Small venues are dying. That’s not news. What’s less understood is exactly why they’re dying, because the economics are genuinely brutal.

I’ve been involved in venue management for fifteen years. I’ve watched rent destroy profitable venues. I’ve seen licensing costs price out new operators before they even open. I’ve watched Sydney’s live music ecosystem slowly contract.

Let me show you the actual numbers. This is what it costs to run a small venue in Sydney in 2026.

The Baseline: Fixed Monthly Costs

Let’s use a realistic example. A 200-capacity venue in Newtown or Marrickville. Nothing fancy. Just a room with a stage, bar, and sound system.

Rent: $8,000-12,000/month depending on exact location. That’s cheap by Sydney standards. A comparable space in Surry Hills or the CBD would be $15,000-20,000.

Utilities: $2,000-3,000/month. Commercial electricity rates are rough, especially when you’re running sound and lighting systems multiple nights a week.

Insurance: $1,500-2,500/month. Public liability insurance for venues serving alcohol with live music is expensive and getting worse.

Licensing fees: $800-1,200/month when you amortize annual costs. Liquor license, live entertainment permits, APRA/AMCOS licensing for music performance.

Internet and POS systems: $300-500/month. You need reliable internet for payment processing and bookings management.

That’s roughly $13,000-20,000 per month in fixed costs before you’ve paid a single employee or booked a single band.

Staffing Costs Per Event

Let’s say you’re open four nights a week. That’s 16-18 events per month depending on how many weeks there are.

Per night staffing:

• 2 bar staff: $500-600 total (rates including penalty rates for late nights)
• 1 sound engineer: $300-400
• 1 door/security: $250-350
• 1 manager/floor supervisor: $350-450

That’s about $1,500-1,800 in labour per event. Multiply that by 16 events: $24,000-29,000/month just in event staffing.

And that’s not including admin staff, cleaners, or maintenance contractors.

The Artist Payment Reality

Here’s where the math gets ugly.

If you’re running original music, you need to pay artists enough that they’ll actually perform. For a 200-capacity venue, you’re looking at $500-1,500 per night for the headline act depending on their draw.

Support acts: $200-500 combined.

That’s $700-2,000 per event in artist fees. Let’s say $1,200 average.

Over 16 events: $19,200/month in artist payments.

Other Ongoing Costs

Stock (alcohol, supplies): Variable, but probably $8,000-15,000/month depending on bar sales.

Equipment maintenance and replacement: $1,000-2,000/month averaged out. PA systems break. Lights fail. You need a budget for this.

Cleaning and waste removal: $800-1,200/month.

Marketing and promotions: $1,000-3,000/month if you’re doing it properly.

Accounting, legal, admin: $500-1,000/month.

The Total Monthly Cost

Let’s add it up with mid-range estimates:

• Fixed costs: $16,000
• Staffing: $26,500
• Artists: $19,200
• Stock: $11,500
• Other operational: $4,500

Total: $77,700/month

That’s over $930,000 per year to operate a small 200-capacity venue.

The Revenue Side

Now let’s look at what you can realistically make.

Bar sales: If you’re doing 16 events with average attendance of 120 people (you rarely sell out), and each person spends an average of $30 at the bar, that’s $57,600/month gross bar revenue.

Your margin on alcohol is roughly 60-70%, so that’s about $35,000-40,000/month in actual bar profit.

Ticket sales: $20 average ticket price. 120 people per event. 16 events. That’s $38,400/month gross ticket revenue.

But you don’t keep all of that. Ticketing platforms take 5-10%. Credit card fees are another 2-3%. You’re down to about $33,000 net.

Total monthly revenue: $68,000-73,000

Total monthly costs: $77,700

Monthly loss: $5,000-10,000

That’s the reality. You’re losing money every month.

How Venues Survive

Some don’t. That’s why they keep closing.

The ones that survive do it through:

Private event hires: Birthdays, corporate events, launches. These can charge premium rates and often have higher bar spend. One good private event can make $8,000-12,000 profit.

Sponsorships and partnerships: Breweries, spirits brands, local councils sometimes funding specific programming.

Merch sales: Keeping a percentage of artist merchandise sales.

The owner working for free: Most small venue operators are working 60-80 hours a week and paying themselves nothing or below minimum wage.

Even with all that, margins are razor-thin.

What’s Changed

Ten years ago, this math was hard but doable. Rent was lower. Licensing was cheaper. You could pay artists less because their own costs were lower.

Now? Rent’s up 40-60% in many areas. Insurance has doubled. Licensing requirements have gotten more complex, which means more compliance costs. Artist fees have risen (appropriately) as cost of living has increased.

Meanwhile, ticket prices haven’t gone up proportionally because there’s a limit to what audiences will pay.

The squeeze is real from both sides.

The Larger Implications

When small venues close, the ecosystem suffers. Artists lose places to perform. Mid-tier acts have nowhere to develop before they’re big enough for larger venues. Music scenes fragment.

Sydney’s live music culture is measurably worse than it was a decade ago. Fewer venues, less diversity in programming, higher ticket prices for the events that do happen.

Other cities have addressed this with specific venue support programs, rent assistance for cultural spaces, and streamlined licensing.

Sydney’s done some of this, but not enough to reverse the trend.

What Would Actually Help

Rent relief or caps for cultural venues. If you could get rent down to $5,000-6,000/month, the math starts working.

Simplified licensing with lower fees. The compliance burden for small venues is disproportionate to the risk they pose.

Grants specifically for operational costs. Most arts funding goes to programming, not keeping the lights on.

Better late-night transport. People don’t go to gigs if they can’t get home. The earlier shows end, the less people spend at the bar.

None of this is happening at the scale needed.

The Hard Truth

If you’re thinking about opening a venue, the economics are terrible. You’ll almost certainly lose money for the first few years. You’ll work constantly. You’ll deal with council bureaucracy, noise complaints, difficult artists, difficult patrons, and broken equipment.

You’ll do it because you love live music, not because it’s a good business.

And maybe that’s the point. Maybe small venues were never supposed to be profitable businesses. Maybe they’re cultural infrastructure that needs support the same way parks and libraries do.

But we’re not treating them that way. We’re expecting them to survive on market economics that don’t work for them.

Until that changes, venues will keep closing.

And Sydney’s music scene will keep getting smaller.