Anaheim May Buy Grove Theater for $7 Million

The Anaheim City Council will decide Tuesday whether to pay nearly $7 million for the Grove of Anaheim, a 1,100-seat theater in the community’s sports and entertainment district.

The city is planning to turn over management of the Grove to a private entertainment company, but would hold on to the prime real estate between Edison International Field and Arrowhead Pond for future development.

“This is an excellent facility in a fabulous location,” Mayor Tom Daly said Friday. “It makes good sense for the city to have control of this property.”

Anaheim originally owned the 1.25-acre site but deeded it to Ogden Entertainment in 1997 for $1 million, on the conditions that the company build a dinner theater and give the city first rights if it ever tried to sell it.

Although the property has since changed ownership and names --from Ogden’s Tinseltown to Aramark’s Sun Theater to SMG’s the Grove of Anaheim--the city retained the first right of refusal.

SMG, which mostly manages arenas and stadiums, does not own most of its property and had been seeking a buyer for the Grove, said Greg Smith, the city’s executive director of Convention, Sports and Entertainment.

SMG officials headquartered in Philadelphia could not be reached for comment Friday afternoon, but Smith said they asked city officials whether they would like to exercise their first right of refusal after SMG received a $6.7-million offer for the property.

The offer was about $1 million less than the appraised value, city officials said.

The city hopes to buy the Grove with money from Convention Center reserves and avoid dipping into general fund revenue.

If the deal is approved by the council, escrow is scheduled to close Nov. 5.

The city also is narrowing a list of potential companies it would hire to manage the theater, including House of Blues, Clear Channel, Concerts West, Nederlander and 3MK.

Although there has been some speculation that the Grove has been struggling because of competition from the House of Blues at Downtown Disney, Smith said the two venues are different.

“We signed a confidentiality [agreement] on SMG’s financials, but I can tell you it’s doing fine,” he added.

Smith expects the Grove to generate between $132,000 and $1.8 million in revenue annually for the city.

The Grove also would operate closely with the Convention Center, with city staff encouraging associations and companies to book special events at the theater and keep business in Anaheim.

Beyond that, Smith said the city can preserve the possibility that the area would become a major sports, entertainment, retail and business district, dubbed Sportstown.

The city also would retain control of the area around the train station, which serves both Metrolink and Amtrak, and is scheduled for expansion.

“The Grove of Anaheim is one of dozens of jigsaw puzzle pieces that make Anaheim a great destination,” Smith said. “It makes good sense to keep it online and part of the package.”