RUTHFULLY YOURS

We now have the first acknowledgment from their side that the Clintons vastly overestimated their personal popularity and the public’s interest in hearing them talk about themselves.

The Clintons and their stadium tour promoter are officially responding to the public’s refusal to show up in sufficient numbers for them to avoid embarrassment (and financial loss) at the level of ticket prices that seemed realistic when the tour was announced only two months ago. The UK Daily Mail noticed this offer on Groupon:

(source)

This is pathetic on a couple of levels. First of all, notice that this is not some last-minute sale, but rather for an event half a year in the future. In other words, they have given up on the price list that seemed realistic to them just a couple of months ago. They are admitting they are not worth (to the public) what they were charging.

Secondly, they are turning to a company, Groupon, that has also discovered that its stock price was too expensive for the public. Check out its stock chart since its IPO:

(source: NASDAQ)

At its close yesterday, Groupon’s stock price has been cut more than 87%, a much steeper discount than the Clintons’ 55% price drop on Groupon.  But recall that last minute discounts for the tour already have reached as high as 90%, so true bargain hunters should hold off until they get desperate.

I have a guess about what is going on behind the scenes. I suspect that  Live Nation, a publicly held New York Stock Exchange-listed company with more than ten billion dollars in revenue last year, is weighing cancellation of the entire tour. Their business, staging public events, has what is called in business jargon, “high operational leverage,” meaning that once you cover your costs, most of the rest of the revenue goes right to profits. But the downside to operational leverage is that failure to cover fixed costs can yield spectacular losses.

I conjecture that the Clintons are afraid of the ridicule that would accompany outright cancellation of the tour. Even worse, it might signal to other Democrats that there is no reason to continue to protect them for the consequences of their misbehavior. If they can’t even pull a crowd, why not cut the party’s losses?

I suspect that this Groupon offer is a compromise. My theory is that Live Nation is saying to the Clintons that if the discount doesn’t drive a lot more sales, they wll pull the plug in the tour.

Bad as this move looks, it heralds even worse news ahead.