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Live Nation Facing $47M Lawsuit Over Times Square McDonalds Cleanup

McDonald's
Oliver Morris/Getty Images

McDonald's restaurant (220 West 42nd St, between 7th and 8th avenues), Manhattan's Times Square, New York.

A source says the lawsuit is exaggerated and the real cost to remedy is in low six-figure range.

Live Nation is getting sued by its old Manhattan landlord for $47 million in back rent and demolition costs over the dismantling of a four-story Times Square McDonalds restaurant at Live Nation's former headquarters, court records show. A lawsuit filed in New York County court says Live Nation was supposed to restore the space to its original condition after the shuttered McDonalds that subleased the space from Live Nation moved out in June.

A source familiar with the situation says the lawsuit and price tag is way overblown and will likely be settled for a few hundred thousand dollars once some of the remaining kitchen equipment is removed.

The concert promoter held a 20-year lease for the Manhattan's Candler Tower, a 106-year-old, 24-story historic building located at 220 West 42nd Street through September. In 2000, the late Bob Sillerman, who at the time was executive chairman at SFX, signed the lease for the building from former owner and landlord Massachusetts Mutual Life Insurance Company. Clear Channel closed the sale of SFX around the same time and in 2005, spun the concert promotion company off into what is now Live Nation.

Live Nation left the Times Square building in 2017 for a more modern office on Manhattan's West side at 430 West 15th Street and had subleased the remaining unused space in the building to other tenants, including McDonalds which occupied the lower level retail space since 2003 and was the busiest and most profitable McDonald’s franchise in the United States, according to Epic LLC, the real estate management company owned by billionaire Steven Elghanayan who purchased the historic building in 2012. Despite it’s high traffic location -- the section of 42nd Street between 7th and 8th Avenues near the Times Square subway stop, is said to be one of the most high-trafficked blocks in New York -- the fast food company announced it was leaving Time Square in June 2020 to "focus on serving customers a few blocks away at the new flagship McDonald’s on 45th and Broadway,” McDonalds officials said in a statement to the media at the time.

Three months later, Live Nation’s lease expired and the company handed the keys for the building over to Epic but didn’t fully comply with a removal notice sent demanding Live Nation "remove all fixtures, equipment, improvements and appurtenances attached to or built into the premises.”

"For example, the restaurant area still contains such items as a freezer and refrigeration units that were installed after the Lease was executed,” the complaint filed by attorneys Jeffrey L. Goldman and Aris E. L. Dutka reads, adding that "the heights of floors and ceilings were altered in the restaurant area and mezzanine levels were installed between floors, all after the Lease was executed, which reduced the square footage available on the second floor. To correct these conditions, among others, Plaintiff will be forced to, inter alia, infill the second floor concrete floor slab, remove the mezzanines, remove or adjust the locations of mechanical, electrical, sprinkler, fire alarm and plumbing installations in the Premises, and return the Premises to New York City code compliant condition."

The building can't be leased until the demolition is completed, the complaint says, and Epic has hired architect Allen + Killcoyne Architects to begin the work, which it estimates will take 14-16 months to complete. Epic is suing for breach of contract, continuing damages from holdover tenancy and attorneys fees. Epic says it wants Live Nation to pay $2.1 million a month in rent for October and November 2020, and $2.8 million from December 2020 to January 2022, for a total of $41 million, along with $2.2 million in back rent it says it's owed and another $3.5 million for the work that needs to be performed.

Live Nation declined to comment for this article.