Very interesting earnings ESTIMATE from Clayboard

From the Clayboard/Clackhouse

Here it is.... my post from the Clackhouse on Clay-related revenue.... I've been mentioning that I was working on this, and I hope you all enjoy it. I'm open to answering any questions!

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Well, as you guys know, I just like to play with numbers. Can't help it. I was a baseball statistician for many many years... from 6th grade all the way through college. I've done fantasy baseball and fantasy hockey. During hockey season I stare at hockey stats on a daily basis. Well, since there's no hockey season (*CRIES!!!* MY OTHER BOYFRIEND PETER FORSBERG IS BACK IN SWEDEN.... POSSIBLY FOR GOOD!), I needed something to occupy myself.

A few weeks back I posted a back-of-the-envelope calculation on the revenue that has been generated that can be attributed to Clay for the 2003 and 2004 calendar years. I'm often one to do informal calculations, but on this one, I felt the need to formalize it. So now I have a pretty little spreadsheet that goes through the categories of revenue generation and calculations for each one.

So why do I do this? I don't know. Because it is fun to know? Because there are fans out there that like to know this information but don't just calculate things in their head like I do? Because I want fans to see and understand from the perspective of the almighty $$$ how well Clay is doing? Because I'm a numbers geek? Pick and choose any combination of above. Take exception with whatever you will. These are in some cases just MY projections (although I believe they are reasonably accurate, well within 10% of the total)

DISCLAIMER!!! THESE ARE MY CALCULATIONS AND PROJECTIONS! IF YOU DISAGREE, FEEL FREE TO DISCUSS WHY. JUST DON'T ASSUME THIS IS ALL FACT. I THINK IT IS PRETTY ACCURATE, WITHIN 10% OF THE TOTAL. BUT I DON'T HAVE ANY INSIDER INFORMATION THAT MAKES THIS ANYTHING MORE THAN WHAT I CAN GLEAN FROM PUBLIC SOURCES.

Category 1: CD Sales.

This is the biggest revenue generator. What I did is I look at all the CDs Clay has had a signficant part of, and assign a percentage of its revenue to Clay. I have as up-to-date sales numbers that I can find. For AI2 related CDs, Clay gets somewhere between 15-20% of the credit for the revenue. Obviously, he gets 100% of the credit for his own CDs. I used $13 average retail price for full-length CDs and $3.50 for singles. This also includes projections for the Christmas CD (I'm using 1.5 million as a projection. Who knows. It could be a million, it could be 2 million. But I chose 1.5 million as a reasonably possible number.) Also, this only includes domestic sales.

AI-related CDs: (Clay gets credit for 15-20% of these sales)
Singles: ~400K sold
Full-length: ~970K sold
Clay Revenue: $2.2 million

Clay CDs:
Singles: ~1.3 million
Full-length: 4.1 million
Clay Revenue: $58 million.

CD-sales GROSS Revenue: $60.2 million

Category 2: Touring - Ticket Sales

4 Concert Tours... AI2 Tour, Independent, Summer, Christmas. For the AI2 tour, I give Clay credit for 30% of the ticket sales. This is probably very very conservative, but there were 10 people on the tour. Yes, we know it was probably more like 50% or more, but I think it is fair to use 30%. For the Independent Tour, I give Clay credit for 70% of the ticket revenue. From all reports, that seems like a reasonably accurate number. Not overly obnoxious, not overly conservative. For the Summer and Christmas Tour, he gets 100% (obviously). My projections for the Christmas tour are 15-20 shows with approx 2000-3000 seat venues, for a total attendance of 40,000, with $75 ticket prices (and no, I don't actually have a lot of real data to back this up, but it's my projection, for better or worse. I think it is reasonable). Note that for the AI2 tour and Independent, all data is from Billboard/Pollstar. For the Summer tour, it is a combination of reported data and projections, as I posted the other day. For Christmas, it is 100% projection.

Tour.............attendance......GROSS.........Clay %.....Clay Revenue
AI2...............407,404.......$15,586,762.....30%.........$4,676,029
Independent..249,790.......$11,203,887.....70%.........$7,842,721
Summer........236,359.......$8,251,242.......100%.......$8,251,242
Christmas........40,000.......$3,000,000.......100%.......$3,000,000

Touring - Ticket Sales Gross Revenue: $23.8 million


Category 3: Touring - Merchandise

Using the attendance and percentages from above, I apply a different $ per attendee for each tour. For the AI2 tour, there wasn't a lot of merch for purchase, so I use a number well below industry average. For Independent, I use industry average. For Summer, I use slightly above average (Clay's sales are unlike anything I've seen at other concerts I've been to, so above average seems right to me.) For Christmas, I was conservative because I have no idea what will be available.

Touring - Merchandise - Gross Revenue: $5.8 million


Category 4: Miscellaneous Revenue

Ok, here things get less structured. I included things like the tickets sales for Dover (it was revenue), projected book sales (being very conservative), and some estimates for other sources, like website merch sales, and other things Clay has had his name on. This is not as "scientific", so I was very conservative. You could argue this number is way higher. I'm not including the thousands of dollars we've all spent on hard drives, upgrading computers, plane tickets, hotels, etc, because that is very difficult to quantify.

Miscellaneous Revenue: $2.4 million

GRAND TOTAL PROJECTED TOTAL 2003/2004 GROSS REVENUE: $92 million

So there it is. By the end of this year, Clay will have caused the spending of over $90 million!!! (Deducting the Christmas projections - book and CD, he's at about $67 million right now!). Now remember this is gross revenue, not earnings. This doesn't indicate how much the store makes off the CD, or how much the wholesale cost of the CD is. It doesn't indicate recording expenses, tour expenses, management expenses. It just shows how much money the general public has shelled out on Clay-related goods. Guess what? ITS.NOT.JUST.US. Sure, I know I spent a lot, but even if 10,000 internet fans spent an average of $500 each, that's $5 million. As time goes on, the industry at large will recognize this, and like it or not, money buys respect.

Next thing y'all will want to know is how much of this is in Clay's pocket. Well, the calculations are still back-of-the envelope, but I think this year Clay will make $8-10 million, and he probably pocketed $2-3 million last year, maybe more. One thing you can see is that while CDs generate the most revenue, they generate the lowest percentage of money that goes to Clay. Merchandise generates the highest percentage, and touring the next highest. Of the $60 million in CD sales, Clay probably sees maybe $3 million (ballpark guess - we've gone through the standard calculations on this before...). Of $5.8 million in merch sales, Clay probably pockets in the area of $2.2-2.5 million. MUCH higher percentage. Some smaller artists/ bands make their whole living off of merch sales (because they don't sell enough CDs to earn their advances, and they barely sell enough tickets to cover expenses when they tour).