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Sheeran will play in the city on March 29 and 31, and April 1, meaning the shows clash with Easter holidays.
Yesterday, Dunedin City Council liquor licensing co-ordinator Kevin Mechen said an agreement was reached with agencies which opposed the special liquor licences and so far about 15 had been granted, with another 10 expected.
About 110,000 tickets have been sold to the three concerts, 70% of which were estimated to be to fans outside the region.
Craft Bar and Kitchen manager Olive Tabor said businesses were "really happy" at the decision.
"Otherwise, are we going to get any more concerts if we can’t actually cater to the people?"
The weekend would be "crazy" with so many extra people in the city, she said.
Hospitality New Zealand Otago president and Speight’s Ale House Dunedin owner Mark Scully said the council took a really "proactive stance" in allowing the licences.
"The concert will finish about 11. It would have been very difficult to get everyone to go to bed an hour later."
Mr Scully’s restaurant would apply for the licence, but he did not know whether it would need to be open past midnight.
Mr Mechen said the move was "common sense".
"If the town was shut, Dunedin’s reputation, and probably New Zealand’s, wouldn’t be that flash."
The special licences required bars to have some kind of "event", he said.
"Each venue has to do its own thing. Most will have some kind of Ed Sheeran theme in the bar. A couple of places are putting fan zones outside."
A 2.30am closing time would be placed on the bars on Good Friday and Easter Sunday mornings, he said.
Mr Mechen doubted the move would create a precedent as an internationally renowned artist playing during the weekend at Easter was a "perfect storm".
Otago Chamber of Commerce chief executive Dougal McGowan said it was a good outcome which came from "a variety of groups working together".
The value of the weekend to the city’s businesses would not be known until afterwards, he said.
"It won’t be only the people going, but joining on the trip, looking for other things to do."