‘The events sector may not last the winter’: the O2 Arena on why re-opening isn’t enough

The last two decades have been boom years for the British live-music industry, and the O2 Arena has been the jewel in its crown. In the 14 years that it has occupied the erstwhile Millennium Dome site in Greenwich, the venue has hosted every major name from every generation of music, from The Rolling Stones, AC/DC and Prince right through to Beyoncé, Ariana Grande and Arctic Monkeys. It was recently garlanded as US trade magazine Billboard’s “venue of the decade”.

But as the pandemic drags on, it’s now becoming clear that, as with smaller local venues, the outlook for the O2 is stark. After a final run of shows in early March, from the likes of Stereophonics, Halsey and The Script, the venue was forced to close its doors.

“Since the pandemic hit, we’ve been in survival mode like everybody else,” says Steve Sayer, vice-president and general manager. “In the last couple of months, if we can trade at all, we’ve been trading with one arm tied behind our back, sometimes two. It’s been very tough.”

Given the vast scale of the O2’s operation, the pandemic has meant huge losses, emergency restructuring and fear for the venue’s future. “In the early days of Covid,” Sayer says, “our strategy was to reschedule as many shows as possible, to avoid cancellations, so at least we could keep some liquidity in our business. We quickly took a view that, in our sector, we’re all in this together – ourselves, promoters, agents and artists. 

“The immediate problem,” he continues, “was that we have a lot of fixed costs, but our business model is predicated on holding events. From those, we get our event income, as well as revenue streams from ancillaries, like parking, merchandising and our hospitality programme for premium clients and partners. And they also feed all the bars and restaurants on site. But once you turn off the tap of events, everything grinds to a halt.”

Initially, there were some redundancies, but the O2’s owners, AEG, were able to retain 180 permanent staff. Of those, 30 per cent have been working full-time, 10 per cent have been working part-time on flexi-furlough, and the remaining 60 per cent have been on full furlough.

The human ramifications, however, are far greater than this suggests. “On event nights,” Sayer explains, “we employ up to 800 people, when you include security, and the cleaning and catering teams. Then we support thousands of jobs in the local area, with the entertainment district and the retail scheme, and all of the supply chains.”

From April to June, the venue was put to use for 44 days as an NHS training facility for the nearby Nightingale hospital, hastily constructed at the ExCeL in London’s Docklands. Once lockdown began to lift, backstage tours were offered for the first time, while hair-raising roof-climbs were spiced up with added stand-up comedy – socially-distanced entertainment in extremis.

As of July, Sayer says, the venue’s bars, restaurants and retail were “trading well, out-performing where we thought we would be” – but still there were no events in the O2 or the neighbouring theatre, Indigo2, and “the second lockdown coming has not been entirely helpful”.

Sayer doesn’t mask his frustration at the Government’s reluctance to engage with the events industry. “Along with travel and hospitality, we’ve been the most severely affected industry. We were one of the first to close, and we may well be one of the last to reopen. 

“But the UK events sector is truly the envy of the world. It contributes over £11 billion in GDA in a normal year, and supports over 600,000 jobs, but I feel that it took a long time for us to get recognition as the crisis unfolded.”

On December 5, the Saturday night after the English lockdown measures are due to be lifted, the O2 is to host its first live music event in almost 10 months. Squeeze, the New Wave-era hitmakers who originally hailed from south-east London, will perform for a crowd of around 5,000, which is only a third of the venue’s seated capacity – just a quarter, in fact, when standing areas are deployed.

“It’s a test event, to some extent,” says Sayer. “We have local authority approval, working to the current guidelines. We’ve enhanced our cleaning regimes, we’ve got a contactless fan experience, and one-way systems in the venue. We know it’s not a long-term solution, and it is certainly not a viable financial model. But it’s definitely worthwhile, because it’s about demonstrating confidence, and building back towards full-capacity events.”

It’s also, he suggests, the O2’s way of forcing the Government to negotiate with their sector, and provide answers quicker than officialdom has thus far done. “We really need the Government to accelerate their engagement with our industry to figure out workable solutions for how we can get to, say, 50 per cent, then maybe to 75 per cent – and then, obviously, at some point next year, back up to full capacity.” 

Sayer reveals that they have substantial interest from performers, who’ve been twiddling their thumbs for much of 2020, and from promoters, to stage socially-distanced shows in that experimental phase of regrowth early next year. There is, however, a stumbling block to those parties fully committing.

“For a while now, our industry has been asking for a government-backed insurance scheme, similar to the one that has been introduced for film and TV. That would give promoters confidence to put a show on, knowing that, if London went from Tier 2 to Tier 3, or if another local lockdown was introduced at some point in the early part of 2021, they would be insured.”

For a good few months now, the live sector has projected approximately May 2021 as a feasible target for returning to full capacity. The O2’s diary for the 18 to 24 months thereafter is “as busy as I’ve ever seen it”, says Sayer: there are rescheduled runs from Stormzy, Dua Lipa and Elton John, amongst over 100 other postponements, all with a Plan B attached. Another frustration, however, is that there’s “inconsistency” between the current guidelines for music events, and for sports and business events – the latter two take up 40 per cent of the O2’s calendar.

Last week’s news of a potential vaccine came as a distant promise of an end to the confusion and muddle, but Sayer remains cautious in his optimism. “The vaccine is going to be the key to unlocking society, let alone events,” he says, “but the Government have been quite clear that it’s not going to be rolled out overnight. Like everyone else, we need to know how quickly – there needs to be much more dialogue, to provide clarity on the timetable and the steps required to reopen at full capacity. 

“Venues and production teams are the experts at delivering safe events. We need the senior medics and scientists to share the evolving best practices. We need to understand the science and the data, so we can design events around that.”

A proposal announced last week by the American arm of the global ticketing agency, Ticketmaster, suggested for the first time how a “health pass” for those who’ve had the vaccine and/or recently tested negative for the virus might be administered at the ticketing stage, with third-party technology giving a green light for tickets to be issued to validated customers. 

Sayer says that the news has “naturally created a lot of interest in the event world”, and suggests that the O2 would consider “using technology to integrate test results and a vaccination certificate, creating a health passport”.

He adds that such “passports” are already being used for the ATP Finals, the tennis tournament that began on Sunday. “No-one is doing it at scale in the event space yet, but we are actively exploring it to understand the role it might be able to play.”

Sayer believes, meanwhile, that another key building-block in getting back to full capacity is “behavioural change” – i.e. the widespread wearing of face masks.  

“If we had asked people to wear a face covering nine months ago, everyone would have said, ‘No way, that’s not going to happen.’ Given where we are today, and the choice between going to an event wearing a face covering and not going to an event at all – I know what the vast majority are going to vote for, and we have research that demonstrates that.”

Even after the vaccine, the new normal may look different.

“We’re confident that the O2 will be all-singing and all-dancing again,” Sayer says. “The outlook is bleaker than we would’ve hoped for, but I do feel that we can start to see our way through this now.

“The analogy I would use is, in the early part of lockdown, we couldn’t even see where the track was. Now, at least we’re on the track but we can’t see the finish line yet, and we have to move at pace, otherwise the event sector is not just going to have a tough winter – a lot of the component parts of it will not survive the winter.

“If we get to March or April, and there’s still no vaccine, and no end in sight, the Government has to be prepared to seriously look at targeted support.”

The message to the Government, from one of Britain’s largest event spaces, is clear: enter urgent dialogue about a workable action plan, or face another crippling blow to our economy.