15, 2028. We may redeem some or all of the notes, at any time prior to January 15, 2024, at a price equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest to the date of redemption, plus a ‘make-whole’ premium. We may redeem up to 35% of the aggregate principal amount of the notes from the proceeds of certain equity offerings prior to January 15, 2024, at a price equal to 103.75% of the aggregate principal amount, plus accrued and unpaid interest thereon to the date of redemption. In addition, on or after January 15, 2024 we may redeem some or all of the notes at any time at redemption prices specified in the notes indenture, plus any accrued and unpaid interest to the date of redemption.

We must make an offer to redeem the notes at 101% of their aggregate principal amount, plus accrued and unpaid interest to the repurchase date, if we experience certain defined changes of control. The notes are secured by a first priority lien on substantially all of the tangible and intangible personal property of LNE and LNE’s domestic subsidiaries that are guarantors, and by a pledge of substantially all of the shares of stock, partnership interests and limited liability company interests of our direct and indirect domestic subsidiaries.

NOTE 6—FAIR VALUE MEASUREMENTS

Recurring

The following table shows the fair value of our significant financial assets that are required to be measured at fair value on a recurring basis, which are classified on the consolidated balance sheets as cash and cash equivalents.


	Estimated Fair Value
	September 30, 2021						December 31, 2020
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(in thousands)
Assets:
Cash equivalents	$	776,553	$	—	$	776,553	$	282,696	$	—	$	282,696

Our outstanding debt held by third-party financial institutions is carried at cost, adjusted for any discounts or debt issuance costs. Our debt is not publicly traded and the carrying amounts typically approximate fair value for debt that accrues interest at a variable rate, which are considered to be Level 2 inputs as defined in the FASB guidance.

The following table presents the estimated fair values of our senior secured notes, senior notes and convertible senior notes:


	Estimated Fair Value at
	September 30, 2021		December 31, 2020
	Level 2
	(in thousands)
6.5% Senior Secured Notes due 2027	$	1,322,100	$	1,340,688
3.75% Senior Secured Notes due 2028	$	497,860	$	—
4.75% Senior Notes due 2027	$	966,986	$	970,872
4.875% Senior Notes due 2024	$	581,929	$	581,480
5.625% Senior Notes due 2026	$	312,237	$	307,785
2.5% Convertible Senior Notes due 2023	$	796,329	$	720,764
2.0% Convertible Senior Notes due 2025	$	459,180	$	425,172

The estimated fair value of our third-party fixed-rate debt is based on quoted market prices in active markets for the same or similar debt, which are considered to be Level 2 inputs.

Non-recurring

The following table shows the fair value of our financial assets that have been adjusted to fair value on a non-recurring basis, which had a significant impact on our results of operations for the nine months ended September 30, 2020.


			Fair Value Measurements Using
Description	Fair Value Measurement		Level 1		Level 2		Level 3		Loss (Gain)
			(in thousands)

2020
Definite-lived intangible assets, net	$	7,390	$	—	$	—	$	7,390	$	15,264

For the nine months ended September 30, 2021, there were no significant impairment charges. During the nine months ended September 30, 2020, we recorded impairment charges related to definite-lived intangible assets of $15.3 million as a component of depreciation and amortization primarily related to intangible assets for revenue-generating contracts and client/vendor relationships in the Concerts segment. It was determined that these assets were impaired since the most recent estimated undiscounted future cash flows associated with these assets were less than their carrying value, primarily as a result of the expected impacts from the global COVID-19 pandemic. These impairments were calculated using operating cash flows, which were discounted to approximate fair value. The key inputs in these calculations include future cash flow projections, including revenue profit margins, and, for the fair value computation, a discount rate. The key inputs used for these non-recurring fair value measurements are considered Level 3 inputs.

NOTE 7—COMMITMENTS AND CONTINGENT LIABILITIES

Litigation

Consumer Class Actions

The following putative class action lawsuits were filed against Live Nation and/or Ticketmaster in Canada: Thompson-Marcial v. Ticketmaster Canada Holdings ULC (Ontario Superior Court of Justice, filed September 2018); McPhee v. Live Nation Entertainment, Inc., et al. (Superior Court of Quebec, District of Montreal, filed September 2018); Crystal Watch v. Live Nation Entertainment, Inc., et al. (Court of Queen’s Bench for Saskatchewan, by amendments filed September 2018); and Gomel v. Live Nation Entertainment, Inc., et al. (Supreme Court of British Columbia, Vancouver Registry, filed October 2018). Similar putative class actions were filed in the United States during the same time period, but as of November 2020, each of the lawsuits filed in the United States has been dismissed with prejudice.

The Canadian lawsuits make similar factual allegations that Live Nation and/or Ticketmaster engage in conduct that is intended to encourage the resale of tickets on secondary ticket exchanges at elevated prices. Based on these allegations, each plaintiff asserts violations of different provincial and federal laws. Each plaintiff also seeks to represent a class of individuals who purchased tickets on a secondary ticket exchange, as defined in each plaintiff’s complaint. The Watch complaint also makes claims related to Ticketmaster’s fee display practices on the primary market. The complaints seek a variety of remedies, including unspecified compensatory damages, punitive damages, restitution, injunctive relief and attorneys’ fees and costs.

The McPhee matter is stayed pending the outcome of the Watch matter, and the Thompson-Marcial, Watch, and Gomel cases are in the class certification phase. In April 2021, the court in the Gomel lawsuit refused to certify all claims other than those pled under British Columbia’s Business Practices and Consumer Protection Act and claims for punitive damages, but the court did certify a class of British Columbia residents who purchased tickets to an event in Canada on any secondary market exchange from June 30, 2015 through April 15, 2021 that were initially purchased on Ticketmaster.ca. We filed a notice of appeal of the class certification ruling in May 2021, and the plaintiff filed a cross-appeal shortly thereafter.

Based on information presently known to management, we do not believe that a loss is probable of occurring at this time, and we believe that the potential liability, if any, will not have a material adverse effect on our financial position, cash flows or results of operations. Further, we do not currently believe that the claims asserted in these lawsuits have merit, and considerable uncertainty exists regarding any monetary damages that will be asserted against us. We continue to vigorously defend these actions.

CIE Arbitration

In July 2019, we entered into agreements with Corporación Interamericana de Entretenimiento, S.A.B. de C.V. (“CIE”) and Grupo Televisa, S.A.B. (“TV”) to acquire an aggregate 51% interest in OCESA Entretenimiento, S.A. de C.V. (“OCESA”) and certain other related subsidiaries of CIE. In May 2020, we notified CIE and TV that we were terminating our agreements with them and commenced binding arbitration proceedings, in New York, New York, before the International Court of

Arbitration of the International Chamber of Commerce (“ICC”), seeking a declaratory judgment that we had properly terminated the CIE purchase agreement and that any obligations thereunder were excused. In July 2020, CIE filed its response to our claims, seeking specific performance to require us to proceed with closing under the CIE purchase agreement and damages in an unspecified amount arising from our alleged failure to timely close. The matter has been assigned to a panel of arbitrators and a hearing had been scheduled to commence in June 2022. In September 2021, we entered into amendments to revive the previously terminated purchase agreements with CIE and TV and proceed with the acquisition of OCESA on modified terms. In connection with the purchase agreement amendment entered into with CIE, the pending arbitration matter before the ICC has been suspended pending the closing of the OCESA acquisition, and we and CIE have agreed to terminate the ICC arbitration and release any claims arising from the earlier termination of the purchase agreements upon completion of the acquisition.

NOTE 8—EQUITY

Common Stock

In September 2021, we completed the public offering of 5,239,259 shares of common stock. A portion of the proceeds of $455.3 million were used to pay estimated fees of $5.9 million, leaving approximately $449.4 million of net proceeds. We intend to use the net proceeds to fund the acquisition of 51% of the capital stock of OCESA and use any remaining proceeds for general corporate purposes.

Accumulated Other Comprehensive Loss

The following table presents changes in the components of AOCI, net of taxes, for the nine months ended September 30, 2021:


	Cash Flow Hedge		Foreign Currency Items		Total
	(in thousands)
Balance at December 31, 2020	$	(31,587)	$	(145,422)	$	(177,009)
Other comprehensive income before reclassifications	10,160		(10,001)		159
Amount reclassified from AOCI	5,853		—		5,853
Net other comprehensive income	16,013		(10,001)		6,012
Balance at September 30, 2021	$	(15,574)	$	(155,423)	$	(170,997)

Earnings Per Share

Basic net income (loss) per common share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. The calculation of diluted net income (loss) per common share includes the effects of the assumed exercise of any outstanding stock options, the assumed vesting of shares of restricted and deferred stock awards and the assumed conversion of our convertible senior notes, where dilutive.

The following table sets forth the computation of weighted average common shares outstanding:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020

Weighted average common shares—basic	216,888,355	212,593,719	215,716,239	211,781,620
Effect of dilutive securities:
Stock options and restricted stock	6,912,045	—	—	—

Weighted average common shares—diluted	223,800,400	212,593,719	215,716,239	211,781,620

The following table shows securities excluded from the calculation of diluted net loss per common share because such securities are anti-dilutive:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Options to purchase shares of common stock	3,750	9,874,376	7,727,064	9,874,376
Restricted stock and deferred stock—unvested	91,275	3,713,249	3,207,115	3,713,249

Conversion shares related to the convertible senior notes	11,864,035	11,864,035	11,864,035	10,729,717
Number of anti-dilutive potentially issuable shares excluded from diluted common shares outstanding	11,959,060	25,451,660	22,798,214	24,317,342

NOTE 9—REVENUE RECOGNITION

The global COVID-19 pandemic has significantly impacted the recognition of revenue for our Concerts, Ticketing and Sponsorship & Advertising segments. Late in the second quarter we began to see the positive impacts of successful vaccination rollouts in many of our key markets, mainly the United States and United Kingdom, with social distancing restrictions easing and live events resuming. In the third quarter, we saw a meaningful restart of our operations with outdoor amphitheater events and festivals taking place in both the United States and United Kingdom.

For our Concerts segment, the impact is partially a delay in the timing of revenue recognition as many events have been or are being rescheduled to dates later in 2021 or 2022. For events that have been cancelled as of September 30, 2021, the deferred revenue has been reclassified to accrued expenses on our consolidated balance sheets where not already refunded to the fan. In certain markets, we are offering fans an incentive to receive a voucher for a future ticket purchase to one of our events in lieu of receiving a refund for the cancelled event. Where a fan has elected to receive the incentive voucher, the cash from the original ticket purchase remains in deferred revenue. For certain of our rescheduled events, we are offering a limited refund window for fans to request a refund. Where a fan has elected to receive a refund for a rescheduled event and where we have estimated future refunds, the deferred revenue has been reclassified to accrued expenses if not already refunded. The estimate of future refunds was developed by applying the percentage of future shows we believe could be rescheduled to the deferred revenue balances as of September 30, 2021 for those impacted quarters, and then applying a venue-specific refund take rate. The venue-specific refund take rates are based on the refunds we have issued since we ceased all our tours and closed our venues in mid-March 2020 through the end of the first quarter of 2021.

For our Ticketing segment, the impact is similar to the Concerts segment if the tickets sold for an event are controlled by our concert promoters. For the Ticketing segment’s third-party clients, previously recognized service charges are reversed from revenue when the event is cancelled or a refund is issued for a rescheduled event, including refunds issued after the balance sheet date but prior to the filing of our consolidated financial statements. The revenue reversal is reflected as accrued expenses on our consolidated balance sheets where not already refunded to the fan. The timing of our third-party clients’ event cancellations and rescheduling of postponed events versus new events available for sale can result in refunds of service charges exceeding quarterly sales resulting in negative revenue for that period.

For our Sponsorship & Advertising segment, the impact is partially a delay in the timing of revenue recognition due to our concert events being rescheduled, our venues being closed along with the limited number of events that were available for sale on our websites. In response to the impacts we are experiencing from the global COVID-19 pandemic, we have amended or are continuing negotiations with certain of our sponsors to either provide additional benefits when our venues reopen and our concert events resume or extend the term of the agreement with no additional benefits to the sponsor.

Concerts

Concerts revenue, including intersegment revenue, for the three and nine months ended September 30, 2021 and 2020 are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands)
Total Concerts Revenue	$	2,151,596		$	154,791		$	2,677,970		$	1,290,007
Percentage of consolidated revenue	79.7		%	84.1		%	75.1		%	79.4		%

Our Concerts segment generates revenue from the promotion or production of live music events and festivals in our owned or operated venues and in rented third-party venues, artist management commissions and the sale of merchandise for music artists at events. As a promoter and venue operator, we earn revenue primarily from the sale of tickets, concessions, merchandise, parking, ticket rebates or service charges on tickets sold by Ticketmaster or third-party ticketing agreements, and rental of our owned or operated venues. As an artist manager, we earn commissions on the earnings of the artists and other clients we represent, primarily derived from clients’ earnings for concert tours. Over 95% of Concerts’ revenue, whether related to promotion, venue operations, artist management or artist event merchandising, is recognized on the day of the related event. The majority of consideration for our Concerts segment is collected in advance of, or on the day, of the event. Consideration received in advance of the event is recorded as deferred revenue or in other long-term liabilities if the event is more than twelve months from the balance sheet date. Any consideration not collected by the day of the event is typically received within three months after the event date.

Ticketing

Ticketing revenue, including intersegment revenue, for the three and nine months ended September 30, 2021 and 2020 are as follows:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2021			2020		2021			2020
	(in thousands)
Total Ticketing Revenue	$	374,237		$	(19,822)	$	646,560		$	177,436
Percentage of consolidated revenue	13.9		%	*		18.1		%	10.9		%


*			Percentage is not meaningful.

Ticket fee revenue is generated from convenience and order processing fees, or service charges, charged at the time a ticket for an event is sold in either the primary or secondary markets. Our Ticketing segment is primarily an agency business that sells tickets for events on behalf of its clients, which include venues, concert promoters, professional sports franchises and leagues, college sports teams, theater producers and museums. Our Ticketing segment records revenue arising from convenience and order processing fees, regardless of whether these fees are related to tickets sold in the primary or secondary market, and regardless of whether these fees are associated with our concert events or third-party clients’ concert events. Our Ticketing segment does not record the face value of the tickets as revenue. Ticket fee revenue is recognized when the ticket is sold for third-party clients and secondary market sales, as we have no further obligation to our client’s customers following the sale of the ticket. For our concert events where our concert promoters control ticketing, ticket fee revenue is recognized when the event occurs because we also have the obligation to deliver the event to the fan. The delivery of the ticket to the fan is not considered a distinct performance obligation for our concert events because the fan cannot receive the benefits of the ticket unless we also fulfill our obligation to deliver the event. The majority of ticket fee revenue is collected within the month of the ticket sale. Revenue received from the sale of tickets in advance of our concert events is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date. Reported revenue is net of any refunds made or committed to and the impact of any cancellations of events that occurred during the period up to the time of filing these consolidated financial statements.

Ticketing contract advances, which can be either recoupable or non-recoupable, represent amounts paid in advance to our clients pursuant to ticketing agreements and are reflected in prepaid expenses or in long-term advances if the amount is expected to be recouped or recognized over a period of more than twelve months. Recoupable ticketing contract advances are generally recoupable against future royalties earned by the client, based on the contract terms, over the life of the contract. Royalties are typically earned by the client when tickets are sold. Royalties paid to clients are recorded as a reduction to revenue when the tickets are sold and the corresponding service charge revenue is recognized. Non-recoupable ticketing contract advances, excluding those amounts paid to support clients’ advertising costs, are fixed additional incentives

occasionally paid by us to certain clients to secure the contract and are typically amortized over the life of the contract on a straight-line basis as a reduction to revenue.

At September 30, 2021 and December 31, 2020, we had ticketing contract advances of $94.0 million and $63.5 million, respectively, recorded in prepaid expenses and $80.5 million and $87.0 million, respectively, recorded in long-term advances on the consolidated balance sheets. We amortized $20.5 million and $6.7 million for the three months ended September 30, 2021 and 2020, respectively, and $49.2 million and $38.8 million for the nine months ended September 30, 2021 and 2020, respectively, related to non-recoupable ticketing contract advances.

Sponsorship & Advertising

Sponsorship & Advertising revenue, including intersegment revenue, for the three and nine months ended September 30, 2021 and 2020 are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
	(in thousands)
Total Sponsorship & Advertising Revenue	$	174,449		$	47,927		$	241,657		$	156,560
Percentage of consolidated revenue	6.5		%	26.0		%	6.8		%	9.6		%

Our Sponsorship & Advertising segment generates revenue from sponsorship and marketing programs that provide its sponsors with strategic, international, national and local opportunities to reach customers through our venue, concert and ticketing assets, including advertising on our websites. These programs can also include custom events or programs for the sponsors’ specific brands, which are typically experienced exclusively by the sponsors’ customers. Sponsorship agreements may contain multiple elements, which provide several distinct benefits to the sponsor over the term of the agreement, and can be for a single or multi-year term. We also earn revenue from exclusive access rights provided to sponsors in various categories such as ticket pre-sales, beverage pouring rights, venue naming rights, media campaigns, signage within our venues, and advertising on our websites. Revenue from sponsorship agreements is allocated to the multiple elements based on the relative stand-alone selling price of each separate element, which are determined using vendor-specific evidence, third-party evidence or our best estimate of the fair value. Revenue is recognized over the term of the agreement or operating season as the benefits are provided to the sponsor unless the revenue is associated with a specific event, in which case it is recognized when the event occurs. Revenue is collected in installment payments during the year, typically in advance of providing the benefit or the event. Revenue received in advance of the event or the sponsor receiving the benefit is recorded as deferred revenue or in other long-term liabilities if the date of the event is more than twelve months from the balance sheet date.

At September 30, 2021, we had contracted sponsorship agreements with terms greater than one year that had approximately $1.0 billion of revenue related to future benefits to be provided by us. We expect to recognize, based on current projections, approximately 12%, 37%, 19% and 32% of this revenue in the remainder of 2021, 2022, 2023 and thereafter, respectively.

Deferred Revenue

The majority of our deferred revenue is typically classified as current and is shown as a separate line item on the consolidated balance sheets. Deferred revenue that is not expected to be recognized within the next twelve months is classified as long-term and reflected in other long-term liabilities on the consolidated balance sheets. We had current deferred revenue of $1.8 billion and $1.4 billion at December 31, 2020 and 2019, respectively.

The table below summarizes the amount of the preceding December 31 current deferred revenue recognized during the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Concerts	$	278,557	$	11,539	$	330,852	$	281,017
Ticketing	24,159		4,023		31,950		25,231
Sponsorship & Advertising	43,437		824		58,070		17,408
Other & Corporate	—		1,364		—		3,402
	$	346,153	$	17,750	$	420,872	$	327,058

As of September 30, 2021, approximately 15.4% of the current deferred revenue balance from December 31, 2020 is expected to be recognized in 2021 and thus such amounts remain in current deferred revenue. In addition, as of September 30,

2021, approximately 14.9% of the current deferred revenue balance from December 31, 2020 has been or is expected to be refunded to fans as the corresponding events have been cancelled or refunds were or are expected to be requested for rescheduled events, and thus such amounts have been reclassified to accrued expenses if not already refunded. Our long-term deferred revenue balance has increased as events have been rescheduled into the fourth quarter of 2022 in markets still experiencing severe impacts from the global COVID-19 pandemic. We had long-term deferred revenue of $149.4 million and $88.6 million at September 30, 2021 and December 31, 2020, respectively, which is reflected in other long-term liabilities on the consolidated balance sheets.

NOTE 10—STOCK-BASED COMPENSATION

The following is a summary of stock-based compensation expense recorded during the respective periods:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(in thousands)
Selling, general and administrative expenses	$	18,826	$	47,590	$	50,636	$	82,802
Corporate expenses	8,492		9,105		29,529		24,163
Total	$	27,318	$	56,695	$	80,165	$	106,965

The decrease in stock-based compensation expense for the three and nine months ended September 30, 2021 as compared to the same periods of the prior year is primarily due to lower expense in 2021 associated with restricted stock awards issued in 2020 and 2021 with a three to six month vesting period in lieu of cash payments for certain compensation owed to employees, as part of our cash savings initiative in connection with the global COVID-19 pandemic.

NOTE 11—SEGMENT DATA

Our reportable segments are Concerts, Ticketing and Sponsorship & Advertising. Our Concerts segment involves the promotion of live music events globally in our owned or operated venues and in rented third-party venues, the production of music festivals, the operation and management of music venues, the creation or streaming of associated content and the provision of management and other services to artists. Our Ticketing segment involves the management of our global ticketing operations, including providing ticketing software and services to clients, and consumers with a marketplace, both online and mobile, for tickets and event information, and is responsible for our primary ticketing website, www.ticketmaster.com. Our Sponsorship & Advertising segment manages the development of strategic sponsorship programs in addition to the sale of international, national and local sponsorships and placement of advertising such as signage, promotional programs, rich media offerings, including advertising associated with live streaming and music-related content, and ads across our distribution network of venues, events and websites.

Revenue and expenses earned and charged between segments are eliminated in consolidation. Our capital expenditures below include accruals for amounts incurred but not yet paid for, but are not reduced by reimbursements received from outside parties such as landlords and noncontrolling interest partners or replacements funded by insurance proceeds.

We manage our working capital on a consolidated basis. Accordingly, segment assets are not reported to, or used by, our management to allocate resources to or assess performance of our segments, and therefore, total segment assets have not been presented.

The following table presents the results of operations for our reportable segments for the three and nine months ended September 30, 2021 and 2020:


	Concerts		Ticketing		Sponsorship & Advertising		Other		Corporate		Eliminations		Consolidated
	(in thousands)
Three Months Ended September 30, 2021
Revenue	$	2,151,596	$	374,237	$	174,449	$	543	$	—	$	(2,103)	$	2,698,722
Direct operating expenses	1,822,537		111,197		38,281		—		—		(2,103)		1,969,912
Selling, general and administrative expenses	303,378		116,796		26,247		508		—		—		446,929


	Concerts		Ticketing		Sponsorship & Advertising		Other		Corporate		Eliminations		Consolidated
	(in thousands)
Depreciation and amortization	59,541		32,040		7,166		10		2,478		—		101,235
Loss (gain) on disposal of operating assets	(1,098)		(66)		—		—		16		—		(1,148)
Corporate expenses	—		—		—		—		44,649		—		44,649
Operating income (loss)	$	(32,762)	$	114,270	$	102,755	$	25	$	(47,143)	$	—	$	137,145
Intersegment revenue	$	1,473	$	630	$	—	$	—	$	—	$	(2,103)	$	—

Three Months Ended September 30, 2020
Revenue	$	154,791	$	(19,822)	$	47,927	$	806	$	—	$	316	$	184,018
Direct operating expenses	113,283		8,503		8,647		—		—		316		130,749
Selling, general and administrative expenses	257,131		126,518		18,891		3,394		—		—		405,934
Depreciation and amortization	65,794		42,565		6,634		2,192		2,753		—		119,938
Loss (gain) on disposal of operating assets	208		(1)		—		1		—		—		208
Corporate expenses	—		—		—		—		31,630		—		31,630
Operating income (loss)	$	(281,625)	$	(197,407)	$	13,755	$	(4,781)	$	(34,383)	$	—	$	(504,441)
Intersegment revenue	$	(286)	$	(30)	$	—	$	—	$	—	$	316	$	—

Nine Months Ended September 30, 2021
Revenue	$	2,677,970	$	646,560	$	241,657	$	2,173	$	—	$	(3,083)	$	3,565,277
Direct operating expenses	2,108,617		188,330		53,134		—		—		(3,083)		2,346,998
Selling, general and administrative expenses	713,922		317,451		65,046		2,257		—		—		1,098,676
Depreciation and amortization	180,877		103,406		21,837		32		7,606		—		313,758
Loss (gain) on disposal of operating assets	(988)		(66)		—		—		16		—		(1,038)
Corporate expenses	—		—		—		—		100,195		—		100,195
Operating income (loss)	$	(324,458)	$	37,439	$	101,640	$	(116)	$	(107,817)	$	—	$	(293,312)
Intersegment revenue	$	1,473	$	1,610	$	—	$	—	$	—	$	(3,083)	$	—
Capital expenditures	$	59,367	$	30,627	$	4,930	$	—	$	15,315	$	—	$	110,239

Nine Months Ended September 30, 2020
Revenue	$	1,290,007	$	177,436	$	156,560	$	2,407	$	—	$	(2,615)	$	1,623,795
Direct operating expenses	1,046,405		120,967		34,369		—		—		(2,615)		1,199,126
Selling, general and administrative expenses	762,961		411,875		59,661		8,810		—		—		1,243,307
Depreciation and amortization	202,352		125,054		21,766		6,630		8,983		—		364,785
Loss on disposal of operating assets	896		—		—		1		—		—		897
Corporate expenses	—		—		—		—		80,858		—		80,858
Operating income (loss)	$	(722,607)	$	(480,460)	$	40,764	$	(13,034)	$	(89,841)	$	—	$	(1,265,178)
Intersegment revenue	$	811	$	1,804	$	—	$	—	$	—	$	(2,615)	$	—
Capital expenditures	$	98,790	$	58,515	$	4,709	$	—	$	6,239	$	—	$	168,253

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