Hoping that an outside manager can bring more dazzle to the Los Angeles Convention Center, City Council members agreed Wednesday to pay Anschutz Entertainment Group up to $350,000 a year to operate the dated downtown venue.
The five-year contract provides AEG an annual base fee of $175,000 with the potential to double that if it meets certain targets, such as raising revenues and bookings at the 1970s-era facility.
The unanimous vote culminated a nearly yearlong effort to find a private operator for the city-owned Convention Center and negotiate a contract that will benefit both the city and its new management team.
"It's about improving performance and making the Convention Center a world-class facility," City Administrative Officer Miguel Santana said after the vote.
About 124 full- and part-time workers are being offered the choice of staying at the Convention Center or seeking other positions within the city. Eight decided to go with AEG and roughly 75 have been placed in other city slots, Santana told the council.
An additional 40 will decide by the end of the year, when AEG takes full control of running the event space.
Ted Fikre, AEG's chief legal and development officer, said the company expects to save money by staffing security, parking and other duties with workers it already employs at the adjacent Staples Center and L.A. Live complex.
With outposts around the globe, the entertainment firm can leverage its booking power to bring in more and bigger events, he said, hopefully attracting tourists and bringing in added business for local hotels, restaurants and shops.
"It's been a long road and there's been some twists and ups and downs," Fikre said, referring to a point earlier this year when AEG was nearly eliminated from the bidding. "But we're ready to get going."
Privatization has been debated for years and was a goal of former Mayor Antonio Villaraigosa. Over the protests of labor unions representing workers, the council agreed last year to find a private operator, a move it said would save money and increase tax revenues.
During that process, AEG nearly lost the right to bid on the contract when city analysts determined it had failed to produce financial documents on deadline. AEG executives pleaded for a second chance, saying the delay was due to a misunderstanding, and the council agreed to seek a new round of proposals.
Under AEG's contract, changes to the city's governing code will bolster its ability to receive advance payments, execute licensing agreements and control an operating account without prior approval of a public governing board.
Those changes will make the Convention Center able to move more quickly when booking large-scale conventions, city leaders have said. Consultants have told the city that its bookings lag behind the convention centers in Chicago and San Francisco, which privatized event operations years ago.
AEG's contract will have no impact on a separate effort by AEG and the city to lure a National Football League team to Los Angeles, officials said. AEG last year got city permission to build a football stadium near Staples Center in exchange for erecting a new exhibition wing at the Convention Center.
But the deal is contingent on the NFL agreeing to bring a franchise back to the city. So far that hasn't happened. The council on Wednesday passed a resolution urging progress.
"We want a team; the city's behind it," Councilman Paul Koretz said. "Let's make it happen."Copyright © 2015, Los Angeles Times