Greek Theatre Concession Contract
Presented by:
The Dept. of Recreation and Parks
ARTS, Parks, Health, Aging and River Committee
Presentation
January 26, 2015
1
RAP Objectives for RFP
• Key objectives
– Financial Performance with Mitigated Risk
• Revenue sharing minimum increases
• Level of Capital Investment
• Strategic Direction
– Asset Management/Concession Improvement Plan
• First class, high quality venue and patron experience
• Vision for addressing trends in fan experience
• Food and Beverage approach
– Event Activity Plan
• Guaranteed number and diversity of shows
– Community Partnership
• Communications plan and outreach to broader community
• Neighborhood Feedback plan
• RFP was designed to stimulate creative and visionary
responses to the four objectives
2
RFP Process Overview
Contract
Award/Scope
Review
PHASE I
12/10/12
PHASE II
Presentation to
Board of Rec & Parks
3/19/14
Final RFP Presented
to Rec & Parks Board
Community
Meeting
1/29/14
Draft RFP Posted
5/2/14
5/7/13
Industry Research
Stakeholder Survey
Collection and
Analysis of
Responses
2/13/14
Special Meeting of
Commission Task
Force for public
comment
PHASE III
Benchmarking and
Best Practices
Presentation to
GTAC
2/21/14
SAG to Propose
Evaluation Panel
5/16/14
Marketing Plan
5/21/14
8/12/14 RFP
Response Due
Immersion
Independent Panel
and Staff Review
RFP Out for Bid
6/4/14
10/1/14
Consideration by
RAP Board
Informational Board
Report presented at
Commission Meeting
6/11/14
10/9/14 Further
Consideration by
RAP Board
Mandatory preproposal
conference and site
walk 6/17/14
10/23/14 RAP Board
Approves
Recommendation
Report on Findings
11/27/13
Identification of
Potential Proposers
Official Review and
Approval of
Evaluation Panel
Q&A Received and
Responded to
Addenda Approved
7/23/14
City Council
Concurrence
3
Evaluation Panel Development
• Recruited (5) independent industry experts
• Key areas of panel expertise
– Finance
– Venue operations
– Music and entertainment industry contracts
– Public Sector administration
– Parks and Recreation department oversight
– Capital improvements and maintenance
– Historic architecture
4
RFP Scoring
• Financial Performance: 30%
• Strategic plan & Direction: 10%
• Revenue Share: 10%
• Capital Investment: 10%
• Asset Management/Concession Improvement Plan:
30%
• Approach to req’d concession improvements: 6%
• Approach to potential consession improvements: 12%
• Approach to preventative maintenance plan: 12%
5
RFP Scoring Continued
• Event Activity Plan: 30%
•
•
•
•
Operational Plan: 12%
Food and Beverage Plan: 7%
Event Plan: 6%
Sustainability Plan: 5%
• Community Partnership Plan: 10%
• Communications Plan: 5%
• Reporting/Feedback Plan: 5%
6
Summary of Cumulative Scores
Evaluation Panel Section Scoring
Max Points Live Nation
Strategic Plan and Direction
Level of Revenue Sharing
Level of Captial Investment
Nederlander-AEG
50
50
50
46
39
47
37
45
37
150
132
119
Approach to Required Concession Improvements
30
30
23
Approach to Potential Concession Improvements
Approach to Preventative Maintenance
60
60
55
54
45
41
150
139
109
Operational Plan
60
55
43
Food and Beverage Plan
35
33
34
Event Plan
Sustainability Plan
30
27
24
25
24
20
150
139
121
Communications Plan
25
22
25
Reporting/Feedback Plan
25
23
22
50
45
47
500
455
396
Financial Performance
Asset Management/Concession Improvements
Event Activity
Community Partnership
Total
7
RFP Response – Financial
Guaranteed
• Total Cash & investment (over 20 yrs)
• Live Nation $106M vs. Nederlander/AEG $96.246M
• Revenue Share (annually)
• Live Nation $3M vs. Nederlander/AEG $3.5M ( Plus $250K escalator every 5
Yrs)
• Over 20 yrs, Live Nation $60M vs. Nederlander/AEG $77.5M
• Capital Investment (over 20 yrs)
• Live Nation $40M vs. Nederlander/AEG $18.746M
• Community Trust (annually)
• Live Nation $300K vs. Nederlander/AEG N/A
8
RFP Response – Financial
Pro Forma (Not Guaranteed)
• Projected Number of Events
• Live Nation 70 events (70 guaranteed)
• Nederlander/AEG 75 events (50 guaranteed)
• Projected Gross Revenue over 20 years
• Live Nation $972.2M vs. Nederlander/AEG $977.7M
• Projected Revenue Share over 20 years
• Live Nation $77.8M (based on 8% of gross) vs. Nederlander/AEG
$97.8 (based on 10% gross)
9
RFP Terms - Capital Investments
• RFP included mandatory capital items
– Repair/replace the North and South Terraces and the seats
– Refurbish/replace the Roof and the Historic Portion of the Stage
Structure
– Refurbish/Replace Theatre seating
• RFP included potential capital items
– Expand the South Concession Plaza and Refurbish all concession
stands
– Upgrade/Install camera surveillance system
– Upgrade the sound and light systems
– Refurbish the dressing rooms
– Refurbish existing VIP spaces
– Maximize the basement space
– Increase stage house dimensions
• RFP designed to encourage innovative strategic direction
10
RFP Response – Live Nation Capital
Investment
• Live Nation’s approach to capital - $25 Million in the first two years
plus $15 Million after 10 years. $40 million total investment.
• Approach to required capital
– Replace rather than repair the terraces
– Replace rather than repair the roof and stage
– Replace the seats
• Approach to potential capital
– Expand the theatre house and roof to reveal historic columns and
design a new roof (see renderings)
– Investment in new sound and lighting
– Upgrade the dressing rooms
– Maximize the basement and office spaces for consumer space
– Turn current office space into concession space
– Upgrade VIP areas
– Landscaping improvements to all grounds
11
RFP Response – Nederlander/AEG
Capital Investment
• Nederlander-AEG’s approach to capital - $18.7 Million in the first
two years and no committed capital funding after 10 years
$18.7 Million total
• Approach to required capital
– Repair rather than replace the terraces
– Repair rather than replace the roof and stage
– Replace the seats
• Approach to potential capital
– Increase stage house dimensions with new proposed roof and reveal
historic columns (see renderings)
– Expansion of Redwood Deck/potential year-round restaurant
– Addition of “grab-and-go” concession station
– Redesign of the Zeus Deck
– Additional video capabilities
– Continue practice of yearly rental for sound and lighting from Schubert
Sound
12
– Upgrade VIP areas
Historic Greek Theatre
Originally constructed without a roof covering.
Historic Greek Theatre and stage shown left
and from the street view below.
13
Current Greek Theatre
Current Greek Theatre roof and stage
Current Greek Theatre roof from above
14
Nederlander-AEG Renderings
Nederlander-AEG’s proposed roof structure
Model of separated roof structure
Sketch of roof structure from the seats
15
Live Nation Renderings
Proposed roof removal and addition
of “floating” roof structure.
Proposed roof structure from the street
Proposed roof structure and stage
16
Summary of Evaluation Panel Findings:
Financial Performance
• Both proposers exceeded the revenue sharing minimums set
by the RFP.
• Total Minimum Guaranteed Proposal Value
– Live Nation - $106 Million
– Nederlander/AEG - $96.2 Million
• Live Nation's strategic direction for capital investment is
advantageous in achieving RAP’s objective of the highest
revenue opportunity coupled with risk mitigation.
• Nederlander-AEG’s proposed revenue share was higher, the
panel believed the more substantial, long-term capital
investment proposed by Live Nation better achieved RAP’s
objectives.
• The Net Present Value of all aspects of Live Nation’s
guaranteed proposal was higher.
17
Summary of Evaluation Panel Findings:
Asset Management/Concession Improvement
Plan
• Live Nation’s capital plan maximized current available
space for an improved fan experience, supporting the
ongoing goal of creating a first class competitive venue.
• Live Nation’s proposal guaranteed a slightly higher level of
spending for preventative maintenance designed to
maintain the facility at the first class, high quality level
described in the RFP.
• Nederlander-AEG’s proposal included an innovative
approach to improving concessions with a new year round
restaurant and a locally renowned restaurateur.
18
Summary of Evaluation Panel Findings:
Event Activity
• RFP minimum number of events – 50
• Live Nation, 70 events vs. Nederlander/AEG, 50 events
• 2014 season number of events – 74
• Live Nation’s Operational Plan committed to specific service
standards and better fan experience to achieve the stated
goal in the RFP of a first class, high quality competitive venue.
• Live Nation committed to implement new traffic solutions
including adding parking fee into ticket price to reduce
parking transaction times and parking congestion.
19
Summary of Evaluation Panel Findings:
Community Partnership
• The Evaluation Panel recognized Nederlander-AEG’s
successful history with the neighboring community and
has a positive relationship with the community.
– Nederlander-AEG’s proposal included new community
events and outreach for the Greek Theatre
• Live Nation committed to start a Greek Theatre
Community Trust contributing $300,000 annually to
support diverse programming and conduct outreach to
at-risk youth and underserved communities.
• Live Nation also committed to start a Cultural Arts
Council, consisting of Cultural Arts and Community
Service leaders to focus on bringing local talent to the
Greek Theatre.
20
Evaluation Panel Recommendation
• Live Nation’s proposal commitments and overall
approach better supports the objectives set forth by
RAP in the RFP
• Evaluation Panel unanimously scored Live Nation’s
proposal as the most responsive to RAP’s four
objectives and recommended Live Nation be
awarded the contract for the Operation and
Maintenance of the Greek Theatre
21
Timeline
• Nederlander’s contract expires October 31,
2015
• Goal was to execute contract under this RFP
by end of April, 2015.
• This is necessary to have time to schedule
talent for the 2016 season.
22