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SR-121085-11BAU:GGF Council Meeting, December 10, 1985 TO: Mayor and City FROM: City Staff SUBJECT: Recommendation Negotiate an Regarding the Events at the Introduction i~ -,~ DEC 1 7 1985 Santa Monica, California Council to Authorize the City Manager to Agreement with Avalon Attractions Presentation of Certain Concert Civic Auditorium. City Staff has been exploring revenue-producing possibilities for the Civic Auditorium which will increase revenues without obligating the City to a long-term commitment of Civic Center property, pending the development of a comprehensive Civic Center plan. Background A significant decline in once-lucrative concert events at the Civic Auditorium has adversely affected the over-all revenue picture in recent years. There were only four public contemporary concerts in FY 1984-'85. This decline is attributable to greatly-increased production costs, which regularly exceed the revenue potential of the Auditorium's limited capacity, and has resulted in a loss of recognition of the Civic Auditorium as a major concert facility. Exiting modifications are being made at the Auditorium which will 11-B DEC 1 7 1985 increase the capacity from 3,500 to 4,500 for "festival" type events with no chairs on the main floor. In order to insure utilization of this increased capacity, a Request for Proposals was issued in mid-August, 1985, seeking an established promoter for a variety of contemporary music presentations at the Civic Auditorium. Over 25 requests were sent out and an advertisement was placed in "Billboard" magazine, the leading music industry publication. A deadline of October 4, 1985, was given. Only one proposal was submitted. Avalon Attractions, Southern California's leading concert production organization representing most major concert acts performing today, submitted a proposal which expressed a willingness to expend resources to rebuild the reputation of the Auditorium as a viable concert venue. This proposal also guarantees the City an annual minimum of $125,000 in rental, equipment, and services revenues from concert presentations at the Civic Auditorium in exchange for an exclusive right to present most types of contemporary music at the Auditorium. This amounts to approximately 25 concerts with an average per-concert revenue of $5,000, an increase of 25% over our previous per-concert average and an increase of 525% over concert rental, equipment, and services 2 revenues from FY 1984-85. Avalon has a similar agreement with the Hollywood Palladium. In 1983, the year prior to the Avalon/Palladium agreement, the Palladium had seven concerts. In 1984 and 1985 Avalon presented 30 concerts per year at that facility, an increase of 329. Average revenues from parking, food and beverage service, and novelty merchandising per concert are estimated at an additional $7,500. For 25 concerts this would mean total revenues to the City of about $312,500 in the first twelve months under the proposed agreement. This compares to total concert revenues in FY 1984-85 of approximately $28,000. Current projections are that concert-related revenues would increase to $62,500 without the Avalon agreement. Therefore, it is expected that an annual increase of approximately $250,000 would result from the agreement with Avalon Attractions. An agreement as proposed in this report would also make more time available for existing Auditorium staff to develop and solicit other types of bookings which may further expand revenue sources. The term of the agreement would not exceed two years, with an optional third-year subject to further negotiation. A six-month cancellation provision will be incorporated into 3 the agreement in the event Civic Center development would require the use of the Civic Auditorium space prior to the expiration of the term. Alternative The alternative to entering into an agreement with Avalon Attractions would be to continue the current policy of allowing all qualified individuals and organizations to present concerts. However, the lack of interest in staff's Request for Proposals seems to indicate minimal interest among qualified promoters to commit to future productions at the Civic Auditorium. Even with the increased capacity, an increase in concert revenues may not be forthcoming. The success of Avalon Attractions' commitment is dependent upon the promotion of the facility as well as the events themselves, and they are prepared to undertake a vigorous promotional campaign only if granted an exclusive agreement. Fiscal/Budgetary Impact The projected annual increase of $250,000 in concert revenues would begin to accrue at the effective date of the agreement with Avalon. It is recommended that no budget adjustments occur until negotiations conclude and the effective date of the agreement is firmly established. 4 No payment to Avalon Attractions from the City would be required. Recommendation Staff recommends Council authorize the City Manager to negotiate and enter into an agreement with Avalon Attractions, within the parameters described in this report. Prepared by: Gary Ferguson, Director of the Civic Auditorium 5 Reference Contract No. 4659 (CCS).