Knitting Factory Acquires 49 Percent Stake in Indie Promoter Spaceland: Exclusive

Billboard

National music and hospitality innovator Knitting Factory Entertainment (KFE) has acquired a 49 percent stake in active L.A. independent promoter Spaceland Presents, Billboard has learned.

The move deepens the relationship between the two firms, which first partnered in 2014 when, with Artist & Recreation, they reopened L.A.'s Regent Theater, which has since become one of downtown L.A.'s most popular medium-capacity music venues. Additionally, KFE and Spaceland, along with Moon Block, are partnering on the 5th annual Desert Daze music festival, set to take place in Joshua Tree, Calif., Oct. 14-16.

KFE president/CEO Morgan Margolis says he and Spaceland founder/CEO Mitchell Frank not only have similar backgrounds in clubs, indie music, and hospitality, but also share a similar vision of operating in all three areas. Margolis believes the new partnership will help both brands grow on a national level at a time when the market is dominated by large national promoters and venue operators. "The market is so difficult right now for promoters," Margolis tells Billboard. "There's only so many independents left, and we felt like this was probably a good time to join forces."

Knitting Factory Partners With Spaceland & Moon Block on Desert Daze Fest

Though it has offices in L.A. (along with Boise and New York) and once operated a club in Hollywood (The Knitting Factory, 2000-2009), outside of the Regent, Desert Daze and occasional one-offs, KFE has not been overly active in Southern California in recent years, though that's clearly changing. "Knitting Factory is trying to get its foothold back in Los Angeles," Margolis tells Billboard. "We have one national market in New York, in Brooklyn, but we closed our club in Hollywood years ago. We felt like Spacleand is a tremendous team, and a lot of the same ideas and directions [on] how to build up national venues and hospitality. Mitchell is a great addition to our executive team, the utilization of his knowledge and brain power within our team will help us grow, and help us to help him."

Frank says Spaceland has had discussions with other promoters in recent years about partnering, but he felt comfortable with Margolis and KFE after they teamed up on the Regent and, later, Desert Daze. "You get to a certain point where you've grown out of your infancy and want to have someone beside yourself to ask advice from," Frank says. "I can go to Morgan and his team for any needs, especially on larger events."

KFE and Spaceland Presents each currently own and operate several clubs, bars and restaurants, both as solo projects and as partnerships with other entities, and they believe KFE's national footprint will enable them to take Spaceland's unique brand into other markets. The partnership will also find Spaceland and KFE partnering on new festivals and other events, specifically niche, highly-curated festivals like Desert Daze.

The principles say the partnership also creates a natural economy of scale in the areas of talent buying, marketing, ticketing and promotion, among others, while each company's specific strengths will add to their overall portfolios. Margolis is also bullish on the sponsorship opportunities for a combined KFE and Spaceland. "You look at the amount of venues I have, what he has, the number of shows we do," he says, "you put that into one big pile, and we have the opportunity for some pretty hefty sponsorships that want to be involved in our brands."

Knitting Factory Rebrands Management Division as KFM

The move comes during an unprecedented period of aggressive growth for Knitting Factory. In the past 18 months, the company has opened new restaurants in Brooklyn and North Hollywood; signed new venue deals in New York City, Montana, Nebraska, and Central California, hired several new executives and talent buyers; and inked new partnerships, including those with Rachael Ray, Giant Step and the Sweet Relief Musicians Fund.

Each company's properties will continue to operate as they currently do, KFE's portfolio will remain as is and Spaceland Presents will continue to operate the Echo and Echoplex, The Regent (in partnership with KFE) and other venues, in addition to the indie music publication, DoLA.

With over 600 employees working on 5,000 events annually, KFE has quietly become one of the most diversified independent consumer-facing live entertainment brands in the country. Founded in 1987 (Margolis took over as CEO in 2008), KFE now owns and operates three Knitting Factory live music concert houses, and buys talent for a multitude of other venues and events across the country. In addition to the Regent, owner/partnerships include Arrive Hotel, a 39-room boutique hotel in Palm Springs, Calif; and KFE has designed, built, staffed and continues to run three Federal bar and restaurant entertainment complexes over the past five years.

Spaceland Presents has built a reputation in Southern California as an innovative concert promoter offering a wide range of music, from cutting edge indie bands to legacy acts, as well as hot local and regional bands, and now produces more than 1,200 events annually. Since 2007, Spaceland has been booking First Fridays at the Natural History Museum, and Saturdays off the 405 at the Getty Museum. Spaceland also co-produces, with Rum & Humble, the Twilight Concert Series at the Santa Monica Pier, and co-produces KCRW-FM and the Annenberg Space for Photography Summer Concert Series. Spaceland Presents is a sister company to Los Angeles music venues the Echo and Echoplex. The Regent, a restored former grindhouse cinema in downtown L.A., has also made its mark as a go-to music venue, sharing space with Prufrock Pizzeria and the Love Song Bar.

Frank says all Spaceland staff will continue with the company, and the Spaceland brand, which has significant equity in the SoCal music scene, will not only remain, but is expected to grow, possibly even leading to a re-launch of the popular club that first bore the "Spaceland' name. That popular venue in L.A.'s Silver Lake neighborhood was shuttered in 2010 after 17 years. "I'm here for the long haul," says Frank. "We're definitely into the Los Angeles scene, we're very much part of the fabric of the city. We're not going to go anywhere."

As synergistic partners, Margolis says Spaceland and KFE will look at launching venues, one-offs, national and regional tours, and festivals, with an early emphasis on the latter. "The first direction is more toward smaller festival plays, more Desert Daze direction, and using our clout as a team together to block buy talent," says Margolis, who is booked as a featured speaker at the upcoming Billboard Touring Conference in L.A. Nov 9-10. "We have the L.A. play now at the Regent, we'll be using Spaceland and Knitting Factory talent buyers to piggyback off New York, Boise, Spokane plays [in KFE venues], wherever it might go."

The partnership will also likely lead to similar conceptual ideas in hospitality, Margolis says, which for KFE means the expansion of the Federal brand. "We'll utilize Mitchell and his contacts to help grow the Federal brand and we'll also help him grow his hospitality ideas," he explains. "We're looking at brewery concepts, whiskey concepts."

Frank, too, envisions an opportunity for events in the vein of Desert Daze, which featuresthe Brian Jonestown Massacre, the Sonics and Deerhunter to perform at the Institute of Mentalphysics in Joshua Tree. "We'll probably be announcing a slew of small- to medium-sized festivals over the next month or two, lots of exciting things," he says, adding that most of these events will be, "Los Angeles-centric, maybe a little bit outside of Los Angeles."

Frank sees a market for events that are "a little more myopic, in specialized genres, something that isn't 100,000 people, [with] a very select group of fans and artists performing. There's a festival circuit that happens, and when you go to one state or another, you're seeing the same homogenized festival, and it's obvious people are starting to rebel."

Even with continued growth, Frank says he's optimistic that the partners can, "stay trim, fit and nimble, and keep our innovation. We've always been first on the wave, and always are wanting to be artist forward, artist friendly, artist first."