How to Value a Festival: A Step-by-Step Model Using Santa Monica’s Upcoming Large-Scale Event

Hook: Why investors and event operators struggle to value festivals — and how to fix it

Investors, operators and local government stakeholders face the same frustration: festivals look simple on the surface but hide lumpy revenues, volatile costs and concentrated risks that break naive models. You need a repeatable, spreadsheet-ready method that turns noisy line items into a disciplined valuation. This guide walks through a step-by-step model — using Santa Monica's upcoming large-scale event as a concrete example — to estimate ticket revenue, sponsorship, merchandise, margins, capex and free cash flow. By the end you will have a checklist of inputs, formulas and scenario tests you can paste into Excel or Google Sheets and use on both one-off and recurring festivals.

Executive summary: Key conclusions up front (inverted pyramid)

• Primary driver: attendance x price mix determines the majority of revenue variance. Model ticketing per tier, dynamic pricing and late sell-through.
• High-impact levers: sponsorship guarantees, VIP & hospitality yield, and F&B/merchandise spend per attendee.
• Cost structure: most costs are semi-variable — artist guarantees and production are lumpy; per-attendee costs (security, cleaning) scale with size.
• Valuation approach: use NPV for one-off festivals, and a three-stage DCF for recurring festivals with an explicit terminal value or multiple.
• 2026 context: sponsorship budgets moved more into experiential activations after late 2025 deals (including the Coachella promoter bringing a large-scale event to Santa Monica and strategic investments in themed nightlife producers). Use this trend to justify higher upfront sponsorship assumptions in base-case models.

Step 1: Define festival archetype and scope

Start with precise definitions. Is this a one-off large-scale music festival, a multi-day recurring regional festival, or a branded experiential activation tied to sponsor campaigns? For our Santa Monica use case, assume a single large-scale, multi-stage music festival for 2 days with a planned gross attendance of 40,000 per day (unique attendees 60,000 across two days) and a strong local sponsorship pipeline in early 2026.

Model inputs to set immediately

• Event dates and duration (days)
• Planned venue and maximum capacity (per day)
• Ticketing tiers and capacities (General Admission, VIP, Hospitality)
• Headline artist commitments and deposit schedules
• Primary sponsors and committed dollars (cash vs. in-kind)

Step 2: Build a revenue model by stream

Break revenue into discrete streams. Each stream should have its own drivers and conversion assumptions.

Core revenue streams and spreadsheet-ready formulas

1. Ticket revenue (by tier):
   • Cells: TierName, Price, Capacity, SellThroughRate
   • Formula (per tier): =Price * Capacity * SellThroughRate
   • Aggregate ticket revenue: =SUM(ticket tiers)
2. Sponsorship: cash guarantees, activation fees, and in-kind valuation
   • Cells: SponsorName, CashAmount, ActivationFee, InKindValue
   • Formula: =SUM(CashAmount + ActivationFee + InKindValue)
3. F&B and concessions
   • Cells: AvgSpendPerAttendee, PayRate (operator share)
   • Formula: =AvgSpendPerAttendee * TotalAttendees * PayRate
4. Merchandise
   • Cells: MerchSKU_AveragePrice, AttachRate (share of attendees who buy merch)
   • Formula: =MerchPrice * TotalAttendees * AttachRate
5. VIP & Hospitality packages
   • Cells for packages count, price and sell-through similar to tickets
6. Ancillary: parking, streaming rights, licensing, secondary revenue
   • Model conservatively and separate guaranteed vs. variable

Tip: use stage-level revenue schedules if you have differential spend by stage/time-slot (dance stages vs. main stage VIP conversions).

Step 3: Build an expense model

Expenses fall into three buckets: fixed (site rental, core production capex when capitalized), semi-variable (artist guarantees, production staffing), and variable (per-attendee costs like security and sanitation).

Key expense categories and sample spreadsheet labels

• Talent & artist fees: ArtistFee, Deposit%, RemainingPayOnDay
• Production: stage, lighting, sound, staging rental — model line items and consider multi-year capital treatment vs. event expense
• Staffing & labor: security, medics, ticketing staff
• Permits, licensing & local fees: city permits, police overtime, noise mitigation
• Insurance: liability and event cancellation (climate risk raised in 2025 increased premiums in 2026)
• Marketing & ticketing commissions: digital ads, platform fees (~5 8%), payment processing
• Production contingencies and force majeure reserve: typically 3 10% of base costs

Common formula for variable cost per attendee: =SUM(per-attendee cost items) * TotalAttendees. For semi-variable costs, use a stepped function where certain line items apply once capacity thresholds are crossed (e.g., extra security pod needed above 25,000 attendees).

Step 4: Capex, working capital & timing

Distinguish between event opex and capital expenditures. Capex could include modular stages, lighting rigs, power distribution panels, and branded infrastructure. Decide if capex is capitalized (useful life multi-year) or expensed to the event.

Spreadsheet guidance

• Capex line items with UsefulLifeYears and CapexAmount
• Depreciation schedule: straight-line with salvage value where appropriate
• Working capital: deposits to artists, vendor advance payments, receivables from sponsors
• Cash timing: model cash outflows and inflows on a monthly or weekly basis in the run-up to the event

Step 5: Taxes, financing and project-level adjustments

Model taxes at the corporate or project level depending on the vehicle. If the event is financed with debt, include interest and principal schedules and consider how sponsor cash flows may be escrowed. For early-stage investors in themed operators (a trend visible in late 2025 and early 2026 investments), model preferred returns and equity dilution.

Step 6: Build the cash flow statement and compute Free Cash Flow

For each forecast period (for a one-off event this is typically annual or event-period monthly), compute:

1. Net operating profit before depreciation (EBITDA) = Total Revenue - Operating Expenses
2. Less: Depreciation & amortization
3. EBIT = EBITDA - D&A
4. Less: Taxes = EBIT * TaxRate
5. Less: Net CAPEX (capitalized assets purchased during the period)
6. Less/plus: Change in Working Capital
7. Equals: Free Cash Flow (FCF)

Spreadsheet formula example for event-period FCF: = (TotalRevenue - OperatingExpenses - Depreciation) * (1 - TaxRate) + Depreciation - NetCapex - ChangeInWC

Step 7: Valuation approach — one-off vs recurring

One-off event valuation

For a single event, compute the NPV of event-specific cash flows using an appropriate project discount rate. If the promoter keeps assets that have residual value (staging, inventory), include salvage assumptions.

Recurring festival valuation (recommended for festival brands)

When the festival is intended to recur, build a multi-year DCF (3 10 years depending on scaling plans). Steps:

1. Forecast FCF for each year
2. Choose a discount rate — use WACC for enterprise valuation or a project discount rate that reflects promoter risk. For mid-sized festival promoters in 2026, a discount range of 9 14% is common depending on leverage, sponsor visibility, and revenue diversification.
3. Terminal value: use either a Gordon Growth model with a conservative long-term growth rate (0 3%) or an exit multiple on EBITDA (4x 8x depending on comparables).
4. Sum PVs to get enterprise value

DCF specifics and spreadsheet formulas

• Discount factor for year t: =1 / (1 + DiscountRate)^t
• PV of cash flow: =FCF_t * DiscountFactor_t
• Terminal value (Gordon Growth): =FCF_last * (1 + g) / (DiscountRate - g)
• Enterprise value: =SUM(PV of FCFs) + PV(TerminalValue)

Step 8: Scenario and sensitivity analysis

Always present at minimum three scenarios: Base, Upside, Downside. Key sensitivities:

• Attendance +/- 10 30%
• Average ticket price +/- 5 20%
• Sponsorship committed vs. pipeline conversion
• Cost inflation (fuel, labor, insurance) — 2025 saw premium rises that carried into 2026

Use data tables or two-way sensitivity tables in Excel to show valuation sensitivity to attendance and ticket price. For investor pitches, show break-even attendance and margin thresholds.

Practical example: quick Santa Monica model (illustrative numbers)

Below is an abbreviated, illustrative event model you can paste into a spreadsheet. These numbers are hypothetical and intended to show structure not to be taken as precise projections for any single festival.

• Unique attendees: 60,000
• Avg ticket price (blended): $110
• Ticket revenue: $6.6m
• Sponsorship (cash): $2.0m (strong buyer interest in 2026 experiential budgets)
• F&B revenue (operator share): $1.2m
• Merchandise revenue: $0.6m
• Total revenue: $10.4m
• Operating expenses: $6.2m (talent fees, production, staffing, permits, marketing)
• EBITDA: $4.2m
• Net capex: $1.0m
• Change in working capital & taxes: $0.8m
• FCF (event period): $2.4m

If you discount a one-off FCF using a 12% project rate, NPV is $2.14m. For a recurring festival with a conservative 2% terminal growth and a 12% discount rate, a 5-year forecast of stable FCF growing 3% annually yields a materially higher enterprise value once terminal value is included.

Key metrics and benchmarks to report to investors

• Ticket revenue per attendee = TicketRevenue / TotalAttendees
• F&B & merch revenue per attendee
• Gross margin = (TotalRevenue - VariableCosts) / TotalRevenue
• EBITDA margin
• Capex per attendee
• Payback period (for promoters who invest upfront): Capex / FCF
• Breakeven attendance = FixedCosts / (AvgRevenuePerAttendee - VariableCostPerAttendee)

Risk factors and mitigants — practical investor checklist

• Weather and cancellation: buy event cancellation & adverse weather insurance; include force majeure clauses in artist contracts.
• Permit and local opposition: secure conditional permits early and engage community benefit commitments.
• Artist cancellation: stagger payments and have substitution clauses; keep headline rebooking windows.
• Sponsor churn: convert verbal commitments to signed LOIs and escrow structured payments if possible.
• Cost inflation: lock rates for large equipment rentals, and add contingency lines to budget.
• Health & safety: allocate budget to security and crowd management; rising standards since 2025 increased required headcounts in many US cities.

2026 market context and strategic considerations

Late 2025 and early 2026 saw two relevant trends that should shape your model assumptions:

1. Major promoters expanding market footprints. The announcement that a Coachella promoter is bringing a large-scale festival to Santa Monica signals both increased competition and higher sponsor interest in regional beach markets. Use this to justify higher marketing budgets and potential price premiums if the promoter brand drives demand.
2. Investor interest in themed nightlife and touring experiences, exemplified by strategic investments such as Marc Cuban's stake in Burwoodland, signals that investors are valuing community-driven, repeatable concepts that can be scaled. In your model, add a valuation uplift for a repeatable brand or touring capability and model multi-market rollouts.

Investor-ready outputs: what to include in a pitch

• One-page summary: total addressable market, planned attendance, revenue split and proposed use of funds
• Base and stress-case financial model (with scenario tabs)
• Cash waterfall and capex schedule
• Sensitivity tables (attendance vs ticket price)
• Risk register with mitigants and contingency allocations

“It’s time we all got off our asses, left the house and had fun,” said an investor in 2026 about experiential investments, highlighting the resilience of live events in a more AI-driven marketing environment.

Spreadsheet-ready checklist (paste into a new sheet)

1. Assumptions tab
   • EventName
   • VenueCapacityPerDay
   • TotalUniqueAttendees
   • Days
   • TicketTiers (Price, Capacity, SellThrough)
   • SponsorshipCommitments (Cash, In-Kind)
   • AvgF&BSpendPerAttendee, F&BOperatorShare
   • MerchAttachRate, AvgMerchPrice
   • ArtistFees and DepositSchedule
   • InsuranceCost, PermitFees, MarketingBudget
   • CapexItems (Amount, UsefulLife)
   • TaxRate, DiscountRate
2. Revenue tab: one-line per stream with formulas described above
3. Expense tab: fixed, semi-variable and variable breakdowns
4. Cash flow tab: compute FCF per event-year and discount schedule
5. Scenario tab: base/upside/downside parameter overrides
6. Outputs tab: metrics, charts, break-even and sensitivity matrices

Final takeaways and actionable steps

• Model at the event-period granularity (weekly cash schedule) to capture deposits and escrow flows.
• Prioritize converting sponsorship pipeline into signed agreements when modeling conservative cases for investor decks.
• Run scenario tests for +/-20% in attendance and +/-10% in ticket pricing to understand valuation sensitivity.
• For recurring festivals, treat early years as investment years with higher capex and marketing spend and forecast margin normalization by year 3.
• Document all assumptions with sources: comparables in 2025/2026, sponsor LOIs, artist contracts and municipal permit timelines.

Call to action

If you are building a model for a Santa Monica event or a touring festival concept, use this guide as your blueprint. Want the spreadsheet-ready template used in this article? Subscribe to our investor toolkit or request the Excel/Google Sheets template to get pre-built tabs, formulas and sensitivity tables you can customize. For bespoke valuation support or investor-ready packaging, reach out to secure a model review and walkthrough.

Related Reading

• Top 10 Monitor Deals for Gamers and Creators This Week
• Real Estate Investors: What Falling Homebuilder Confidence Means for 1031 Exchanges and Depreciation Schedules
• Poolside Content & Recovery Systems in 2026: Advanced Strategies for Swim Pros and Clubs
• Fan Culture vs. Creator Freedom: When Feedback Becomes a Career Barrier
• Monetizing Ceremony Highlights: Productizing Clips Like Goalhanger