Soundwave ticketing agency Eventopia has backed down on their initial refusal to refund punters following the spectacular collapse of the Soundwave music festival.
Eventopia has now agreed to refund millions of dollars to the 18,000 Soundwave ticketholders despite originally claiming that it was promoter AJ Maddah and his company Hounds of Hell Pty Ltd’s responsibility to do so.
Eventopia initially told their customers that, “The Soundwave Festival Promoter currently holds the ticket sales funds. When the Soundwave Promoter returns this money to us, Eventopia will happily refund you. Eventopia has issued the Soundwave Promoter a letter of demand to return proceeds that were advanced”.
That, of course, was totally inconsistent with Australian standards. Eventopia has reversed its original bulldog stance and told its customers, “To ensure fans are not disadvantaged Eventopia has sent an email this afternoon to all customers inviting them to apply for a full refund of their Soundwave 2016 ticket prior to January 31 2016.”
Soundwave, AJ Maddah and Hounds of Hell Pty Ltd have crashed and burned in a disaster unseen in Australia since the Harry M Miller Computicket scandal of 1978. Miller’s company Computicket went out of business within six months of launching. Miller served 10 months in jail on fraud charges for that disaster.
Questions will now need to be answered as to why AJ Maddah was allowed to continue trading with the Soundwave business when he was already in debt to the tune of 26 million to 186 creditors. When the company was placed into administration following a disastrous 2015 event, the collapse of Big Day Out, the failed Harvest Festival and a million-dollar loss buying the Billy Hyde backline company creditors voted to allow Maddah to potentially trade his way out of debt by mounting another Soundwave.
It was a ludicrous decision but creditors were faced with losing everything immediately or gambling on a slim window of hope. That decision now means that not only have they lost everything, but by allowing Maddah to continue, new creditors have been added to the list who have now also lost their money. Simply, the best-case scenario should have been that Soundwave was wound up months ago. 2016’s event should never have been allowed to go ahead.
The other stupid decision was Eventopia management advancing Maddah from the ticket sales Normally, ticketing money is held in escrow until an event takes place as a safeguard to the general public who are asked to pay up months in advance for a show. This was a massive gamble. After his prior business disasters, Maddah had no credit facility to pay deposits for artists and confirm accommodation and travel plans. He could not pay the upfront costs unless Soundwave was an immediate hit with ticket buyers. It wasn’t. Without the proper credit facility the upfront costs had to be paid in cash. That meant that he could not afford the top shelf artists as headliners he was used to booking in the past. Without an act like Metallica, Iron Maiden or Green Day, punters did not have the incentive to buy and they didn’t. Around 18000 tickets were sold in advance for the Sydney, Melbourne and Brisbane shows. That averages around 6000 per event. It needed four times that to break even.
At 12000 sales when 80% of money was advanced, Maddah had around $1.7 million to play with. That simply wasn’t enough to get the acts into Australia and that should have sent off alarms before it as paid out. It wasn’t enough. By the time the festival was cancelled at around the 18000 sales mark, gross revenues were at $3.3 million. Massive losses for the company were inevitable. For example, Soundgarden was still owed over $2 million from the last event. There was no way 2016 was going to save the creditors of the previous years and pay for itself in 2016. When that became obvious to the creditors, they signalled the administrators to pull the pin on Maddah.
Eventopia have brought on massive damage to their own business by advancing a risky business like Soundwave. It is not normal Australian practice in the industry to do so and in doing they did at their own risk. It is the obligation of Eventopia to refund ticket holders and to initially suggest otherwise was sheer business arrogance.
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