Pacific-Irvine Meadows Alliance Deal Investigated

A proposed alliance between Orange County’s two giant concert amphitheaters has prompted an investigation by the U.S. Justice Department’s antitrust division, concert industry officials said Friday.

But the deal, if approved, could end years of bitter rivalry between the Pacific Amphitheatre in Costa Mesa and the Irvine Meadows Amphitheatre.

Documents obtained by The Times indicate that the government is studying the possible “elimination of competition” between the two facilities that could be in violation of four provisions of the Sherman Antitrust Act.

Gary Spratling, chief of the Justice Department’s antitrust division in San Francisco, confirmed the inquiry but declined to comment further.

Ever since the Pacific Amphitheatre opened in 1983, two years after Irvine Meadows, the facilities have waged high-stakes bidding wars to book the hottest rock, pop, country and jazz attractions into Orange County. Each amphitheater has offered about 35 to 55 concerts annually.

This competition has meant more money for entertainers but also higher ticket prices. Pacific Amphitheatre officials said joint operation of the amphitheaters would open the door to other promoters, stimulate competition and benefit ticket buyers. At the same time, entertainers would no longer enjoy lucrative bidding wars for their services.

Justice Department documents show that the antitrust division is seeking detailed business records from Orange County and Los Angeles-area promoters who might have arranged events at 29 venues in Southern California, including Irvine Meadows and the Pacific Amphitheatre.

Specifically, investigators are interested in dates of concerts, names of performers and facilities where concerts were held, ticket sale revenue, memos, phone records, ledgers, contracts and numbers of tickets sold for events between Jan. 1, 1985, to the present.

The documents indicate that the government is looking into, among other things, possible restraint of trade, monopolization--if one company controlled both venues--and attempts to acquire stock or ownership of a company for the purpose of lessening competition.

About three weeks ago, officials at the Nederlander Organization, which built and operates the 18,765-capacity Pacific Amphitheatre, approached owners of the 15,000-capacity Irvine Meadows with an offer to form “an association,” Nederlander attorney Neil Papiano said Friday. Negotiations between the two parties are still under way as the Justice Department investigation continues, he said.

Papiano, who also is a partner in the Nederlander Organization, said that an association with Irvine Meadows would increase, not eliminate, competition by breaking the exclusive booking arrangement that Irvine struck in 1983 with Avalon Attractions.

Nederlander is a New York-based firm that books and promotes concerts nationwide. Avalon is Southern California’s largest independent concert promoter and has been a fierce rival with Nederlander in Orange County and Los Angeles for touring concert attractions.

Concert industry sources familiar with the deal said that Nederlander and Ogden Allied Leisure Services, a major concessionaire, have bid to buy a majority interest in Irvine Meadows from its owners, a consortium of private investors. Nederlander and Ogden are also partners in a proposal to build an indoor sports and concert arena in Anaheim.

This report could not be confirmed and Papiano said “I wouldn’t characterize it as” a buyout but later added: “I don’t think you can rule out anything at this point.”

Papiano declined to provide more details about the nature of the association, saying “negotiations are ongoing and several possibilities have been discussed.”

If Nederlander is successful in breaking Avalon’s exclusive booking agreement, Papiano said, “A lot of people will benefit from this--not just us--(because), if it is consummated, anybody can book shows there. . . . This would be a substantial benefit to concert-goers, and to all the promoters in the area. . . .”

“That’s why we believe (the deal) will ultimately be approved and why all of us are cooperating completely and fully in providing anything that anybody (in the Justice Department) wants,” he added.

Neither Robert Geddes, Irvine Meadows’ managing partner, nor his partners--developer Donald M. Koll, chairman of the Koll Co., and Newport Beach attorney Paul Hegness--could be reached for comment. Geddes is also a partner in Avalon Attractions.

Avalon Attractions president Brian Murphy said, “I don’t know if I should comment. The U.S. Department of Justice has started an investigation into whether or not they feel this move is being made to eliminate competition between the two facilities.”

Some Southland promoters have suggested that Nederlander’s goal is to use Irvine for concerts by heavy-metal and hard-rock acts that tend to be louder, retaining the country, jazz and middle-of-the-road performers at the Pacific.

Neighbors of the Pacific Amphitheatre have sued Nederlander, complaining of excessive noise, an ongoing problem that is one reason behind Nederlander’s bid. But “it’s not the primary reason,” Papiano said.

“Some events are better suited to Irvine than the Pacific, and some are better suited to the Pacific than Irvine,” he said.

Like Avalon Attractions’ arrangement with Irvine Meadows, Nederlander has had an exclusive right to promote concerts at the Pacific Amphitheatre. Nederlander books and operates the Pacific on a 40-year lease with the state-owned Orange County Fair, on whose property the amphitheater was built.

As to whether other promoters would enjoy the same access to the Pacific as Nederlander is hoping to gain at Irvine Meadows, Papiano said, “Yes, that is a possibility.”

If that is true, for the first time Orange County could become an open field for concert promoters.

San Diego rock promoter Bill Silva said he would “absolutely” be interested in booking shows at the Orange County amphitheaters. “There would be a few instances a year where, if the venues were open to us, we’d love to book them. . . . That’s why we are watching with great interest what happens in Orange County.”

But one Southland concert industry source, who requested anonymity, considers equal access unlikely, saying that Nederlander could control parking, food concessions, merchandise booths and other income-generating activities at both facilities, giving the company substantial economic advantages over competitors. Non-ticket income can represent up to 50% of the total take for an evening, and a single concert can generate “easily $500,000,” the source said.

On the other hand, Silva said, Nederlander could act as a landlord while other promoters assume the risk and responsibility for selling tickets. “It’s a tremendous situation for them--sitting back and taking your rewards regardless of what happens at the gate.”

Officials at both amphitheaters have long complained that intense competition has driven their talent costs up astronomically over the prevailing rate for concert attractions.

Up-front guarantees to performers “would have to be five or six times what it is in other markets . . . because of the bidding wars,” Silva said. Top acts can command guaranteed fees of more than $200,000 a night.

“We have lost some big money,” Nederlander chairman James M. Nederlander told The Times in April, 1989. “We are not discouraged with it. We are not making money . . . but we expect to.”

Said Irvine Meadows’ Geddes in an interview last year: “I would say the (amphitheater) would not be deemed a financial success. An investment of this size would typically generate a more lucrative return than Irvine Meadows does.”

Times staff writer Dan Weikel and free-lance writer Jim Washburn contributed to this report.