Last spring, executives at Onex, AEG’s private equity partner in facility management company ASM Global, notified AEG leadership of their plans to trigger a clause in their agreement that allowed Onex to sell its 35% stake in ASM. Under the terms of the deal, AEG could either buy out Onex or match competing offers.

AEG officials instead elected to get out too, and over about half a year worked with Onex to identify a buyer for all ASM Global. On Nov. 3, Onex and AEG jointly announced that Legends Hospitality was buying ASM, the country’s leading venue management company.

Onex CEO Bobby Le Blanc told investors on a Nov. 10 earnings call that the decision to sell its ASM ownership stake for $2.3 billion was prompted by the company’s rebound in value, quickly recovering in the post-pandemic period after seeing its value dramatically drop when concerts shut down from 2020-2021 due to COVID-19.

The final sale price would double what ASM Global was worth in 2019 when AEG and Onex merged their SMG facility management holdings to create the world’s largest facility manager, Le Blanc confirmed.

Still, AEG’s decision to sell surprised many in the touring industry who had followed the company’s growth in that space.

For one, the sale made AEG a much smaller company, reducing its global footprint from 350 facilities under management to just nine — all of which AEG either owns or partially owns. And unlike Onex, as the world’s second largest concert promoter, AEG was able to enjoy significant synergies from owning ASM that other companies could not. AEG could more easily book its touring shows at ASM-managed facilities, expand its AXS ticketing platform to ASM-managed venues and sell sponsorships through its global partnerships division.

AEG and Onex merged their facilities holdings 14 months after Onex acquired SMG, AEG’s longtime facilities rival. In so doing, ASM Global became the world’s largest venue management company, with little to no competition for potentially large lucrative government contracts. Facility management has long been a predictable contracts business, in which city and county governments would pay SMG or AEG a fee to manage publicly owned venues and split any profits the private companies helped generate.

Merging the industry’s two largest competitors into ASM Global gave Onex and AEG unprecedented scale in the capital-intensive space and access to lucrative contracts. But the honeymoon didn’t last long. Oak View Group, which was founded in 2015 by former AEG CEO Tim Leiweke — who made his own failed bid to buy SMG — began growing as a serious competitor, and peeled away a number of big-name management clients away including PPG Paints Arena in Pittsburgh, the BOK Center in Tulsa and the sprawling McCormick Place convention center in Chicago. While the concert business’ post-pandemic boom has brought impressive profits, a source in facility management says that increased competition and inflation have been eating up ASM’s margins. Additionally, rising interest rates have made it difficult for firms like ASM to offer up capital investments in return for long-term management contracts, and much of the business’ growth was coming from new international venue projects, which were more costly to service.

Most recently, the bulk of AEG’s growth has been in its tour promotion business globally and through its theaters and clubs division. Since the end of the pandemic, both AEG and Live Nation have been looking to expand their network of smaller venues that they manage exclusively.

The company’s sweet spot is “locations with capacities of 1,500 to 5,000,” Rick Mueller, president of AEG Present North America, told Billboard last month. While most arena management deals do not include exclusive booking agreements because no single promoter can provide arenas enough content on their own to sustain a large facility, exclusively programming a club or theater can be much more profitable due to the leverage the contract holder has over other promoters wanting to book the venue, requiring promoters to cut them in on show deals. Now, AEG likely has more than an extra billion dollars to invest in this strategy, should it choose to do so.