Live Nation Entertainment Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

LEASES

LEASES

9 Months Ended

Sep. 30, 2020

The significant components of operating lease expense are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Operating lease cost	$	59,923	$	43,412	$	180,478	$	139,251
Variable and short-term lease cost	10,545		48,318		43,275		96,147
Sublease income	(3,682)		(4,040)		(11,944)		(12,669)
Net lease cost	$	66,786	$	87,690	$	211,809	$	222,729

Many of our leases contain contingent rent obligations based on revenue, tickets sold or other variables, while others include periodic adjustments to rent obligations based on the prevailing inflationary index or market rental rates. Contingent rent obligations are not included in the initial measurement of the lease asset or liability and are recorded as rent expense in the period that the contingency is resolved. In response to the global COVID-19 pandemic, we closed our venues in mid-March and the majority of those venues have remained closed through September 30, 2020. As a result, our variable lease cost has declined during the three months and nine months ended September 30, 2020.

Supplemental cash flow information for our operating leases is as follows:


	Nine Months Ended September 30,
	2020		2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities	$	154,471	$	146,953
Lease assets obtained in exchange for lease obligations, net of terminations	$	149,817	$	130,011

Future maturities of our operating lease liabilities at September 30, 2020 are as follows:


	(in thousands)
October 1 - December 31, 2020	$	41,360
2021	205,277
2022	198,912
2023	199,432
2024	182,291
Thereafter	1,598,904
Total lease payments	2,426,176
Less: Interest	843,335
Present value of lease liabilities	$	1,582,841

The weighted average remaining lease term and weighted average discount rate for our operating leases are as follows:


	September 30,
	2020		2019
Weighted average remaining lease term (in years)	13.9		13.4
Weighted average discount rate	6.19	%	5.78	%

As of September 30, 2020, we have additional operating leases that have not yet commenced, with total lease payments of $119.1 million. These operating leases, which are not included on our consolidated balance sheets, have commencement dates ranging from October 2020 to June 2030, with lease terms ranging from 1 to 20 years.

In response to the impacts we are experiencing from the global COVID-19 pandemic, we have amended certain of our lease agreements and are continuing negotiations with certain of our landlords for deferral or abatement of fixed rent payments. These lease concessions are not expected to substantially increase our obligations under the respective lease agreements. Therefore, we have elected to account for these lease concessions as though enforceable rights and obligations for those concessions existed in our lease agreements rather than applying the lease modification guidance as clarified by the FASB.