SMG Wins Bid to Manage McCormick Place, What’s Next?

DARLENE GUDEA, PRESIDENT & HIL ANDERSON, SENIOR EDITOR
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Chicago, IL – SMG was awarded the contract to manage the nation’s largest convention center, Chicago’s McCormick Place, for the next five years, starting July 1.   The recommendation was made by Jim Reilly, the state-appointed trustee  of the Metropolitan Pier and Exposition Authority (MPEA), and approved by the MPEA interim board of directors. SMG will receive an annual management fee of $450,000 to run McCormick Place, an amount that could double if SMG achieves performance targets.

The MPEA board also announced that David Causton, who was not part of or privy to the bid selection process, has been reappointed general manager of McCormick Place and will become an SMG employee effective July 1. He will take an early retirement from the MPEA and begin work with SMG with an unspecified number of other MPEA employees. The transition phase is expected to take three months.

Global Spectrum, the only other contender, was widely expected to win the contract since its senior vice president for convention centers, Tom Mobley, had worked with Reilly during an 11-year stint as general manager of McCormick Place starting in 1992.  The MPEA said SMG got the nod due to its experience with major convention centers, its expertise in labor relations, its track record, and its focus on cost reductions and customer experience enhancements.

No stranger to Chicago, SMG was credited with bringing Soldier Field out of the red in 1994 and into a profitable operation that netted about $8 million last year. Founded in 1977 by the late patriarch of Chicago’s Pritzker family, it is now owned by investment banker American Capital Strategies, Ltd.   SMG manages more than 220 public assembly facilities worldwide.  Its specialized Convention Center division, manages 67 convention facilities, including Reliant Park in Houston, Cobo Center in Detroit and Direct Energy Centre in Toronto, all of which rank in the Top 20 in size, according to Trade Show Executive’s annual directory of the World’s Top Convention Centers (WTCC). With 2.6 million square feet of prime exhibit space, McCormick Place tops the WTCC rankings.

Three for Three
Stung by the nonrenewal of its contract with the Miami Beach Convention Center which was awarded two years ago to Global Spectrum and Messe Schweiz [which organizes Art Basel in the facility], SMG has been three for three in the past six months. It won the contract to manage Detroit’s Cobo Center in October; the Montego Bay Convention Centre this month; and McCormick Place early this week. Hell bent on winning the contract, “We submitted the most ‘extreme’ proposal from every perspective,” said Gregg Caren, SMG’s senior vice president of strategic business development. He said a team of “15 of SMG’s best” worked on the RFP since January, generating a 150-page document that was not just a proposal,  but a phenomenal consulting report, including a strategic and tactical game plan. Caren said an outside consultant valued the final work product at $150,000 if the MPEA were to have commissioned the work themselves.

Turning McCormick Place over to private management was part of the package of sweeping reforms enacted last year by the Illinois legislature to make the center more attractive and economical for show organizers. However, a key segment of the reforms involving union work rules was overturned by a federal judge on March 31. The judge ruled lawmakers violated federal labor laws by passing a bill that interferes with the contracts struck between the unions and the general contractors servicing trade shows at McCormick Place. On April 4, the decision was appealed by the MPEA, and at least for now, the “new” work rules remain in effect.

What’s Next?
So what happens if the new work rules are blocked?  “We are going to do our job of professionally managing the building whatever is ultimately decided,” said Caren. “We will focus on ensuring a high level of service, satisfaction and value for  show managers, exhibitors and attendees.” Caren said what SMG won’t be doing is telling David Causton, a top-notch facility manager, how do to his job,  but rather will bring in more resources and stronger buying power for procurement of goods and services. “We are going to add the elements of best practices we built while managing facilities such as the Colorado Convention Center in Denver and The Moscone Center in  San Francisco and likewise replicate the success at McCormick Place in our other properties.”

Reach Gregg Caren at (610) 729-7922 or gcaren@smgworld.com; David Causton at (312) 791-7000 or dcauston@mpea.com; MPEA Trustee Jim Reilly at (312) 791-6288 or jreilly@mpea.com