Safe from creditors and for sale | The other stones from Just for Laughs

There was inflation, difficulties in the media industry and the drop in sponsorships, but other elements were throwing sand into the gears at Just for Laughs. The company’s relationship with its shareholders was not in good shape.

In addition to carrying a heavy debt, the Just for Laughs Group (JPR) had to deal with significant constraints attributable to its shareholders, we learned The Press. The now insolvent company was notably obliged to spend half of its advertising budget – several millions per year – with Bell without the conglomerate being the “main sponsor” of its comedy festival.

The arrival of new owners at the fallen Quebec comedy giant in 2018 led to several changes. Among these, the obligation for JPR to devote an annual minimum to advertising expenditure on the platforms (radio, television and billboards) of the telecommunications giant.

Year after year, it was half of the company’s promotional budget, or at least 4 million, according to the terms of the agreement that The Press was able to consult. These advertising purchases had to be made according to the prices displayed. There was no question of discounts or preferential rates even though Bell owned 26% of JPR.

At our request, François Colbert, holder of the Chair of Arts Management at HEC Montréal, took note of the details of the agreement between the company and the conglomerate.

By email, Bell responded that he did not want to make “a comment on this subject”. His spokesperson, Caroline Audet, suggested asking these questions “directly” to JPR, currently under the protection of the Companies’ Creditors Arrangement Act. It was not possible to contact Alain Boucher, the new president of JPR, while the former boss Charles Décarie declined our interview request.

Other stones

Sheltered from its creditors since March 5, JPR blamed its financial debacle on inflation, which inflated its expenses, changes in the “media industry” as well as the “difficult times” that go through free festivals due to subsidy capping.¹

From, The Press revealed that the strategy – a leveraged acquisition – used by Bell, evenko (CH Group) and Creative Artists Agency to get their hands on JPR in 2018 had quickly weakened the group because it found itself heavily in debt. According to five former employees who held decision-making positions within the company in recent years, contractual constraints such as the agreement with Bell added sand to the equation. They asked not to be identified for fear of reprisals for their careers since they still work in the event organization sector.

“There were quotas to respect even if Bell’s media were not always the best channels to promote products,” says one of these people.

Unanswered question

These same workers have difficulty explaining the absence of Bell as the main sponsor of the Just for Laughs festival. In Quebec, the conglomerate is the “main sponsor” of music festivals such as Osheaga, ÎleSoniq and Lasso. The company name is clearly visible on the websites of each of these events. Even if he owns a quarter of JPR, Bell has never played the same role with the Quebec humor specialist.

This marked a break for the group, which relied on Videotron for several years before the business relationship ended abruptly in 2017 when the company’s founder and president Gilbert Rozon was targeted by accusations of sexual misconduct – a scandal having forced the businessman to sell his company.

According to our information, collected from employees with access to data, Videotron paid an average of 2.5 million per year to sponsor the JPR festival.

The conglomerate also offered the equivalent of at least 5 million in “freebies” – advertising pages in its newspapers and on television – to JPR for the promotion of the event and the sale of tickets for the numerous shows presented on the occasion. of the annual humor meeting.

In terms of sponsorship, telecommunications giants are considered essential by the organizers of major events since these companies, which reap billions in profits each year, have the means to be the main partners of major events. JPR has been unable to convince another major conglomerate to sponsor its annual festival. If this scenario had materialized, a competitor of Bell would have found itself sponsoring an event partly owned by one of its main rivals.

“It’s surprising that Bell didn’t want to be the major sponsor and offer conditions [publicitaires] consequently, agrees Mr. Colbert. It’s curious. Generally, the media group will sponsor the organization and in return, it offers advertising at a lower cost. That’s kind of the idea. »

Bell did not respond to our questions as to why the conglomerate did not play the role of major sponsor of the high mass of humor in Quebec.

Since 2019, the Just for Laughs festival has been presented by Beneva – born from the merger between La Capitale and SSQ Assurance – in collaboration with Loto-Québec. Despite everything, JPR was never able to find a telecommunications partner as a “national sponsor”, a role that a telecommunications giant could have played according to the ex-employees we interviewed.

“You felt like the little rock in someone’s boot, that’s not bad, the feeling internally towards the owners,” explains one of the ex-employees. Internally, we were all wondering why Bell was not sponsoring the festival. »

Expensive fees

The integration of the Just for Laughs Group (JPR) into the evenko ecosystem has also created a certain financial straitjacket. This giant of Montreal festivals demanded commissions of around 15% on the sale of sponsorships as well as management fees exceeding 1.5 million for the annual high mass of humor.

When evenko took possession of 25% of Just for Laughs’ shares, sponsorship was centralized at Spectra. These two specialists in show production and venue management are controlled by the CH Group (51%), while the American giant Live Nation holds the remaining 49%. JPR then found itself under the aegis of a team responsible for selling sponsorships for events entirely controlled by evenko and Spectra: Osheaga, the Francos and the Montreal International Jazz Festival, among others.

“It sure gets more interesting [pour evenko et le Groupe CH] to seek sponsorships for what is completely theirs, says François Colbert, holder of the Chair of Arts Management at HEC Montréal. We still had an interest in finding sponsorships for JPR. But it would be human to emphasize what is completely ours. »

Before the Rozon affair, this work was supervised internally at JPR. Former employees interviewed by The Press as part of this report are unanimous: this new way of doing things was a source of irritation between the group and one of its owners.

It felt like it was lagging behind the rest of evenko’s portfolio.

The Press had access to financial data from the Just for Laughs festival. We learn that sponsorship commissions were 15%. In addition, JPR was not able to fully count on Spectra’s help with sponsorships for its last festival. This division of the CH Group ceased to deal with the sale of sponsorships around May 2023, less than three months before the Just for Laughs festival. It was necessary to turn to a subcontractor to finish the work.

Integration, with fees

Another change: everything related to organization, equipment rental for the “street” portion of the comedy festival, food and drinks, merchandise sales and government relations, among other things, was insured by Groupe CH properties.

These services were not free. As part of the festival which took place last summer, according to financial data consulted by The Pressthis was accompanied by a bill of around 1.7 million, which represents around 10% of the total revenues of the annual comedy meeting.

“That seems high to me,” says Mr. Colbert. However, it is not known how much all this cost them before. evenko negotiated this. Once again, this gives the impression that JPR has complied with a demand. »

By email, evenko confirms that services were “outsourced” in connection with the presentation of the Just for Laughs festivals.

“Just for Laughs stopped paying for these services in 2021,” says Evenko, by email. Despite this, evenko/Spectra continued to provide services, which explains why evenko/Spectra holds one of the largest ordinary claims. »

The management costs were, however, clearly visible in the financial data of the last festival consulted by The Press. At the time of filing for bankruptcy, JPR owed a little more than 6 million to the various entities of the CH Group.