Money for Nothing: The Lucrative World of Club Appearances

http://www.gq.com/story/how-celebs-get-paid-for-club-appearances

by JackPoach • 10 years ago

113 83 10 years ago

gq.com

Synaesthesia• 10 years ago

This is some next level 0.1% shit.

dandermotj• 10 years ago

I think we're hitting the .00001% here. Such a bizarre reality.

nkurz2• 10 years ago

Actually, I think .1% might be right. .00001% is much, much richer than you are probably thinking.

99.9th percentile US net worth is about 30 million: http://www.federalreserve.gov/econresdata/feds/2015/files/20...

Arbitrarily assuming a 5% return on that, that's 1.5 million dollars a year, which is about $5K per day.

Go out to the club with a few of your .1% friends, and you are right in the $25K per table ballpark while still staying within budget.

ZeroGravitas2• 10 years ago

As I started reading, I was curious about the business model that would allow the clubs to spend this much money, on the basis that they had to recoup it and more within a single night.

They kind of answer that near the end, but I'm still left a bit befuddled. Apparently there's multiple(!) groups of people who will pay $25,000 dollars minimum to sit at a table near Nikki Minaj for an hour?

I can understand (if not condone) the birthday party thing, where you spend millions to get someone famous at your party, as by doing so you are saying "I have so many millions, I can do this ridiculous thing, or buy a famous painting, and still be richer than you". But it seems weird that it's a booming and widespread business model.

maxerickson2• 10 years ago

Maybe available capital is currently underutilized.

(which is admittedly hand wavy and ill informed, but there must be some limit to how efficiently a given economy can put capital to use, faced with abundance, that lack of efficiency might show up as outlier valuations of particular experiences. At least the recipients on the club side are likely to put the money to more comfortable purposes.)

avs7334• 10 years ago

which is admittedly hand wavy and ill informed, but there must be some limit to how efficiently a given economy can put capital to use, faced with abundance, that lack of efficiency might show up as outlier valuations of particular experiences.

I tend to think that the people spending money on this are unlikely to be the type of people capable of putting capital to a more 'efficient' or effective use.

vijayr• 10 years ago

Remember that iPhone app that simply said "I am rich" (or something like that) and sold a few copies for $999 before Apple pulled it down? It is always amusing to see the ridiculous things people would do to make themselves feel better than others around them. Some "celebrities" charge hundreds of dollars for an autograph or a pic and people still pay for the privilege. I guess as long as people pay for it, there would be someone to take advantage of it.

johnloeber• 10 years ago

Apparently there's multiple(!) groups of people who will pay $25,000 dollars minimum to sit at a table near Nikki Minaj for an hour?

Yes. There are tens of thousands of people (and most importantly, their children) for whom multi-million dollar annual expenses are fairly inconsequential.

There are also plenty of people who cannot afford such expenses, but who will nonetheless make them -- a fool and his money are easily parted.

And clubbing with celebrities -- especially for young people -- is among the best status symbols that money can buy. Not to mention that it can be fun, too. (The Lil Jon example in the article is good -- some celebrities are known for throwing really great parties. As with most goods, the really great is much more expensive than the normal stuff.) In a society that is greatly concerned with status and appearances, it is no surprise that this market exists.

chinathrow• 10 years ago

Yes. There are tens of thousands of people (and most importantly, their children) for whom multi-million dollar annual expenses are fairly inconsequential.

Indeed.

http://richkidsofinstagram.tumblr.com/

return0• 10 years ago

You forget that rich people do not care about showing off their money to the middle class. They care about showing off to their peers and above. And that costs a lot.

drzaiusapelord4• 10 years ago

Yeah this. If you're worth eight or nine figures, dropping $25k for hobnob with a celebrity is probably no big deal. From a percent of wealth perspective, its cheaper than what a middle class family would spend at Disney World.

sjtgraham2• 10 years ago

You're missing the point of these night clubs. Nearly all of them are owned by, or involve criminal gangs because they're a fantastically convenient and efficient way to clean dirty money. Buy a jeroboam of champagne wholesale for $300, sell in night club for $30,000 or more.

ZeroGravitas2• 10 years ago

I did briefly consider this, but it seems the celebrity isn't really required for this scenario, and is therefore an uneccesary expense.

nradov• 10 years ago

I'm not quite following. Are you claiming that criminal gangs are investing in night clubs just because they have high profit margins? Or are you claiming that they pass dirty cash under the table to certain customers with the understanding that those customers will immediately return it as clean cash by paying artificially inflated prices for drinks?

There is a common money laundering scheme where a criminal gang purchases a bar and buys a bunch of inventory. But they don't really try to earn a profit or have many real customers. They just write up fake receipts for cash "customers" and then deposit their dirty money. Most of the inventory gets poured down the sewer. The IRS will sometimes send agents to count actual customers going into such places when they suspect laundering.

gaadd332• 10 years ago

Any info available about that? Most of the clubs I know of are affiliated with large corporate entities like Wynn or MGM. The highest grossing clubs are all run by the Tao Group.

Also where can you get a jeroboam of Veuve Clicquot or Dom Perignon for $300 wholesale? I'd love a link or more info since I would buy a bunch for parties.

collyw2• 10 years ago

Probably quite a good place to sell the sort of things that criminal gangs deal in as well - drugs and prostitution.

pitt1980• 10 years ago

"on the basis that they had to recoup it and more within a single night"

I'm not sure that's exactly right

I'm not exactly a regular club goer, but every once in a while I hear my co-workers talk about various places that members of the local NFL team were at the night before

it occurs to me that this makes for relatively effective branding for those places

if its a fun enough place for professional football players to party, it must be a fun enough place for regular people to party, etc etc

suddenly that place is a hot spot

----------

I suspect a similar thing is going on, you bring enough celebrities to create a buzz about your place

whether your place is actually fun enough to monetize that buzz.... I don't know, it really isn't my scene, but that might be a different thing

those places do seem to go in and out of business pretty regularly, I suspect overinvesting in buzz is relatively common

pjc50• 10 years ago

multiple(!) groups of people who will pay $25,000 dollars minimum to sit at a table near Nikki Minaj for an hour?

"Buy experiences, not things"

There aren't millions of such people, but in a big city with a big nightclub scene? Of course. Why do you think people complain about the 1% so much?

bubtubgub4• 10 years ago

I can understand (if not condone) the birthday party thing, where you spend millions to get someone famous at your party, as by doing so you are saying "I have so many millions, I can do this ridiculous thing, or buy a famous painting, and still be richer than you". But it seems weird that it's a booming and widespread business model.

The rich are growing richer and the wealth gap is deepening, is happens all the time until the lower classes can no longer stand the abuse and revolt, after which usually a subset of the upper classes gets power and makes minor concessions to calm the mob. Usually this is followed by increased propaganda and controls to prevent another revolt from happening which leads to the people losing more power. Most of the media and sources of information are already in the hands of the elite and allied with their interests, so revolts are less likely and usually easily suppressed. The cycle continues. A police state and an Elysium-style separation of the elite from the plebs seems closer every day. People find it easier to ignore the struggle and suffering of people far away or people they don't see, even the impoverished and homeless in their own cities, because the media mostly ignores them, but most don't realize that they will soon also be in this class of ignored, powerless beggars and the elite class will be better protected and more isolated, allowing them to ignore the problems of the lower classes even more.

silverbax88• 10 years ago

Are you really referring to a tenant of Marxism to explain why some people have enough money to blow on trivial things in a night club and correlate it to some sort of future revolution?

This isn't something new - 'Lifestyles of the Rich and Famous' from the 1980s was based on this exact kind of excess.

drzaiusapelord4• 10 years ago

Societies can handle x amount of difference between the wealthy and the poor. We're nowhere near any point of revolt, regardless of what hyped up manboys on reddit and HN think. Low unemployment, high gdp per capita, high household income, high human development index rating, etc.

If anyone's revolting its the Greeks and the Spanish, not Americans. And not because of "the rich" but because the feel good socialism they can't pay for is destroying a generation of wealth, work, and prosperity.

HN/Reddit unicorns like Brazil, Russia, Finland, etc are also all underperforming:

http://www.bloomberg.com/news/articles/2016-01-11/meet-2016-...

Gee, maybe low regulatory environments, easy access to investment cash, entrepreneur culture, freedom of speech, honest elections, a real judiciary, capital protections, etc matter to an economy? Naww, keep ignoring the facts.

aetherson2• 10 years ago

There are 536 billionaires in the United States. If you have $1 billion, and you earn a measly 2% return on it, then your yearly income is $20 million. If your yearly income is $20 million and you blow $10 million of that on stuff other than entertainment, then you can spend $25,000 every night and not exceed your entertainment budget.

Obviously that's not actually how it works out -- lots of people who do this stuff are not billionaires, the above is not how billionaires finances work, etc. But it gets at the scale of money available to a top end group of people who are a minuscule fraction of the population but because the population is large, are actually a fairly sizable absolute number of people who can throw that kind of money around.

joezydeco• 10 years ago

Harvard Business Review actually did a 2009 case study on the New York nightclub Marquee. There are actual numbers in there.

The same owners eventually ran the TAO clubs in Vegas. It's....interesting.

http://goo.gl/JE3sqX

kriro• 10 years ago

And here I am thinking it is insane that people pay for pictures of people on TV shows at comic con and the like. I have quite a few friends who are traveling the con circuit and always thought it was a strange secondary job market where ex stars get appearance fees and people pay for money (guys like some random Star Wars extra).

Guess that's just small potatoes.

brianbreslin• 10 years ago

This isn't surprising. How else does a single night club in Miami pull in over $70M a year (LIV at fontainebleu hotel). For every 25k appearance there are 10 that night paying $5k each for bottle service nearby, and then another 1000 paying $100 for booze.

jeffbarr2• 10 years ago

I was at LIV last week (an unpaid appearance :-)). Two drinks + tax + tip came out to $48.

nxzero3• 10 years ago

Pay for the drinks, stay for the experience... ;-)

thinkdevcode• 10 years ago

As someone who's been to LIV a few times, I can say that entrance alone on most weekend nights (fri/sat) is $100. "Premium" drinks like Patron (how is that premium?) are $25 a glass. Those skyboxes on the second floor (that look down on the dance floor) start at $10,000 minimum. Fortunately, I never had to pay because I had a mutual friend with the owner. LIV is definitely on the top end of South Beach nightlife, but there are other clubs that have similar prices.

avs7334• 10 years ago

I have a personal rule to never trust anyone who speaks in the third person...this article seems to validate that quite well.

From another perspective though, is GQ effectively proposing Paris Hilton as a disruptive innovation? I kind of except that...she effectively initiated the business of recursive celebrity (rich begets famous begets rich). I honestly wonder what scholars 2-300 years from now will have to say about the development of reality television from Survivor to The Simple Life/Paris Hilton to the Kardashians to whatever will come next...

and I cannot believe I just wrote this on HN

nxzero3• 10 years ago

Paris is a disruptive innovation, though just not one that the tech world sees an opportunity.

On the other hand, social media is just as driven in large part by pop-culture, but tech loves it. Beyond that, most people crave what she's managed to create, not the only rich person in the world, yet she managed to make it happen.

Now if it was only possible to make meaningful ideas & knowledge as viral using the same tactics.

Touche2• 10 years ago

I kind of except that...she effectively initiated the business of recursive celebrity (rich begets famous begets rich).

Wait, why is the current royal family rich/famous?

wutbrodo• 10 years ago

They were better at killing people+politics way back in the day.

avs7334• 10 years ago

I would separate power (even historical power) and it's inter-linkage with wealth and fame from simply the inter-linkage of wealth and fame. That to me is the new thing, removing power from this equation

shalmanese• 10 years ago

https://broadly.vice.com/en_us/article/paris-hilton-profile-...

djtriptych• 10 years ago

..and Andy Warhol turns in his grave.

breitling• 10 years ago

"Without Ray J's dick, there's no Scott Disick. Without O. J. Simpson, there is no business for this family.”

Just wow.

pc86• 10 years ago

Certainly crude, but it's not wrong.

hamitron• 10 years ago

If the glove don't fit, there's no Scott Disick.

tallanvor• 10 years ago

SKAM Artist

Well, it's certainly a scam!

NoGravitas• 10 years ago

#LateStageCapitalism

chetman• 10 years ago

The whole things seems incredibly distant and surreal to me, but I'm also the sort of person who would pay money to AVOID going to anything that bills itself as a "night club." I much prefer a cozy pub or a decent wine bar, ideally with the music low enough that conversation is possible.

But, you know, I'm a giant nerd, so what do I know?

eternalban• 10 years ago

I click on this link and immediately my retina screams "please switch off!". It's an entirely different planet and species. An now I need to take a shower. /!s

apalmer2• 10 years ago

Isnt this just advertising? I dont really understand how this is any different from other forms of celebrity endorsements such as basketball players pitching nike's. These guys faces are even on the flyers to the parties.

aetherson2• 10 years ago

I think that there's a sense that, like, if you go and endorse a Nike shoe, okay, you might get paid a lot of money, but you still go and do a photo-shoot and maybe spend a frustrating day being filmed doing a jump-shot and have the director saying, "Okay, but can you do that with more intensity," whereas going to a club is supposed to be fun -- indeed, such fun that lots of basically ordinarily people pay fairly large amounts of money to go to it.

So these people are being paid not to, like, fake go to a club in front of cameras and it's work, but literally be paid to have fun.

I expect that the actuality of it is a little more complex than that, but there does seem like there's a grain of truth in it, too.

tomsun• 10 years ago

I don't know what I'm more sad about in this article, the fact that so much economic activity is dedicated to boast oneself's social status by paying to gain proximity to celebrities, or that these parties are insidious to a celebrity's mental and physical health.

bechampion• 10 years ago

SMSPF

086421357909764• 10 years ago

They're leaving out the bigger part in that Clubs are a very easy way to launder money. When the hire these celebrities to show up it makes it even easier to move larger amounts of cash.

draw_down• 10 years ago

Famous people can make money simply off the interest that the general public has in them. However, I would encourage the author of this piece and anyone who reads it to consider this point much more broadly.

For example Ronan Farrow and Chelsea Clinton were both paid hundreds of thousands by MSNBC for essentially nothing. I think it's rather telling that people would prefer to focus on someone like Nicki Minaj getting money in clubs, but that's just me.

soundwave106• 10 years ago

Celebrity culture has always been around, but in some ways it feels more noxious and gamed than it used to be.

Maybe it's just me, I guess. But when I look at someone like the Kardashians, honestly the only real reason they got this opportunity to be "famous for nothing" is their Hollywood connections. They certainly didn't rise up on their acting ability. The celebritization of "lucky sperm club" members as you mention also bothers me.

But, yeah, I don't get the article's attempt to drag other musicians / DJs / rappers into this. Well known musicians / performers going to a club and getting insane sums for simply performing? That's not news. Yes, today its EDM and rap in the club versus rock bands on the stage, but that's what is trendy now; big artists in the 1960s (your Beatles and whatnot) also got (2016 equivalent) six figure appearance fees too.

One can argue about the merits of the winner-takes-all nature of the entertainment industry, but it's a little less "money for nothing" in that case. Lil Jon did have to spin a set.

wehadfun• 10 years ago

For politicians, authors, popular business people: this is called convention speeches.

For rappers, DJs, and Reality stars: this is called club appearances.

ookblah• 10 years ago

the average life of a nightclub is not very long, perhaps a few years and that's IF you're popular. as such, there's huge pressure to just create a lot of buzz and ride that wave until inevitably you become old hat.

those people here talking about how it's convenient for laundering are missing this fact. you can point to the mega clubs in vegas as the few examples of those raking in money, but the vast majority of these clubs go out of business and make nothing. living in nyc there are handful of these big clubs that have been around for longer than a few years and even then, the popular ones have to "re-invent" themselves every few years to keep attendance up.

the more common story is that doors open, and you get some mediocre attendance and basically just losing money hand over fist every week thereafter. people come and see that your establishment isn't that popular and the next week even less people come. momentum is crazy important and i can see paying thousands for a guest appearance even if you're losing money that specific week.

drzaiusapelord4• 10 years ago

Yeah this. You don't want to launder in a high regulatory, high crime, high profile, etc business. You want something like a car wash or laundromat on a small scale. Or, better yet, construction, which is notorious for its lax accounting.

Clubs bring in a lot of scrutiny. The 70s mafia movies made them look for but serious criminals have so many other options that dealing with them nowadays seems stupid. Do you really want a drunk or a whore or a gangbanger to bring police into your laundering operation regularly?

astrodust2• 10 years ago

Clubs bring in a lot of scrutiny.

One operated here illegally for about five years because every time there was a motion to shut them down they found another avenue to appeal. The legal system can move at a glacial pace at the best of times, and they were clever enough to slow it down even more.

Five years is enough time to bank millions of dollars in legitimate profits and make even more on the side through more shady deals.

I know that many of the clubs here juice up their profits by laundering and taking a cut of the drug trade in their bathrooms. They also make enormous amounts of cash legitimately which makes it hard to find out what profits are legal and which are illegal.

For example if you charge $10 for a double shot, but the product only costs you (at most) $1, you're making 90% profit right out of the gate. If someone wants to launder some money, increase your shot sales by 20%. Pour out bottles if you have to just to make the numbers add up, it's not even hard.

Very few of them are ever snared in legal issues because they have a lot of experience flying under the radar and knowing how to operate without getting into trouble. The number one cause for closing a club is either the place burned out, popularity waned, or in rare cases where there was a shooting which means a much tighter leash.

throw7• 10 years ago

ahhh... it's "1 Oak", I was reading it as "10 AK". Silly me.

peterbsmith• 10 years ago

And Larry Ellison, Mark Zuckerberg, Bill Gates, Steve Ballmer, Ev Williams, Marc Benioff, Sheryl Sandberg, Marissa Mayer, Arianna Huffington, etc... get Millions of dollars per day. Within any one of those weeks, there is an hour or two where they're not doing much more labor than a Scott Disick or Nikki Minaj in a club.

collyw2• 10 years ago

The difference is that the people in the article are being paid just to turn up. The business people you mentioned are in charge of large organizations that are making them money while they aren't around.

golergka• 10 years ago

Celebrity culture of US is so bizzarelly different from the nightlife culture I know. I understand that some people just want to waste money sitting at the table with a celebrity, but why call this establishment a nightclub in the first place?

Clubs are places to enjoy the music — without phones, without friends, without stupid conversations. Things describes in that article are the exact opposite of this.

Money for Nothing: The Lucrative World of Club Appearances

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