Los Angeles City Council members agreed Wednesday to pay Anschutz Entertainment Group up to $350,000 a year to operate the city’s ailing downtown convention center.
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.
Wednesday’s unanimous vote culminated a nearly yearlong effort to find a private operator for the city-owned convention center and negotiate a contract that can 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.
Another 40 will decide by the end of the year, when AEG takes full control of the event space.
Ted Fikre, AEG's chief legal and development officer, said the company will save money by staffing security, parking and other duties with workers it already employs at adjacent Staples Center and L.A. Live.
With outposts around the globe, the entertainment firm can leverage its booking power to bring in more and bigger events, he said, hopefully attracting more tourists and filling a greater number of hotel beds, restaurants and shops.
“It’s been a long road and there’s been some twists and ups and downs,’’ Fikre said, referring a point earlier this year when AEG was nearly eliminated from the bidding. “But we’re ready to get going.”
Privatization of the center has been debated for years and was a goal of former Mayor Antonio Villaraigosa. The council agreed last year to find a private operator, a move members said would save money and increase tax revenues, over the protests of labor unions representing workers.
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 made to the city governing codes will bolster AEG’s ability to receive advance payments, execute licensing agreements and control an operating account without first getting approval of the center’s public governing board.
Those changes will make the center more nimble in the competitive market for booking large-scale conventions, city leaders have said. They produced studies showing that Los Angeles bookings lag behind Chicago and San Francisco, major cities that years ago privatized event halls.
The AEG contract will have no effect on a separate joint effort by the company and the city to lure a National Football League team to Los Angeles, officials said. That push has so far been unsuccessful.