# Live Nation Entertainment, Inc. (LYV) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from Live Nation Entertainment, Inc.'s 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/1335258/000133525825000028/lyv-20241231.htm Accession: 0001335258-25-000028 Filing date: 2025-02-21 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/LYV/ All MD&A years: /company/LYV/mda/ Previous year: /company/LYV/mda/fy2023/ (FY 2023) Next year: /company/LYV/mda/fy2025/ (FY 2025) ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion of our financial condition and results of operations together with the audited consolidated financial statements and notes to the consolidated financial statements included elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed under Item 1A.—Risk Factors and other sections in this Annual Report. The following discussion of our financial condition and results of operations generally discusses 2024 and 2023 items along with year-over-year comparisons between these two years. Discussion of 2022 items and year-over-year comparisons between 2023 and 2022 can be found in Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Annual Report on Form 10-K. Executive Overview In 2024, we saw demand for the live experience growing across the globe with emerging to superstar acts performing to packed houses across all genres and in venues big and small. After a record 2023 fueled by our highest volume of stadium shows ever, we surpassed last year’s revenue results. While operating income declined double-digits as a result of the Astroworld legal contingency, we grew our AOI by double-digits and our underlying businesses thrived in 2024. Our Concerts segment generated over $0.5 billion in AOI for the first time ever, growing by over 50%. We added over 5 million fans and nearly 5,000 additional shows in Concerts, with new venues added to our global footprint and plans to open more in the year ahead. Our overall revenue increased by $429 million, or 2%, to $23.2 billion as compared to last year. The increase in revenue was $664 million without the impact of changes in foreign exchange rates. Operating income for the year declined by $260 million or 24% primarily related to the Astroworld estimated loss contingencies of $455 million partially offset by stronger performance in our Concerts and Sponsorship segments. The decrease in operating income was $208 million without the impact of changes in foreign exchange rates. Consolidated AOI for the year increased by $265 million, or 14%, to $2.1 billion this year. The increase in AOI was $320 million without the impact of changes in foreign exchange rates. Our event-related deferred revenue balance increased by $336 million, or 11%, to $3.3 billion as of December 31, 2024 compared to December 31, 2023. This, coupled with current ticket sales for 2025, suggests ongoing strong demand for concerts, making us confident in our continued success in the year ahead. For the year, we experienced unfavorable foreign currency translation impacts of $235 million on revenues, $52 million on operating income and $55 million on AOI. The majority of the impacts came from Latin American currencies. All of the segment financial comments below are based on reported foreign currency exchange rates. Our Concerts segment revenue for the year increased by $283 million, or 2% compared to 2023, from $18.7 billion to $19.0 billion. The growth in revenue was the result of more fans enjoying their favorite artists and spending more money at events to maximize their unique live experiences. Approximately 151 million fans attended our shows in the year, our largest annual fan count ever, compared to approximately 146 million last year, for growth of over 5 million or 4%. The growth was relatively evenly distributed across our global markets with notable strength in the United States, Latin America and Asia-Pacific. Growth in amphitheater, arena and theater & club fan count drove the increase in show attendance. In particular, arena fan count increased by almost 8 million fans to over 50 million fans globally. Some of the larger acts touring globally in the year included Coldplay, Pink, Metallica and Olivia Rodrigo, reflecting the global diversified base of our artists. Concerts AOI for the year increased by $209 million, or 65%, compared to 2023, from $320 million to $530 million. Our ancillary revenue spending at our United States amphitheater shows was over $44 per fan for the year, growing by nearly $1 over 2023, driven by higher food and beverage spending as well as merchandise and premium offerings. After extensive renovations, our Jones Beach amphitheater re-opened on Long Island and produced double-digit growth on premium seating, concessions and VIP club revenues. Similarly the Estadio GNP stadium (formerly known as Foro Sol) re-opened in Mexico City over the summer, offering fans an elevated concert-going experience with several new VIP lounges and additional points of sale for all fans. 30 Our Ticketing segment revenue for the year increased by $29 million, or 1%, compared to 2023, from $2.96 billion to $2.99 billion. We sold 331 million fee-bearing tickets in 2024 compared to 329 million tickets last year, essentially flat for the year. GTV for the year was $34.7 billion, down $1 billion, or 3% compared to 2023. Despite some sales headwinds during the year and a tough 2023 comparison with respect to stadium activity, the year ended on an encouraging note with the fourth quarter coming in as our highest quarter ever for transacted ticket sales and GTV. This resulted in a record fourth quarter for Ticketing across all of our key financial metrics – revenue, operating income and AOI. Ticketing AOI for the year was $1.1 billion, roughly in line with our 2023 results. We signed 22.8 million net new tickets in 2024, of which 14.3 million, or roughly 60%, are from clients outside of North America, highlighting the significance of our international operations and our global expansion opportunity. This gives us confidence that our ticketing platforms’ features and functionalities will continue to fuel growth going forward. Our Sponsorship & Advertising segment revenue for the year increased by $100 million, or 9%, compared to 2023 from $1.1 billion to $1.2 billion. The increase was largely driven by our international divisions with new naming rights and other deals for Estadio GNP in Mexico City, newly acquired festivals in Colombia, additional sponsorable content in Mexico and the timing of the Rock in Rio Brazil and Portugal festivals which play every two years. Sponsorship & Advertising AOI increased by $89 million, or 13%, compared to 2023, from $675 million to $764 million. We are optimistic about the long-term potential of our Company and are focused on the key elements of our business model: expanding our global platforms to connect artists and fans. 31 Consolidated Results of Operations [[GREPCENT_TABLE]] [["","Year Ended December 31,","","% Change 2024 vs 2023","","% Change 2023 vs 2022"],["","2024","","2023","","2022"],["","As Reported","","Currency Impacts","","Constant Currency*","","As Revised","","As Revised","","As Reported","","Constant Currency*","","As Revised"],["","(in thousands)"],["Revenue","$","23,155,625","","","$","235,038","","","$","23,390,663","","","$","22,726,317","","","$","16,681,254","","","2%","","3%","","36%"],["Operating expenses:"],["Direct operating expenses","17,328,154","","","","","","","17,250,530","","","12,347,611","","","0.4%","","","","40%"],["Selling, general and administrative expenses","4,096,424","","","","","","","3,557,167","","","2,955,884","","","15%","","","","20%"],["Depreciation and amortization","549,923","","","","","","","516,797","","","449,976","","","6%","","","","15%"],["Gain on disposal of operating assets","(11,015)","","","","","","","(13,927)","","","(32,082)","","","(21)%","","","","(57)%"],["Corporate expenses","367,629","","","","","","","330,817","","","237,834","","","11%","","","","39%"],["Operating income","824,510","","","52,365","","","876,875","","","1,084,933","","","722,031","","","(24)%","","(19)%","","50%"],["Operating margin","3.6%","","","","3.7%","","4.8%","","4.3%"],["Interest expense","325,974","","","","","","","350,244","","","278,483"],["Loss on extinguishment of debt","2,563","","","","","","","18,504","","","\u2014"],["Interest income","(156,254)","","","","","","","(237,818)","","","(77,620)"],["Equity in losses (earnings) of nonconsolidated affiliates","16,675","","","","","","","5,455","","","(10,571)"],["Other expense (income), net","(103,874)","","","","","","","35,274","","","41,215"],["Income before income taxes","739,426","","","","","","","913,274","","","490,524"],["Income tax expense (benefit)","(391,698)","","","","","","","209,476","","","115,941"],["Net income","1,131,124","","","","","","","703,798","","","374,583"],["Net income attributable to noncontrolling interests","234,837","","","","","","","146,905","","","108,143"],["Net income attributable to common stockholders of Live Nation","$","896,287","","","","","","","$","556,893","","","$","266,440"]] [[/GREPCENT_TABLE]] ________ [[GREPCENT_TABLE]] [["*","Constant currency is a non-GAAP financial measure. We calculate currency impacts as the difference between current period activity translated using the current period\u2019s currency exchange rates and the comparable prior period\u2019s currency exchange rates. We present constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations."]] [[/GREPCENT_TABLE]] Revenue Revenue increased $429.3 million during the year ended December 31, 2024 as compared to the prior year driven by increased revenue in our Concerts segment of $283.4 million, Ticketing segment of $29.2 million and Sponsorship & Advertising segment of $99.8 million as further discussed within each segment’s operating results. 32 Operating income Operating income decreased $260.4 million during the year ended December 31, 2024 as compared to the prior year primarily driven by decreased operating income in our Concerts segment of $313.2 million, which included Astroworld estimated loss contingencies of $454.9 million, and Ticketing segment of $20.7 million. These decreases in operating income were partially offset by increased operating income in our Sponsorship & Advertising segment of $99.2 million as further discussed within each segment’s operating results. Interest expense Interest expense decreased $24.3 million during the year ended December 31, 2024 as compared to the prior year primarily driven by lower debt balance throughout 2024 as compared to 2023. Interest income Interest income decreased $81.6 million during the year ended December 31, 2024 as compared to the prior year primarily attributed to lower rate of return on our cash and cash equivalents in 2024 and a decrease in our cash and cash equivalents. Other expense (income), net For the year ended December 31, 2024, we had $103.9 million of other income, net, which primarily includes mark to market adjustments for certain investments in nonconsolidated affiliates of $99.2 million. For the year ended December 31, 2023, we had $35.3 million of other expense, net, which includes net foreign exchange rate losses of $74.5 million partially offset by mark to market adjustments for certain investments in nonconsolidated affiliates of $46.5 million. The net foreign exchange rate gains and losses result primarily from revaluation of certain foreign currency denominated net assets held internationally. Income taxes For the year ended December 31, 2024, we had a net tax benefit of $391.7 million on income before income taxes of $739.4 million compared to a net tax expense of $209.5 million on income before income taxes of $913.3 million for 2023. In 2024, the net income tax benefit consisted of $518.3 million of tax benefit related to United States federal income taxes, $127.0 million of tax expense related to foreign entities and $0.4 million of tax benefit related to state and local income taxes. The net decrease in tax expense of $601.2 million is related to a valuation allowance release, due to changes in judgment regarding the realizability of certain deferred tax assets. Net income attributable to noncontrolling interests Net income attributable to noncontrolling interests increased $87.9 million during the year ended December 31, 2024 as compared to the prior year primarily due to higher operating results from certain concert businesses during 2024 as compared to the prior year. Non-GAAP Measures Consolidated AOI Consolidated AOI is a non-GAAP financial measure that we define as consolidated operating income (loss) before certain acquisition expenses (including ongoing legal costs stemming from the Ticketmaster merger, changes in the fair value of accrued acquisition-related contingent consideration obligations, and acquisition-related severance and compensation), amortization of non-recoupable ticketing contract advances, depreciation and amortization (including goodwill impairment), loss (gain) on disposal of operating assets, and stock-based compensation expense. We also exclude from AOI the impact of estimated or realized liabilities for settlements or damages arising out of the Astroworld matter that exceed our estimated insurance recovery, due to the significant and non-recurring nature of the matter. Ongoing legal costs associated with defense of these claims, such as attorney fees, are not excluded from AOI. We use AOI to evaluate the performance of our operating segments. We believe that information about AOI assists investors by allowing them to evaluate changes in the operating results of our portfolio of businesses separate from non-operational factors that affect net income (loss), thus providing insights into both operations and the other factors that affect reported results. AOI is not calculated or presented in accordance with GAAP. A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in our business. Accordingly, AOI should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies. 33 The following table sets forth the reconciliation of consolidated operating income to consolidated AOI for the years ended December 31, 2024, 2023 and 2022: [[GREPCENT_TABLE]] [["","2024","","2023","","2022"],["","","","As Revised","","As Revised"],["","(in thousands)"],["Operating income (1)","$","824,510","","","$","1,084,933","","","$","722,031"],["Acquisition expenses","128,513","","","93,664","","","68,078"],["Amortization of non-recoupable ticketing contract advance","88,717","","","83,693","","","79,043"],["Depreciation and amortization","549,923","","","516,797","","","449,976"],["Gain on sale of operating assets","(11,015)","","","(13,927)","","","(32,082)"],["Astroworld estimated loss contingencies","454,902","","","\u2014","","","\u2014"],["Stock-based compensation expense","110,348","","","115,959","","","110,049"],["Consolidated AOI (1)","$","2,145,898","","","$","1,881,119","","","$","1,397,095"]] [[/GREPCENT_TABLE]] ___________________ [[GREPCENT_TABLE]] [["(1)","For the years ended December 31, 2023 and December 31, 2022, the revision increased our operating income and consolidated AOI by $18.7 million for 2023 and decreased our operating income and consolidated AOI by $10.1 million for 2022, respectively. See further discussion in Part II \u2014 Financial Information\u2014Item 8.\u2014Financial Statements and Supplementary Data\u2014Note 2 \u2013 Correction of Errors in Previously Reported Consolidated Financial Statements."]] [[/GREPCENT_TABLE]] 34 Segment Overview Information regarding our use of AOI to evaluate the performance of our operating segments can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 12 – Segments and Revenue Recognition. Concerts Revenue and related costs for events are generally deferred and recognized when the event occurs. All advertising costs incurred during the year for shows in future years are expensed at the end of the year. If a current year event is rescheduled into a future year, all advertising costs incurred to date are expensed in the period when the event is rescheduled. Concerts direct operating expenses include artist fees, event production costs, show-related marketing and advertising expenses, along with other costs. To judge the health of our Concerts segment, we primarily monitor the number of confirmed events and fan attendance in our network of operated and third-party venues, talent fees, average paid attendance, market ticket pricing, advance ticket sales and the number of major artist clients under management. In addition, at our operated venues and festivals, we monitor ancillary revenue per fan and premium ticket sales. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates. Ticketing Revenue related to ticketing service charges is recognized when the ticket is sold for our third-party clients. For our own events, where our concert promoters or venues control ticketing, revenue is deferred and recognized when the event occurs. GTV represents the total amount of the transaction related to a ticket sale and includes the face value of the ticket as well as the service charge. We use GTV to evaluate changes in ticket fee revenue that are driven by the pricing of our service charges. Ticketing direct operating expenses include call center costs and credit card fees, along with other costs. To judge the health of our Ticketing segment, we primarily review the GTV and the number of tickets sold through our primary and secondary ticketing operations, the number of clients renewed or added and the average royalty rate paid to clients who use our ticketing services. In addition, we review the number of visits to our websites, cost of customer acquisition, the purchase conversion rate, and the overall number of customers in our database. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates. Sponsorship & Advertising Revenue related to sponsorship and advertising programs 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. Sponsorship & Advertising direct operating expenses include fulfillment costs related to our sponsorship programs, along with other costs. To judge the health of our Sponsorship & Advertising segment, we primarily review the revenue generated through sponsorship arrangements and online advertising, and the percentage of expected revenue under contract. For business that is conducted in foreign markets, we also compare the operating results from our foreign operations to prior periods without the impact of changes in foreign exchange rates. 35 Key Operating Metrics [[GREPCENT_TABLE]] [["","","","Year Ended December 31,"],["","","","","","2024","","2023","","2022"],["","","","","","(in thousands except estimated events)"],["Concerts (1)"],["Estimated events:"],["North America (2)","","","","","36,673","","","33,629","","","29,170"],["International","","","","","18,014","","","16,430","","","14,475"],["Total estimated events","","","","","54,687","","","50,059","","","43,645"],["Estimated fans:"],["North America (2)","","","","","86,563","","","81,252","","","69,693"],["International","","","","","64,486","","","64,538","","","51,459"],["Total estimated fans","","","","","151,049","","","145,790","","","121,152"],["Ticketing (3)"],["Estimated number of fee-bearing tickets sold","","","","","330,567","","","329,116","","","280,862"],["Estimated number of non-fee-bearing tickets sold","","","","","307,164","","","291,295","","","269,814"],["Total estimated tickets sold","","","","","637,731","","","620,411","","","550,676"]] [[/GREPCENT_TABLE]]  _________ (1)Events generally represent a single performance by an artist. Fans generally represent the number of people who attend an event. Festivals are counted as one event in the quarter in which the festival begins, but the number of fans is based on the days the fans were present at the festival and thus can be reported across multiple quarters. Events and fan attendance metrics are estimated each quarter. (2)North America refers to our events and fans within the United States and Canada. (3)The fee-bearing tickets estimated above include primary and secondary tickets that are sold using our Ticketmaster systems or that we issue through affiliates. This metric includes primary tickets sold during the year regardless of event timing, except for our own events where our concert promoters or venues control ticketing which are reported when the events occur. The non-fee-bearing tickets estimated above include primary tickets sold using our Ticketmaster systems, through season seat packages and our venue clients’ box offices, along with tickets sold on our “do it yourself” platform. These ticketing metrics are net of any refunds requested and any cancellations that occurred during the period and up to the time of reporting of these consolidated financial statements. 36 Segment Operating Results Concerts Our Concerts segment operating results were, and discussions of significant variances are, as follows: [[GREPCENT_TABLE]] [["","","","","","Year Ended December 31,","","% Change 2024 vs 2023","","% Change 2023 vs 2022"],["","","","","","","","2024","","2023","","2022"],["","","","","","","","","","As Revised","","As Revised","","","","As Revised"],["","","","","","(in thousands)"],["Revenue (1)","","","","","","","$","19,024,302","","$","18,740,913","","$","13,494,100","","2%","","39%"],["Direct operating expenses (2)","","","","","","","16,041,350","","16,001,769","","11,334,178","","0.2%","","41%"],["Selling, general and administrative expenses","","","","","","","3,005,885","","2,497,983","","2,083,637","","20%","","20%"],["Depreciation and amortization","","","","","","","370,108","","320,680","","260,238","","15%","","23%"],["Gain on disposal of operating assets","","","","","","","(11,094)","","(10,804)","","(30,810)","","3%","","(65)%"],["Operating loss (3)","","","","","","","$","(381,947)","","$","(68,715)","","$","(153,143)","","*","","55%"],["Operating margin","","","","","","","(2.0)%","","(0.4)%","","(1.1)%"],["AOI (3)","","","","","","","$","529,748","","$","320,397","","$","174,840","","65%","","83%"],["AOI margin","","","","","","","2.8%","","1.7%","","1.3%"]] [[/GREPCENT_TABLE]] _________________________ [[GREPCENT_TABLE]] [["*","Percentages are not meaningful."],["(1)","See further discussion in Part II \u2014 Financial Information\u2014Item 8.\u2014Financial Statements and Supplementary Data\u2014Note 2 \u2013 Correction of Errors in Previously Reported Consolidated Financial Statements. For the year ended December 31, 2023, the revision decreased revenue by $22.8 million."],["(2)","For the years ended December 31, 2023 and December 31, 2022, the revision decreased direct operating expenses by $17.7 million and $5.1 million, respectively."],["(3)","For the years ended December 31, 2023 and December 31, 2022, the revision decreased operating income and AOI by $5.1 million as well as increased operating income and AOI by $5.1 million, respectively."]] [[/GREPCENT_TABLE]] Revenue Concerts revenue increased $283.4 million during the year ended December 31, 2024 as compared to the prior year attributable to acquisitions and new venues of $335.1 million as well as increased show count and fan growth. In particular, higher arena and amphitheater shows and related fan count partially offset by fewer stadium shows contributed to the increase in revenue. Operating results Concerts AOI increased $209.4 million during the year ended December 31, 2024 as compared to the prior year primarily driven by an increase in revenues from the number of shows discussed above partially offset by increased selling general and administrative expenses related to additional compensation expenses fueled by growth from our venue footprint and additional global activity. The remaining change in operating income outside of AOI of $522.6 million is primarily associated with Astroworld estimated loss contingencies of $454.9 million and higher depreciation and amortization expenses of $49.4 million for additional capital expenditures incurred to support the increased operations as well as from acquisitions and new venues. 37 Ticketing Our Ticketing segment operating results were, and discussions of significant variances are, as follows: [[GREPCENT_TABLE]] [["","","","","","Year Ended December 31,","","% Change 2024 vs 2023","","% Change 2023 vs 2022"],["","","","","","","","2024","","2023","","2022"],["","","","","","","","","","As Revised","","As Revised","","","","As Revised"],["","","","","","(in thousands)"],["Revenue","","","","","","","$","2,988,685","","$","2,959,477","","$","2,238,618","","1%","","32%"],["Direct operating expenses (1)","","","","","","","1,089,608","","1,067,937","","809,173","","2%","","32%"],["Selling, general and administrative expenses","","","","","","","888,198","","855,070","","711,574","","4%","","20%"],["Depreciation and amortization","","","","","","","100,329","","105,256","","109,778","","(5)%","","(4)%"],["Loss (gain) on disposal of operating assets","","","","","","","41","","39","","(197)","","5%","","*"],["Operating income (2)","","","","","","","$","910,509","","$","931,175","","$","608,290","","(2)%","","53%"],["Operating margin","","","","","","","30.5%","","31.5%","","27.2%"],["AOI (2)","","","","","","","$","1,123,588","","$","1,140,133","","$","812,714","","(1)%","","40%"],["AOI margin","","","","","","","37.6%","","38.5%","","36.3%"]] [[/GREPCENT_TABLE]] __________________________ [[GREPCENT_TABLE]] [["*","Percentages are not meaningful."],["(1)","See further discussion in Part II \u2014 Financial Information\u2014Item 8.\u2014Financial Statements and Supplementary Data\u2014Note 2 \u2013 Correction of Errors in Previously Reported Consolidated Financial Statements. For the years ended December 31, 2023 and December 31, 2022, the revision decreased direct operating expenses by $23.8 million and increased direct operating expenses by $15.2 million, respectively."],["(2)","For the years ended December 31, 2023 and December 31, 2022, the revision increased operating income and AOI by $23.8 million as well as decreased operating income and AOI by $15.2 million, respectively."]] [[/GREPCENT_TABLE]] Revenue Ticketing revenue increased $29.2 million during the year ended December 31, 2024 as compared to the prior year. Ticket sales and gross transaction value for concerts, sporting and family & arts events were largely in line with 2023. For concert events, higher sales for arena and amphitheater shows were mostly offset by a reduction in stadium shows, coming off a record year of stadium activity in 2023. Operating results Ticketing AOI decreased $16.5 million and operating income decreased $20.7 million during the year ended December 31, 2024 as compared to the prior year primarily driven by higher selling, general and administrative expenses attributable to improving the user experience and reducing friction during high demand on-sales. 38 Sponsorship & Advertising Our Sponsorship & Advertising segment operating results were, and discussions of significant variances are, as follows: [[GREPCENT_TABLE]] [["","","","","","Year Ended December 31,","","% Change 2024 vs 2023","","% Change 2023 vs 2022"],["","","","","","","","2024","","2023","","2022"],["","","","","","(in thousands)"],["Revenue","","","","","","","$","1,195,019","","$","1,095,217","","$","968,146","","9%","","13%"],["Direct operating expenses","","","","","","","242,536","","245,297","","225,724","","(1)%","","9%"],["Selling, general and administrative expenses","","","","","","","197,565","","184,158","","155,305","","7%","","19%"],["Depreciation and amortization","","","","","","","62,934","","72,969","","60,318","","(14)%","","21%"],["Loss on sale of operating assets","","","","","","","38","","\u2014","","\u2014","","*","","*"],["Operating income","","","","","","","$","691,946","","$","592,793","","$","526,799","","17%","","13%"],["Operating margin","","","","","","","57.9%","","54.1%","","54.4%"],["AOI","","","","","","","$","763,777","","$","675,137","","$","591,972","","13%","","14%"],["AOI margin","","","","","","","63.9%","","61.6%","","61.1%"]] [[/GREPCENT_TABLE]] ______________ [[GREPCENT_TABLE]] [["*","Percentages are not meaningful."]] [[/GREPCENT_TABLE]] Revenue Sponsorship & Advertising revenue increased $99.8 million during the year ended December 31, 2024 as compared to the prior year primarily driven by increased sponsorship activity from our international markets and onsite sponsorships. Operating results Sponsorship & Advertising AOI increased $88.6 million and operating income increased $99.2 million during the year ended December 31, 2024 as compared to the prior year. These increases were primarily due to increased revenues from sponsorship activity discussed above. 39 Liquidity and Capital Resources Our cash is centrally managed on a worldwide basis. Our primary short-term liquidity needs are to fund general working capital requirements, capital expenditures and debt service requirements while our long-term liquidity needs are primarily related to acquisitions and debt repayment. Our primary sources of funds for our short-term liquidity needs will be cash flows from operations and borrowings under our amended senior secured credit facility, while our long-term sources of funds will be from cash flows from operations, long-term bank borrowings and other debt or equity financings. We may from time to time engage in open market purchases of our outstanding debt securities or redeem or otherwise repay such debt. Our balance sheet reflects cash and cash equivalents of $6.1 billion at December 31, 2024 and $6.2 billion at December 31, 2023. Included in the December 31, 2024 and 2023 cash and cash equivalents balances are $1.6 billion and $1.5 billion, respectively, of cash received that includes the face value of tickets sold on behalf of our ticketing clients and their share of service charges, which we refer to as client cash. We generally do not utilize client cash for our own financing or investing activities as the amounts are payable to clients on a regular basis. Our foreign subsidiaries held approximately $3.3 billion in cash and cash equivalents, excluding client cash, at December 31, 2024. We generally do not repatriate these funds, but if we did, we would need to accrue and pay United States state income taxes as well as any applicable foreign withholding or transaction taxes on future repatriations. We may from time to time enter into borrowings under our revolving credit facility. If the original maturity of these borrowings is 90 days or less, we present the borrowings and subsequent repayments on a net basis in the statement of cash flows to better represent our financing activities. Our balance sheet reflects total net debt of $6.4 billion and $6.6 billion, respectively, at December 31, 2024 and December 31, 2023. Our weighted-average cost of debt, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 4.4% at December 31, 2024, with approximately 93% of our debt at fixed rates. Our weighted-average cost of debt for short-term borrowings outstanding at December 31, 2024, excluding unamortized debt discounts and debt issuance costs on our term loans and notes, was 5.0%. Our cash and cash equivalents are held in accounts managed by third-party financial institutions and consist of cash in our operating accounts and invested cash. Cash held in non-interest-bearing and interest-bearing operating accounts in many cases exceeds the Federal Deposit Insurance Corporation insurance limits. The invested cash is in interest-bearing funds consisting primarily of bank deposits and money market funds. While we monitor cash and cash equivalents balances in our operating accounts on a regular basis and adjust the balances as appropriate, these balances could be impacted if the underlying financial institutions fail. To date, we have experienced no loss or lack of access to our cash and cash equivalents; however, we can provide no assurances that access to our cash and cash equivalents will not be impacted by adverse conditions in the financial markets. For our Concerts segment, we often receive cash related to ticket revenue in advance of the event, which is recorded in deferred revenue until the event occurs. In the United States, this cash is largely associated with events in our owned or operated venues, notably amphitheaters, festivals, theaters and clubs. Internationally, this cash is from a combination of both events in our owned or operated venues, as well as events in third-party venues associated with our promoter’s share of tickets in allocation markets. With the exception of some upfront costs and artist advances, which are recorded in prepaid expenses until the event occurs, we pay the majority of event-related expenses at or after the event. Artists are paid when the event occurs under one of several different formulas, which may include fixed guarantees and/or a percentage of ticket sales or event profits, net of any advance they have received. When an event is cancelled, any cash held in deferred revenue is reclassified to accrued expenses as those funds are typically refunded to the fan within 30 days of event cancellation. When a show is rescheduled, fans have the ability to request a refund if they do not want to attend the event on the new date, although historically we have had low levels of refund requests for rescheduled events. We view our available cash as cash and cash equivalents, less ticketing-related client cash, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others, plus event-related prepaid expenses. This is essentially our cash available to, among other things, repay debt balances, make acquisitions, and finance capital expenditures. Our intra-year cash fluctuations are impacted by the seasonality of our various businesses. Examples of seasonal effects include our Concerts segment, which reports the majority of its revenue in the second and third quarters. Cash inflows and outflows depend on the timing of event-related payments but the majority of the inflows generally occur prior to the event. See “—Seasonality” below. We believe that we have sufficient financial flexibility to fund these fluctuations and to access the global capital markets on satisfactory terms and in adequate amounts, although there can be no assurance that this will be the case, and capital could be less accessible and/or more costly given current economic conditions. We expect cash flows from operations and borrowings under our amended senior secured credit facility, along with other financing alternatives, to satisfy working capital requirements, capital expenditures and debt service requirements for at least the succeeding year. We may need to incur additional debt or issue equity to make other strategic acquisitions or investments. There can be no assurance that such financing will be available to us on acceptable terms or at all. We may make significant acquisitions in the near term, subject to limitations imposed by our financing agreements and market conditions. 40 The lenders under our revolving loans and counterparty to our interest rate hedge agreement consists of banks and other third-party financial institutions. While we currently have no indications or expectations that such lenders will be unable to fund their commitments as required, we can provide no assurances that future funding availability will not be impacted by adverse conditions in the financial markets. Should an individual lender default on its obligations, the remaining lenders would not be required to fund the shortfall, resulting in a reduction in the total amount available to us for future borrowings, but would remain obligated to fund their own commitments. Should the counterparty to our interest rate hedge agreement default on its obligation, we could experience higher interest rate volatility during the period of any such default. Sources of Cash In December 2024, we issued $1.1 billion principal amount of 2.875% convertible senior notes due 2030. In conjunction with this issuance, we used the net proceeds to repay $585.0 million outstanding amounts under our senior secured revolving credit facility, to repurchase $316.0 million aggregate principal amount of the 2.0% convertible senior notes due 2025 and related repurchase premiums, fees and accrued interest of $98.0 million, paid debt issuance costs of $18.1 million, with any remaining proceeds available for general corporate purposes. In November 2024, we amended our senior secured credit facility and added a new venue expansion revolving credit facility of $400.0 million, which resulted in a total available revolving borrowing capacity of $1.7 billion. During the three months ended March 31, 2024, we repaid $370.0 million outstanding amounts under our senior secured revolving credit facility that had been outstanding as of December 31, 2023. No material gain or loss was recorded as a result of this repayment. In November 2023, we amended our senior secured credit facility to include a $1.3 billion revolving credit facility in addition to the existing $950.0 million term loan B facility. The $1.3 billion revolving credit facility refinanced our existing $630.0 million revolving credit facilities and we drew down $370.0 million at closing to repay in full our outstanding $367.5 million delayed draw term A loan facility and related accrued interest and fees. The delayed draw term A loan facility was permanently retired upon being repaid in full. In February 2023, we amended our senior secured credit facility. The amendments provides for, among other things: (i) replacement of the benchmark reference rate of the Eurodollar Rate (as defined in the Credit Agreement) with the Term SOFR Rate for borrowings denominated in United States Dollars and for each Alternative Currency (as defined in the Credit Agreement), a corresponding reference rate, as set forth in the Amended Credit Agreement, (ii) deletion of the provisions regarding Canadian bankers’ acceptances, and (iii) the addition of our ability to draw letters of credit in Canadian Dollars. In January 2023, we issued $1.0 billion principal amount of 3.125% convertible senior notes due 2029. In conjunction with this issuance, we used approximately $485.8 million of the net proceeds to repurchase $440.0 million aggregate principal amount of the 2.5% convertible senior notes due 2023, entered into capped call transactions at a cost of $75.5 million, paid debt issuance costs of $15.0 million, with any remaining proceeds available for general corporate purposes. In December 2022, we entered into a $126.7 million Euro denominated loan due in 2024 with a floating interest rate of three month Euribor plus 3.0% per annum related to an asset acquisition in Europe. In December 2024, we extended the maturity of the Euro denominated loan to December 2025. Debt Instruments Information regarding our various debt instruments can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt. Debt Covenants Information regarding our debt covenants can be found in Part II —Financial Information —Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt. Subsequent Event On February 18, 2025, we utilized $84.8 million of our existing cash balance to repay the remaining aggregate principal amount of the 2.0% convertible senior notes due February 2025 plus accrued interest and we issued 182,560 shares of common stock to the convertible holders. 41 Uses of Cash Acquisitions During 2024, we completed various acquisitions that resulted in cash paid, net of cash acquired, of $98.3 million. Capital Expenditures Venue and ticketing operations require ongoing investment in our existing venues and ticketing systems to address fan and artist expectations, technological industry advances and various federal, state and/or local regulations. We categorize capital outlays between revenue generating capital expenditures and maintenance capital expenditures. Revenue generating capital expenditures are primarily focused on our global venue expansion strategy as we connect more artists to their global fan base and major renovations to buildings to enhance the fan experience and drive improvements in our hospitality efforts including onsite spending and premium experiences. In addition, in Ticketing, we continue to develop new ticketing tools and technology enhancements. Revenue generating capital expenditures can also include smaller projects whose purpose is to increase revenue and/or improve operating income. Maintenance capital expenditures are associated with the renewal and improvement of existing venues and technology systems, web development and administrative offices. Capital expenditures typically increase during periods when our venues are not in operation since that is the time that such improvements can be completed. Our capital expenditures, including accruals for amounts incurred but not yet paid for, but net of expenditures funded by outside parties such as landlords and noncontrolling interest partners or expenditures funded by insurance proceeds, consisted of the following: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","(in thousands)"],["Revenue generating capital expenditures","$","499,220","","","$","321,885","","","$","237,603"],["Maintenance capital expenditures","133,411","","","131,866","","","126,957"],["Total capital expenditures","$","632,631","","","$","453,751","","","$","364,560"]] [[/GREPCENT_TABLE]] For the years ended December 31, 2024, 2023 and 2022, $5.0 million, $15.0 million and $12.4 million, respectively, of insurance proceeds and landlord or noncontrolling interest partner reimbursements have been excluded from capital expenditures in the table above. Revenue generating capital expenditures for 2024 increased from the same period of the prior year primarily due to enhancements at our theaters and amphitheaters in the United States as well as a stadium in Mexico. We expect capital expenditures to be approximately $900 million to $1.0 billion for the year ending December 31, 2025 with approximately 85% dedicated to revenue generating projects, including $700 million to $800 million of spend relating to our venue expansion and enhancement plans. Some of the more significant projects in 2025 include an extensive renovation of an arena in Hamilton, Ontario in Canada and the new Riverside Amphitheater outside of Kansas City, Missouri which will open in 2026. In the third quarter of 2025, our new stadium in Bogota, Colombia will open, with capacity for 40,000 fans, further strengthening our presence in Latin America. Approximately $250 million of our capital expenditure estimate is being funded outside our cash flow by third party equity partners, sponsors, pre-selling certain premium rights and project-based debt. Cash Flows [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2024","","2023","","2022"],["","","","As Revised","","As Revised"],["","(in thousands)"],["Cash provided by (used in):"],["Operating activities","$","1,725,175","","","$","1,362,974","","","$","1,835,047"],["Investing activities","$","(854,281)","","","$","(695,805)","","","$","(784,691)"],["Financing activities","$","(658,550)","","","$","(87,281)","","","$","(143,340)"]] [[/GREPCENT_TABLE]] 42 Operating Activities Cash provided by operating activities increased $362.2 million for the year ended December 31, 2024 as compared to the prior year primarily due to an overall increase in net income combined with changes in operating assets and liabilities partially offset by higher deferred income taxes, lower provision for uncollectible accounts receivable, changes in fair value of contingent considerations from certain acquisitions and higher gains on mark-to-market of investments in nonconsolidated affiliates during 2024. Investing Activities Cash used in investing activities increased $158.5 million for the year ended December 31, 2024 as compared to the prior year primarily due to higher purchases of property, plant and equipment in 2024 for revenue generating capital expenditures and cash paid for acquisitions, net of cash acquired, which were partially offset by lower advances in notes receivable and higher collections of notes receivable due to timing. See “—Uses of Cash” above for further discussion. Financing Activities Cash used in financing activities increased $571.3 million for the year ended December 31, 2024 as compared to the prior year primarily due to higher payments of our long-term debt as a result of the repayment of outstanding amounts under our senior secured revolving credit facility, repayment of the principal amount on our 4.875% senior notes and the repurchase of a portion of our 2.0% convertible senior notes. These repayments were partially offset by higher proceeds of debt in 2024 from the issuance of our 2.875% convertible senior notes and draw down from our senior secured revolving credit facility as compared to 2023. See “—Sources of Cash” above for further discussion. Contractual Obligations and Commitments Firm Commitments We have future cash obligations for our debt obligations and operating lease liabilities. We lease office space, certain equipment and many of the venues used in our concert operations under long-term operating leases. Some of our lease agreements contain renewal options and annual rental escalation clauses (generally tied to the consumer price index), as well as provisions for our payment of utilities and maintenance. Information regarding our scheduled maturities of our outstanding debt obligations (excluding unamortized debt discounts and issuance costs) and operating lease liabilities can be found in Part II—Financial Information—Item 8.—Financial Statements and Supplementary Data—Note 5 – Long-Term Debt and —Note 4 – Leases, respectively. We also have minimum payments associated with non-cancelable contracts related to our operations, such as artist guarantees and client ticketing agreements. As part of our ongoing capital projects, we will enter into construction-related commitments for future capital expenditure work. Information regarding our minimum payments for non-cancelable contracts and capital expenditures commitments can be found in Part II—Financial Information—Item 8.—Financial Statements and Supplementary Data—Note 8 – Commitments and Contingent Liabilities as of December 31, 2024 and thus do not represent all expected expenditures for those periods. The estimated interest payments, and expected payments of contingent and deferred consideration liabilities as of December 31, 2024 are as follows: [[GREPCENT_TABLE]] [["","Payments Due by Period"],["","Total","2025","2026","2027","2028","2029","Thereafter"],["","(in thousands)"],["Estimated interest payments","$","801,532","","$","288,800","","$","255,401","","$","149,741","","$","66,325","","$","34,662","","$","6,603"],["Contingent and deferred consideration","61,531","","40,764","","8,211","","6,345","","368","","365","","5,478"],["Total","$","863,063","","$","329,564","","$","263,612","","$","156,086","","$","66,693","","$","35,027","","$","12,081"]] [[/GREPCENT_TABLE]] Guarantees of Third-Party Obligations As of December 31, 2024 and 2023, we guaranteed the debt of third parties of approximately $19.4 million and $19.4 million, respectively, primarily related to maximum credit limits on employee and tour-related credit cards and obligations under a venue management agreement. Seasonality Information regarding the seasonality of our business can be found in Part II—Financial Information—Item 8.—Financial Statements and Supplementary Data—Note 1 – The Company and Summary of Significant Accounting Policies. 43 Market Risk We are exposed to market risks arising from changes in market rates and prices, including movements in foreign currency exchange rates and interest rates. Foreign Currency Risk We have operations in countries throughout the world. The financial results of our foreign operations are measured in their local currencies. Our foreign subsidiaries also carry certain net assets or liabilities that are denominated in a currency other than that subsidiary’s functional currency. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in the foreign markets in which we have operations. We operate in certain countries that are hyper-inflationary, for example Argentina, however the impact of these currencies did not have a material impact on our statement of operations for the year ended December 31, 2024. Our foreign operations reported an operating income of $744.4 million for the year ended December 31, 2024. We estimate that a 10% change in the value of the United States dollar relative to foreign currencies would change our operating income for the year ended December 31, 2024 by $74.4 million. As of December 31, 2024, our most significant foreign exchange exposure included the Euro, British Pound, Australian Dollar, Canadian Dollar and Mexican Peso. This analysis does not consider the implication such currency fluctuations could have on the overall economic conditions of the United States or other foreign countries in which we operate or on the results of operations of our foreign entities. In addition, the reported carrying value of our assets and liabilities, including the total cash and cash equivalents held by our foreign operations, will also be affected by changes in foreign currency exchange rates. We primarily use forward currency contracts, in addition to options, to reduce our exposure to foreign currency risk associated with short-term artist fee commitments. At December 31, 2024, we had forward currency contracts outstanding with an aggregate notional amount of $283.1 million. Interest Rate Risk Our market risk is also affected by changes in interest rates. We had $6.5 billion of total debt, excluding unamortized debt discounts and issuance costs, outstanding as of December 31, 2024. Of the total amount, we had $6.0 billion of fixed-rate debt and $457.6 million of floating-rate debt. Based on the amount of our floating-rate debt as of December 31, 2024, each 25-basis point increase or decrease in interest rates would increase or decrease our annual interest expense and cash outlay by approximately $1.1 million. This potential increase or decrease is based on the simplified assumption that the level of floating-rate debt remains constant with an immediate across-the-board increase or decrease as of December 31, 2024 with no subsequent change in rates for the remainder of the period. In January 2020, we entered into an interest rate swap agreement that is designated as a cash flow hedge for accounting purposes to effectively convert a portion of our floating-rate debt to a fixed-rate basis. The swap agreement expires in October 2026, has a notional amount of $500 million and ensures that a portion of our floating-rate debt does not exceed 3.445%. Recent Accounting Pronouncements Information regarding recently issued and adopted accounting pronouncements can be found in Item 8.—Financial Statements and Supplementary Data—Note 1 – The Company and Summary of Significant Accounting Policies. 44 Critical Accounting Policies and Estimates The preparation of our financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. On an ongoing basis, we evaluate our estimates that are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenue and expenses that are not readily apparent from other sources. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such difference could be material. Management believes that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require management’s most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. The following narrative describes these critical accounting estimates, the judgments and assumptions and the effect if actual results differ from these assumptions where applicable. Consolidation Our consolidated financial statements include all of our accounts, including our majority owned and controlled subsidiaries and VIEs for which we are the primary beneficiary. Intercompany accounts among the consolidated businesses have been eliminated in consolidation. Net income (loss) attributable to noncontrolling interests is reflected in the statements of operations. Typically, we consolidate entities in which we own more than 50% of the voting common stock and control operations and also VIEs for which we are the primary beneficiary. Investments in nonconsolidated affiliates in which we own more than 20% of the voting common stock or otherwise exercise significant influence over operating and financial policies, but not control of the nonconsolidated affiliate, are accounted for using the equity method of accounting. Investments in nonconsolidated affiliates in which we own less than 20% of the voting common stock and do not exercise significant influence over operating and financial policies are accounted for at fair value unless the investment does not have a readily determinable fair value in which case the investment is accounted for at cost less any impairment. Business Combinations We account for our business combinations under the acquisition method of accounting. Identifiable assets acquired, liabilities assumed and any noncontrolling interest in the acquiree are recognized and measured as of the acquisition date at fair value. Additionally, contingent consideration is recorded at fair value on the acquisition date and classified as a liability. Goodwill is recognized to the extent by which the aggregate of the acquisition-date fair value of the consideration transferred and any noncontrolling interest in the acquiree exceeds the recognized basis of the identifiable assets acquired, net of assumed liabilities. Determining the fair value of assets acquired, liabilities assumed and noncontrolling interest requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates and asset lives among other items. In addition, when we have acquisitions where substantially all of the fair value of assets acquired is concentrated in a single asset or group of similar assets, we account for the acquisitions as asset acquisitions. Intangibles We classify intangible assets as definite-lived or indefinite-lived. Definite-lived intangibles include revenue-generating contracts, client/vendor relationships, trademarks and naming rights, technology, non-compete agreements, and venue management and leasehold agreements, all of which are amortized either on a straight-line basis over the respective lives of the agreements, typically 3 to 10 years, or on a basis more representative of the time pattern over which the benefit is derived. We periodically review the appropriateness of the amortization periods related to our definite-lived intangible assets. These assets are stated at cost or fair value at the date of acquisition. Indefinite-lived intangibles consist of trade names and cryptocurrency assets which are not subject to amortization. Our amortization expense is presented as a separate line item, with depreciation expense, in the statements of operations. There is no amortization expense included in direct operating expenses, selling, general and administrative expenses or corporate expenses. We test for possible impairment of definite-lived intangible assets whenever events or circumstances change, such as a current period operating cash flow loss combined with a history of, or projections of, operating cash flow losses or a significant adverse change in the manner in which the asset is intended to be used, which could indicate that the carrying amount of the asset may not be recoverable. If indicators exist, we compare the estimated undiscounted future cash flows related to the asset to the carrying value of the asset. If the carrying value is greater than the estimated undiscounted future cash flow amount, an impairment charge is recorded based on the difference between the fair value and the carrying value. Any such impairment charge is recorded in depreciation and amortization in the statements of operations. For the years ended December 31, 2024, 2023 and 2022, there were no significant impairment charges. 45 We test for possible impairment of indefinite-lived intangible assets at least annually. Depending on facts and circumstances, qualitative factors may first be assessed to determine whether the existence of events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset is impaired. If it is concluded that it is more likely than not impaired, we perform a quantitative impairment test by comparing the fair value with the carrying amount. When specific assets are determined to be impaired, the cost basis of the asset is reduced to reflect the current fair value. The impairment loss calculations require management to apply judgment in estimating future cash flows, expected future revenue, discount rates and royalty rates that reflect the risk inherent in future cash flows. For the years ended December 31, 2024, 2023 and 2022, there were no significant impairment charges. Goodwill We review goodwill for impairment annually, as of October 1, using a two-step process. We also test goodwill for impairment in other periods if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount or when we change our reporting units. The first step is a qualitative evaluation as to whether it is more likely than not that the fair value of any of our reporting units is less than its carrying value using an assessment of relevant events and circumstances. Examples of such events and circumstances include historical financial performance, industry and market conditions, macroeconomic conditions, reporting unit-specific events, historical results of goodwill impairment testing and the timing of the last performance of a quantitative assessment. We also considered changes in discount rates, market multiples, carrying values and forecast since the last quantitative test. If any reporting units are concluded to be more likely than not impaired, or if that conclusion cannot be determined qualitatively, a second step is performed for that reporting unit utilizing a quantitative approach. For the year ended December 31, 2024, as part of a refresh of the fair values of reporting units, as of July 1, 2024, three of our reporting units were assessed under quantitative analysis to support future qualitative evaluation. As of October 1, as required by our policy to perform goodwill tests annually as of October 1, these three reporting units were also assessed under the initial qualitative evaluation and did not advance to the quantitative analysis. As of October 1, the remaining three reporting units with goodwill were assessed under quantitative analysis to support future qualitative evaluation. All of our reporting units assessed under the quantitative analysis primarily used a discounted cash flows methodology, with a lesser weighting attributed to the market multiple approach. The discounted cash flows methodology estimates fair value by discounting the reporting unit’s estimated future cash flows using a weighted-average cost of capital that reflects current market conditions and the risk profile of the reporting unit. Under the market multiple approach, the estimated fair value of the reporting unit was estimated by applying market multiples derived from stock prices of companies that are engaged in the same or similar lines of business as the reporting unit and that are actively traded on a free and open market. The derived multiples are then applied to the reporting unit’s financial metrics. For the year ended December 31, 2023, as part of our annual test for impairment, one of our reporting units, which accounted for approximately 12% of our goodwill at December 31, 2023, was assessed under the quantitative analysis. The remaining reporting units with goodwill were assessed under the initial qualitative evaluation and did not advance to the quantitative analysis. For the year ended December 31, 2022, as part of our annual test for impairment, all of our reporting units with goodwill were assessed under the initial qualitative evaluation and did not advance to the quantitative analysis. No impairment charges were recorded for the years ended December 31, 2024, 2023 and 2022. Revenue Recognition Revenue from the promotion or production of an event in our Concerts segment is recognized when the event occurs. Revenue collected in advance of the event is recorded as deferred revenue until the event occurs. Revenue collected from sponsorship agreements, which is not related to a single event, is classified as deferred revenue and recognized over the term of the agreement or operating season as the benefits are provided to the sponsor. Revenue from our ticketing operations primarily consists of service fees charged at the time a ticket for an event is sold in either the primary or secondary markets. For primary tickets sold to our concert and festival events, where our concert promoters control ticketing, the revenue for the associated ticket service charges collected in advance of the event is recorded as deferred revenue until the event occurs and these service charges are shared between our Ticketing and Concerts segments. For primary tickets sold for events of third-party clients and secondary market sales, the revenue is recognized at the time of the sale and is recorded by our Ticketing segment. We account for taxes that are externally imposed on revenue producing transactions on a net basis. 46 Litigation Accruals We are currently involved in certain legal proceedings and, as required, have accrued our estimate of the probable costs for the resolution of these claims. Management’s estimates used have been developed in consultation with counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. Income Taxes We account for income taxes using the liability method which results in deferred tax assets and liabilities based on differences between financial reporting bases and tax bases of assets and liabilities and are measured using the enacted tax rates expected to apply to taxable income in the periods in which the deferred tax asset or liability is expected to be realized or settled. We assess the realizability of our deferred tax assets, considering all relevant factors, at each reporting period. As almost all earnings from our continuing foreign operations are permanently reinvested and not distributed, our income tax provision does not include additional United States state and foreign withholding or transaction taxes on those foreign earnings that would be incurred if they were distributed. It is not practicable to determine the amount of state and foreign income taxes, if any, that might become due in the event that any remaining available cash associated with these earnings were distributed. The FASB guidance for income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is more likely than not to be realized upon ultimate settlement. We have established a policy of including interest related to tax loss contingencies in income tax expense (benefit) in the statements of operations. We treat the taxes due on future Global Intangible Low-Taxed Income (“GILTI”) inclusions in United States taxable income as a current-period expense when incurred.