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Woodstock’s financial backers can’t cancel the event, court rules

By | Published on Thursday 16 May 2019

Woodstock 50

Organisers of the Woodstock 50 festival yesterday welcomed a ruling in the New York courts confirming that the event’s financial backer had no right to unilaterally cancel the event. This means “Woodstock 50 is on!”, said organisers declared. Though the court declined to force that now ex-backer to return $18 million to the event’s bank account.

The 50th anniversary celebration of the original Woodstock, due to take place in August, was thrown into doubt last month when its primary financial backer – Amplifi Live, a division of marketing group the Dentsu Aegis Network – announced that the event had been cancelled. The Woodstock company itself then quickly denied there had been any cancellation and insisted that the show would go on.

The dispute between Woodstock and Dentsu went legal last week, putting the spotlight on the contract between the two entities in the New York courts this week. Most attention fell onto what that contract said about cancelling the event and the management of the bank account that had been set up to pay festival costs.

The agreement did set out quite clearly what Dentsu could do if it thought the Woodstock company was ever in breach of its contract. Basically, the marketing firm could either cancel the deal and walk away from the project, or take control of the festival and more directly manage the booking of acts and delivery of the event.

Dentsu alleges that Woodstock was very much in breach of its contract by the middle of last month. Among its gripes are Woodstock’s failure to consult the firm over talent bookings and a significant, if necessary, slashing of capacity, as well as failures to decrease the approved budget after missing a talent booking deadline and to gain approval for certain expenses.

On the basis of those alleged breaches, Dentsu decided to take control of the event. It then used that control to cancel the whole thing, because “the significant cost overruns, revenue shortfalls and lack of financing facing the festival [are] all insurmountable obstacles that cannot be cured”. But, argued Woodstock, while the contract may have provided for Dentsu to take control of the event, that didn’t mean it could cancel the show.

That’s because – although by taking control of the event Dentsu changed its working relationship with the Woodstock company – the two entities’ agreement was still in place. And that agreement clearly states that “any decision to cancel the festival shall be jointly made in writing by the parties”.

This is why the judge hearing the case ruled yesterday that Dentsu and its subsidiaries “are enjoined and restrained … from cancelling the festival or communicating to the media and/or festival stakeholders – including state and county officials, venue operators, local vendors, community representatives, insurers, producers, and talent agencies, and performers – that the festival has been cancelled”.

However, not everything went the way of the Woodstock company. Under the original deal Dentsu committed a budget of just over $49 million to stage the festival and set up a standalone bank account via which to pay the festival’s costs. There was just under $18 million in that account at the point the marketing group bailed on the project.

At that time Dentsu took that cash out of the festival account. The legal filing Woodstock made last week also requested that that money be returned. But the judge said yesterday that he was denying the “request, pending a full evidentiary hearing, for a mandatory injunction directing [Dentsu] to return the $17.8 million to the festival bank account and provide [Woodstock] access to the funds in the festival bank account”.

This was based on what the aforementioned contract said about funding and banking, and in particular the fact it put the financial backer very much in control of the festival bank account, to which the Woodstock team had just “read-only access”. In its various legal arguments this week – the judge added – the Woodstock company had fallen “woefully short of making the heightened showing necessary to warrant a mandatory injunction ordering [the return of] $17.8 million to the festival bank account”.

So, a mixed ruling that allows both sides to claim a victory of sorts. But a ruling that definitely allows Woodstock 50 to go ahead, providing its organisers can find a new financial backer to fill the big fat budget hole.

One of those organisers, Gregory Peck, yesterday insisted that – now it had been confirmed Dentsu had no right to cancel his event – “Woodstock 50 is on! We can’t wait to bring this important event to the public this summer. We have one of the greatest line-ups of talent of any music festival, and we are grateful to all of the talent for their loyalty and support”.

Meanwhile Michael Lang, the most prominent person on the Woodstock side of the dispute, added: “We have always relied on the truth and have never lost faith that the festival would take place. I would like to thank all of the talent and their representatives for their patience and support. Woodstock 50 will be an amazing and inspiring festival experience”.

For its part, Dentsu said it felt “vindicated” by the judge’s ruling on bank account access. “The court did not rule that [our] assumption of control over the festival was improper or alter that status in any way”, a spokesperson then added. “While we understand that pursuant to the court’s ruling [we] cannot cancel the festival without Woodstock 50’s agreement, at this time we do not intend to further invest in the festival due to the issues noted by the court, as well as the compressed timeframe, and multiple health and safety concerns”.

We now await to see whether Woodstock 50 does indeed go ahead in August. Either way, it seems likely further legal action will follow. Woodstock may well sue Dentsu over the reputation damage its cancellation announcement caused, while the marketing group may yet go legal over the alleged breaches of content. So, as always, good news for the lawyers.