The long, complex and highly politicized process to secure an outside promoter to run Los Angeles’ city-owned Greek Theatre just took an even more convoluted turn. On Wednesday (April 15), the Department of Recreation and Parks voted 3-1 for the Greek concession to be brought in-house for the 2016 concert season.
The decision follows a difficult and expensive two-year RFP process that saw Live Nation square off against the team of Nederlander and AEG with competing bids. In October, the Parks Commission followed the advice of an independent panel and recommended Live Nation’s proposal to run the Griffith Park venue. In February, however, the City Council voted not to endorse the Department’s’ decision due in large measure to community opposition. The conflicting inter-governmental viewpoints put the Recreation and Parks department in a bind without enough time to complete a new RFP process and jeopardizing the 2016 season. Then came Plan B.
A General Managers Report submitted for the Department of Recreation and Park’s April 15 commission meeting strongly advocated for what it called an “open venue” model which brings the operation of the Greek in-house while allowing “for-profit entertainment companies, artists and non-profit cultural organizations to secure programming on a non-exclusive basis.” The proposed open venue model’s “most significant advantage,” according to the report, is the “high potential for increased revenue” which it forecast to be between $3 million and $4.8 million dollars in net revenue for the city in 2016 and depending on the number of concerts. In contrast, in 2014 the Greek grossed more than $27 million in gross receipts which resulted in nearly $2 million for the city.
Nederlander CEO Alex Hodges said in a statement that his company was “disappointed that the Board of Recreation and Parks has accepted the recommendation to self-operate the Greek Theatre.” He also noted that to bring promotions in-house would “require several more steps by the Department.” He suggested the commission “amend and extend Nederlander’s existing Greek Theatre Operating Agreement with an increased annual minimum rent guarantee to the City of $3.5 million for 2016, with zero expense or risk to the City.”
A letter to the commission from Live Nation”s Bret Gallagher, whose jurisdiction includes Southern California and Las Vegas, on the other hand, supported the commission’s decision and urged it to “reject the opposition from the incumbent operator [Nederlander] and instead proceed to adopt the open venue plan as the most legally defensible and appropriate option for the 2016 season, protecting the integrity of the public contracting process.”
The Parks Commission’s report is primarily focused on the bottom line rather than the details of running a major music venue. It notes that currently the city receives only 8 percent of ticket sales and 6 percent of the revenue for the parking, sponsorships and food & beverage sales. In the open venue model, the city would receive greater percentages of these revenue streams as well as 100 percent of the sponsorship revenue and rent for the facility.
Other criticisms leveled against the in-house plan note that few if any of the capital improvements required in the original RFP will be immediately addressed. Others say the Recreation and Parks department should not be in the business of operating a venue, especially in light of how it handled the RFP process, which not only set a bad precedent for bidding on city contracts but may still incur a lawsuit.
The new plan does, however, call for revenue to be put into a Greek Theatre Capital Improvement account. It also proposes hiring a Greek Theatre manager with expertise to oversee the venue and mentions other cites other with successful city-run venues including Red Rocks Amphitheatre in Denver, the Pavilion at Ravina Festival in Highland Park, IL, and the Filene Center at Wolf Trap, VA.