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Bad Business: SFX Entertainment’s Controversial Ties To CrowdRX

Over a month has passed since EDM conglomerate SFX Entertainment filed for bankruptcy. Even after its wheels have ground to a halt, however, cogs in the company’s machinery continue to come loose and expose the design flaws that led to its inevitable breakdown.

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As it would happen, the tone of the dialogue would change once again – this time for the worse, as Bazos opted to buy out a different event medicine brand called National Event Services. The source says, “Pollak’s potential share in the new company diminished significantly. He hired an investment banker to put in due diligence on his own company, but Bazos stonewalled.”

The source continues to say that Pollak’s consultant advised him not to go through with the deal because it was impossible to ascertain the true value of CrowdRX, and because Bazos’ new offer was significantly lower than his first. When Pollak expressed his doubts to Dr. Bazos, he became even more defensive.

The source recalls that Bazos had dismissed Pollak’s concerns by telling him that it was not typical for either party to put in due diligence before an agreement had been reached. Such an argument is now especially ironic given recent developments in SFX’s chapter 11 restructuring. As mentioned earlier, the corporation is not scheduled to sell Beatport until May – but 18 of the 24 companies interested in purchasing the download store have already done due diligence.

“Pollak politely declined,” says the source, “and despite him acting in good faith, Bazos made a veiled threat that he would be blacklisted from working SFX events in the future.”

Shortly afterwards, Dr. Bazos demonstrated that he was willing to follow through on his threat:

“He tried very hard to get ParaDocs banned from Electric Zoo last year, but he failed,” the source recalls. “Pollak’s long-standing relationships gave him job security that Bazos’ position on the SFX board couldn’t override.”

According to the source, Dr. Bazos told Pollak that he would not work the 2015 edition of Electric Zoo. Shortly afterwards, Pollak reached out to a contact acquainted with the inner workings of the festival. It was the first the contact had heard of it, and Pollak ended up providing onsite medical care at Electric Zoo last year – as he will for the festival’s 2016 edition.

We Got This Covered reached out to Dr. Bazos to ask, among other things, if he had ever threatened to push an event medicine company out of an event. He gave us, as he put it himself, “a super hard no.” He elaborated:

“Our company is run by myself, I’m a full-time medical doctor, and by Carl Monzo, who’s a full-time provider in Philadelphia. We don’t have the business wizardry, nor are we the aggressive types who would have those conversations at all. It’s not like that.”

Dr. Bazos insists that he was brought on specifically for his medical expertise:

“In terms of the running of the business of SFX, I was by default on the board as the head of medical safety, but most of the decisions were being made by business people and the independent directors of SFX.”

At this point, if you’ve closely followed SFX in the news then you’re probably wondering if anyone on the board of directors is business savvy. Incidentally, the SEC filing for an agreement between CrowdRX and SFX Entertainment might reveal that self-interested decision making at the leadership level contributed to its well-chronicled downfall.

It bears mention that CrowdRX is not, nor has it ever been owned by SFX – which makes for a textbook conflict of interest considering that Bazos serves on the latter company’s board. The agreement (which took effect around the same time Bazos formed his company) dictated that SFX would compensate CrowdRX in monthly payments that add up to the oddly round sum of $200,000 per year. The amount is additional to other case-by-case exchanges of funds laid out in the contract which by themselves would make CrowdRX a more competitive option according to insiders familiar with the event medicine market.

“I always bristle when I hear that number,” Dr. Bazos responds when we bring up the figure. He justifies it by citing the number of events staffed by CrowdRX (albeit vaguely, as he purports that the number falls somewhere between “dozens to hundreds”), as well as numerous costs associated with enlisting and training qualified medical technicians licensed to work in the state where any given event takes place.

Since CrowdRX is a private business, it’s difficult to weigh costs against revenues in order to build the case that some sort of corporate back scratching was at play in the decision. Either way, it definitely didn’t help either party in the long run. According to a court document that surfaced after SFX filed for bankruptcy, at that time, the company owed CrowdRX just shy of $270,000.

Business aside, attendee safety should be the single highest priority of anyone involved on the production side of an event – and even in that regard, the ends don’t appear to justify the means.

A source privy to knowledge of CrowdRX’s participation in the 2015 edition of Mysteryland USA recalls that after the company had taken it over following the prior year, medical staff response times increased significantly.

“Normal [response times are] within, at a large festival like Mysteryland, a half minute to two minutes,” they claim. “I would say their times were at least 10-15 minutes. I know that we were waiting on a couple of calls more than 20.”

This source maintains that the observation is a common one among other event medicine professionals.

“They have a negative reputation with anyone who works with them because they don’t know how to work an event in terms of deployment – they don’t do any deployment,” they say. “I think that anyone who works with them would know that.”

More established event medicine companies strategically place doctors and EMTs at various points throughout whatever festival they oversee, assigning more staff to a stage at which a particular set change is expected to cause a crowd influx before it happens.

“They don’t do that,” the source says. “CrowdRX does nothing with that. They’re like, ‘Okay, we need 50 EMTs and 50 doctors to show up in the tent,’ and that’s pretty much all they do.”

The source speculates that Bazos’ limited working experience in music festival environments is among the reasons for the longer response times.

“He’s got a total lack of experience in the field, and I think he’s been doing it so long that he’s just lazy,” they suggest. “He’s an orthopedic surgeon; he has absolutely no field experience.”

In general, longer response times lead to more incidents in which patients must be taken to a hospital by ambulance – which creates a higher likelihood of fatalities. While the longer times did not translate into fatalities at Mysteryland USA, they did at other festivals in which CrowdRX assumed control in 2015.

Paradiso, which takes place at The Gorge Amphitheater in George, WA, saw the deaths of two attendees last year, where it had none the year before. In addition to the other controversies surrounding last year’s edition of TomorrowWorld, the Atlanta, GA festival saw its first fatality in 2015 after CrowdRX took over – as well as reports that medical personnel gave a girl who broke her foot an ice wrap but no crutches or wheelchair.

With the information at hand, it’s impossible to prove the validity of either source’s accusations – especially in light of Bazos’ claims to the contrary of the first. However, the anecdotes certainly fall in line with the behavior patterns exhibited by the corporation’s leadership in their other dealings.

With last year’s TomorrowWorld catastrophe and their mismanagement of Beatport, the corporation has demonstrated an unwillingness to follow through on their promises to let electronic music entrepreneurs run their businesses as they have. Instead, they’ve established a track record for making decisions motivated by self interest that, at their worst, may have endangered the lives of the music fans who make up their very consumer base.

Since declaring bankruptcy, SFX Entertainment is likely to sell off more of its brands in the coming months, and many of the live music events under its corporate umbrella might not be contractually required to maintain a business relationship with CrowdRX moving forward. Not only for the sake of encouraging good business practices, but also the well being of festival goers at large, an informed promoter or venue will think twice before entering into a business relationship with the event medicine company.

If you would like to share additional testimonials with We Got This Covered about CrowdRX or SFX Entertainment, don’t hesitate to start a conversation with us by commenting below or sending a confidential email to [email protected]