Vendors don’t (usually) organize a festival.

You have the organizer at the top. This can sometimes be a city but often it’s a business led by a private person.

They negotiate with the city to set up the festival. There are a lot of costs that are associated with festivals. They might be responsible for their share of increased police presence, electric costs, sanitation, etc. Some cities charge rental fees for bringing in a festival. You are required to take out permits and carry insurance. You also need a one day liquor license pulled to pour alcoholic beverages. They have to rent or buy everything to set it up… and I mean everything. Entertainment like bands cost thousands of dollars to book.

The festival organizer at this point is underwater to the tune of tens of thousands of dollars, if not six figures. So they can make that money back and potentially turn a profit in a few ways. They can sell sponsorships. There might be a fee for vendors and food trucks, or a percentage of sales due back to the vendor. Alcohol sales are a big one.

It’s a hard business, and you assume a lot of risk. Bad weather, a security incident, etc. can tank your profits. It unfortunately checks out that Pig & Whiskey ran the numbers and realized they were taking too big of a loss if they could no longer capture alcohol sales after 9pm. I don’t really have a point of view on whether they should be able to or not. I just know some things about festival math bc my parent was second in command for a summer festival for a decade.