Greek Theatre’s 2 Suitors Agree to Act Together

The bitter rivalry between the two concert promoters competing for a contract to operate the city of Los Angeles-owned Greek Theatre took another twist Tuesday when the two firms announced they will jointly market shows at the historic venue.

Under an usual pact, the two competitors--Nederlander Organization and House of Blues--agreed to lump together the revenue and expenses of the Greek and a second facility, Universal Amphitheater, during the summer concert season. House of Blues holds exclusive promotional rights at Universal.

Under the accord, Nederlander, a family-owned company that has had the exclusive right to book concerts at the Greek for 25 years, will submit the sole bid for the city contract. But the two companies would share the expense of producing and advertising concerts at the two facilities.

The pact follows a seething two-year war over the Los Feliz theater in which the promoters exchanged accusations of ineptitude and corruption. House of Blues mounted an unprecedented effort to force open the bidding process, noting that the Nederlander family had won a series of extensions on its contract without having to compete.

Ironically, the deal places the city squarely in the position it was in two years ago--with a single offer on the table from the Nederlanders. But the terms are far different and could result in higher revenue for the city.

Requirements adopted this year after the city threw out two promoters’ bids, however, mean that Nederlander must pay the city at least $1.2 million a year in rent and must guarantee the facility will generate at least $15 million a year in total revenues or pay financial penalties. The Nederlanders’ 1999 request for an extension offered only $500,000 a year in rent, at a minimum, and did not include penalties.

City officials had not reviewed the Nederlander bid filed late Tuesday. But some criticized the effect of the promoters’ agreement on the selection process.

“I certainly haven’t evaluated it [the bid] yet,” said Lisa Specht, a member of the city Recreation and Parks Board who had favored House of Blues’ proposal in the bid review earlier this year. “I can say that any time you get only one bid, it’s a disappointment for any city department. I think competition is good for the city.”

Executives at the two concert companies said the competition to offer the city ever-higher revenue, however, had driven up the cost of operating the facility so far that it would not be profitable to run it alone.

“Under this agreement, the contract makes sense, from a business perspective, for Nederlander and allows us to meet the city’s requests,” said Nederlander attorney Adam Burke.

That was also the reason cited by the nation’s biggest promoter, Clear Channel Entertainment, for backing out of a plan to jointly operate the facility with Nederlander.

“We’ve chosen not to participate in the Greek Theater bid process because of economics caused by the minimum bid requirements,” said Rachel Gary, a Clear Channel Entertainment spokeswoman.

As part of the deal between Nederlander and House of Blues, Nederlander will pay the expense of renovating the Greek, which will cost a minimum of $8 million. The two companies would begin marketing each other’s concerts, sharing ticket-club membership lists and other resources in an attempt to bolster sales.

Beginning next year, the two companies will pool the revenue and expenses associated with their respective facilities during the Greek’s concert season, which runs from April through October.

The companies would share the profits based on their facilities’ past performance (with the more profitable building recouping a greater portion). Profits above the two facilities’ base would be split 50-50, according to executives at the two companies. If the Greek falls short of the guaranteed minimum to the city, the two companies also would split the expense of the penalties.

Jay Marciano, president and chief executive of House of Blues’ concert division, said “These are two of the premier indoor and outdoor amphitheaters in the world and [the pact] will result in substantial benefits for the fans and the city of Los Angeles.”