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The Soundwave Music Festival was cancelled last week amid debts of up to $25 million, leaving suppliers and ticket holders for January's planned three-city event in limbo.
Soundwave was the jewel in the crown of Iranian-born music promoter AJ Maddah, who ran the Harvest music festival before it was canned in 2013 and was briefly a co-owner of Big Day Out before selling it to US promoter C3 in June 2014.
The demise of Australia's largest remaining rock festival – which allegedly had profits of $13 million in 2013 – will be a shock to many, but it was a long time coming.
For the past year, creditors have been attempting to have Maddah's company wound up over outstanding debts. Some suppliers for the 2014 festival were reportedly forced to wait up to 10 months to be paid.
In early October 2015, a creditors' meeting heard Soundwave owed more than $11 million to some of the biggest acts in the world, including Seattle grunge pioneers Soundgarden ($2.1 million), mask-wearing metal act Slipknot ($1.6 million), and Billy Corgan's group Smashing Pumpkins ($1.2 million).
Burton Bell, frontman of Californian metal band Fear Factory, told Fairfax Media in October he became aware of Maddah's financial issues in February while playing the Adelaide leg of the 2015 festival.
"AJ owes my band a lot of money," he said. "We fear we will never see that money. My family has suffered financial hardship since the Soundwave tour."
By the time of a second meeting of creditors on October 29, Maddah appears to have settled his tab with the musicians – a crucial act if he were ever to stage another music festival – but his company's debts were still estimated to be at least $13 million and possibly "in excess of $25 million", according to administrator Deloitte.
Despite that, creditors voted to allow Maddah to continue planning for Soundwave 2016, for which he allegedly had 34 acts booked and $2 million worth of tickets presold, even though he had not yet secured venues for the tour.
It is likely that by the time the festival was cancelled last week as many as 50,000 tickets had been sold at $172 each – meaning more than $8 million of potential refunds are at stake.
Ticket seller Eventopia claimed on Friday that it would refund ticket buyers' money – but not until Maddah released the funds for those tickets, which it claimed had been passed on to him.
But Consumer Affairs Victoria said the ticket seller was responsible for refunds.
"People should request the refund from the company that sold them the festival ticket," a CAV spokesperson told Fairfax.
Neil Cussen, acting for Deloitte, told an October 7 meeting of creditors that Maddah's company had "nominal" assets and no staff. "The only real asset of the company was the right to hold the festivals," he said.
It is debatable that the company he was referring to even owned that much, because Maddah appears to have shifted that right elsewhere before the company went into voluntary administration on September 29.
On August 24, he set up a new company, HOH Holdings Pty Ltd, which wholly owns a second company, called The Hounds of Hell Pty Ltd.
The notes of the October 29 creditors meeting suggest Hounds of Hell was the company that would stage the 2016 festival – free of that mountain of debt.
That millstone had been hung around the neck of the asset-free Soundwave Pty Limited until Maddah changed its name on September 24 and again on September 25. The debt now belongs to the anonymous-sounding ACN 127 870 866 Pty Ltd.
The people left out of pocket are anything but anonymous, however. They are the security, lighting, stage management, catering and cleaning companies and sole traders who make a music festival run, most of them owed tens of thousands of dollars, some of them much more.
Their names may not have the cachet of a Burton Bell or a Soundgarden, but the financial hardship they will suffer this holiday season is every bit as real.
With Peter Vincent and Annabel Ross