Greek Theatre Concession ContractPresented by:

The Dept. of Recreation and Parks

ARTS, Parks, Health, Aging and River Committee Presentation

January 26, 2015

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

RFP Process OverviewContract

Award/Scope Review

12/10/12PHASE I Immersion

5/7/13Industry Research

Benchmarking and Best Practices

Report on Findings

11/27/13PHASE II

Community Meeting

1/29/14

Stakeholder Survey

2/13/14Collection and

Analysis of Responses

Presentation to GTAC

2/21/14Identification of

Potential Proposers

Presentation to Board of Rec &

Parks 3/19/14

Draft RFP Posted5/2/14

Special Meeting of Commission Task Force for

public comment 5/16/14

PHASE III

SAG to Propose Evaluation Panel

Official Review and Approval of Evaluation Panel

Final RFP Presented to Rec & Parks Board 5/21/14

Marketing Plan

RFP Out for Bid6/4/14

Informational Board Report presented at Commission

Meeting 6/11/14

Mandatory pre-proposal

conference and site walk

6/17/14

Q&A Received and Responded

toAddenda Approved

7/23/148/12/14 RFP

Response DueIndependent

Panel and Staff Review

10/1/14 Consideration by

RAP Board

10/9/14 Further Consideration by

RAP Board

10/23/14 RAP Board Approves Recommendatio

n

City Council Concurrence

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

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%

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%

Summary of Cumulative Scores

RFP Response – FinancialGuaranteed

• 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

RFP Response – FinancialPro 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)

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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

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

RFP Response – Nederlander/AEGCapital 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– 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.

Current Greek Theatre

Current Greek Theatre roof and stage

Current Greek Theatre roof from above

Nederlander-AEG Renderings Nederlander-AEG’s proposed roof structure

Model of separated roof structure

Sketch of roof structure from the seats

Live Nation RenderingsProposed roof removal and addition of “floating” roof structure.

Proposed roof structure from the street

Proposed roof structure and stage

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.

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.

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.

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.

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

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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.