The City of LA’s Rec and Parks Department is recommending SMG’s contract to manage the Greek Theatre be renewed for up to ten years, a significant victory for the firm that has managed the Hollywood amphitheater as an open venue since 2015. The recommendation is a major defeat for Tim Leiweke’s Oak View Group which had submitted a competing proposal to operate the LA venue.
Based on the scoring of city staff, SMG trounced OVG, outscoring the LA-based company that owns Pollstar and Venues Today with 92.3 points to OVG’s 78.3. As result, Rec and Park’s staff issued a report Friday (April 27) recommending that SMG’s contract be renewed for five years with a five-year extension.
The renewal now has to be approved by the department’s board of directors. A similar decision in 2014 to hand control of the Greek over to Live Nation after 40 years under management by Nederlander Concerts sparked large protests and an intervention by the LA City Council, ultimately leading to the compromise open venue deal. Signed in 2015, the agreement allows SMG to operate the venue as a neutral venue manager with Live Nation, Nederlander and AEG competing, and partnering for shows.
It’s unlikely the decision to renew SMG’s contract will lead to widespread protests like the #WeAreTheGreek movement launched by Nederlander Concerts in 2014, but Leiweke or OVG’s SVP of development Sims Hinds could protest the decision, which won’t be officially adopted until the board votes on it.
City officials seemed unimpressed by OVG’s vision for the Greek, arguing their RFP was partially incomplete and contained some accounting discrepancies. More importantly, officials believed the detailed reported submitted by SMG had the potential to make more money for the city and included a “more robust event services staffing plan” that “demonstrated its commitment to frequent communication with the local community about critical issues” while providing “more detailed plans” for key operational issues. SMG also offered to spend more than three times as much as OVG for capital improvements, arguing Leiweke’s company did not “provide sufficient detail or adequate funding to meet the scope of the minimum required capital improvements” requested by the city.
“Over the proposed full, five-year term, based on the projections provided by SMG in its RFP response, SMG’s proposal could generate more net revenue than would be generated under OVG’s proposal,” the report reads, estimating that SMG could net the city $300,000 to $500,000 more in food and beverage sales annually than OVG. While the report said it was possible for OVG to earn more than $7 million annually for the city, “without the benefit of any OVG projections for sponsorship and premium seating sales, it is unknown whether net revenue under OVG’s proposal would be greater than the net revenue generated under SMG’s proposal.”
The report also found “discrepancies” between what OVG was projecting for management fees versus projected financials for food and beverage. There were questions about how OVG planned to pay for a new parking system it wanted to implement, which city officials were worried would add new costs to the Greek’s parking plan while giving up key revenues for the facility. Staff were also skeptical of an OVG plan to eliminate 200 seats to build 30-35 premium loge boxes, worried that the seat drop would hurt promoters who already pay a premium to bring shows to the building.
And when it came to capital improvements, SMG offered to spend $4 million at the Greek upgrading the redwood deck and building out a number of F&B and customer service projects, while OVG only offered to spend $1.1 million.
City staff reported that both companies proposed a similar fee structure to manage the building, with OVG asking for $2.2 million and SMG requesting $2.1 million annually. OVG offered $2.5 million minimum annual guarantee on food sales, while SMG offered $2.3 million, although SMG offered a 43% share percentage for food and beverage, while OVG offered 40%.
In the end, city officials ruled that SMG’s plan had the potential to generate more revenue for the building, would invest nearly four times as much in the facility as OVG and had a more detailed plan than what Leiweke’s group was offering. The board is expected to vote to finalize the RFP next Wednesday (May 2). If approved, the proposal will be sent to Mayor Eric Garcetti and the LA City Council.