This Just In

Los Angeles Convention Center Issues RFP for Management Contract; Twists and Turns Ensue

HIL ANDERSON, SENIOR EDITOR

Los Angeles, CA – The City of Los Angeles is aiming to save at least $14 million over five years by converting to private management of the Los Angeles Convention Center (LACC) and expects to award the contract sometime in the Spring.  However, the plans may have been muddled by the sudden announcement on March 14 that Anschutz Entertainment Group (AEG) is no longer for sale.

AEG and SMG are believed to be the two management companies bidding for the city contract to run the convention center. The LACC is poised for an expansion and extensive renovation that hinges on the ability of AEG to win a commitment from a National Football League team to play in Farmers Field, a 68,000-seat stadium AEG plans to build adjacent to the convention center.

The unexpected announcement was immediately followed by word of a shakeup in the AEG executive suite that saw the company’s high-profile president and CEO, Tim Leiwecke, step down. He was replaced by Dan Beckerman, who had been AEG’s CFO and COO.

AEG founder Phillip Anschutz said he was taking a more active role in the in the company, which raised media speculation as to whether Anschutz could jump-start the search for an NFL team for Farmers Field or cause it to fall apart completely and take the LACC expansion down with it.

On March 15, Los Angeles Mayor Antonio Villaraigosa indicated expanding the convention center would not play second fiddle to the still-fluid stadium project. In a written statement, the mayor urged AEG to get down to business with the NFL and said the city was being proactive in keeping the convention center project moving forward. “I am directing the CAO (City Attorney’s Office) to provide me options within the next 30 days that provide a path forward to ensure that the convention center modernization project moves ahead no matter what,” he said.

The stadium project will include razing the West Hall of the convention center to make way for the stadium. The hall would be replaced with a new 20,000 square-foot wing on the south side of the building. The LACC offers 720,000 square feet of prime exhibit space and is currently ranked as the 18th largest convention center in the nation, according to Trade Show Executive’s directory of the World’s Top Convention Centers. The LACCwould use Farmers Field for overflow space and special events.

AEG’s Small Presence in Convention Centers

The news that AEG was off the block came within weeks of the announcement that AEG’s Facilities unit had entered into a partnership with the Gwinnett Convention Center, calling for AEG to provide support services including event programming, sponsorship and premium seating sales, purchasing, vendor venue services, advertising, and event-day operations to the anchor venues of the facility. The Gwinnett Center is an Atlanta-area venue that includes an all-purpose arena and a small convention center with 71,000 square feet of prime exhibit space. AEG lists only six other convention centers in its overall facilities portfolio, none of which is in the U.S.  Three are in Australia and the others are in Malaysia, Oman and Qatar.

AEG manages the LA Live and Staples Center properties adjacent to the convention center and plans to oversee construction of a $1.1 billion enclosed football stadium.

SMG Has the Track Record

SMG is the stronger player in U.S. convention center management with 70 convention centers under contract, ranging from the nation’s largest exhibition facility, McCormick Place, with 2.6 million square feet of exhibit space, to the Wilmington Convention Center with 30,000 square feet.  Based in suburban Philadelphia, SMG manages nine of the 40 largest convention centers in the U.S., according to Trade Show Executive’s World’s Top Convention Centers ranking. SMG also manages nearly 80 arenas and four NFL Stadiums, and hosts more Super Bowls than any other firm.

With AEG pulling the company off the market and possibly impacting LACC expansion plans, will that change the desire or strategy of SMG to seek the management contract for the LACC? Gregg Caren, SMG senior vice president of strategic business development, told Trade Show Executive, “In deference to the city, we won’t take any position as it relates to the ongoing bidding process. Our modus operandi is still  based on SMG’s qualifications to operate the LACC and help the city of Los Angeles.”

Reach Gregg Caren, at (610) 729-7922 or gcaren@smgworld.com; AEG Facilities President Bob Newman at (213) 763-7700 or bnewman@aegworldwide.com