SMG Takes Rockford; AEG Ogden Expands Interest in Perth

5 Aug

MetroCentre in Rockford, Ill.

MetroCentre, Davis Park and the Rockford (Ill.) IceHogs of the American Hockey League

Management Company: SMG

Owner: Rockford Area Venues and Entertainment Authority (RAVE)

Effective Date: Sept. 1, 2010

Terms: Five years. SMG will receive a base management free of $170,000 and will give RAVE an interest free loan of $1 million to be used at their discretion. That loan is to be paid back increments of $100,000 a year and will be forgiven if other income reaches certain thresholds. In addition, SMG will receive an incentive based on reduction of the operating loss, which totaled $1.3 million last year. That portion has not been benchmarked yet, but is along the lines of 10 percent of the decrease between $270,000 and $500,000, so if the loss is cut by $500,000, SMG receives an incentive of $23,000. It would receive 25 percent of the decrease from $500,000 to $1 million. The real incentive is to eliminate the deficit, at which point SMG’s incentive would be 40 percent of the profit.

Comments: Bob Cavalieri, senior VP of business development, noted the scope and type of facilities SMG will manage – everything entertainment related in Rockford. It even includes consulting with a nonprofit that runs the historic, 2,400-seat Coronado Theater downtown, he said.

The 7,000-seat MetroCentre was refurbished to the tune of $23 million three years ago. The plan is to build a permanent proscenium stage in Davis Park, which can seat about 5,000 for an amphitheater event and is used for festivals and other events now. It’s right on the Rock River, he said, a beautiful setting.

The Rockford IceHogs is the AHL affiliate of the Chicago BlackHawks. Cavalieri has already bandied about the phrase, “Come see your future Stanley Cup champions in Rockford,” referring to the BlackHawks 2010 championship. Owned by the city, the IceHogs team is one of the few municipally owned teams in the league. SMG also manages the Reading (Pa.) Royals of the ECHL, Cavalieri noted, and has eight AHL tenant teams in SMG-managed venues.

The Rockford venues have always been publicly operated. In the early days, Doug Logan, who moved on to private management, managed the Rockford MetroCentre. It has a storied past and a bright future, Cavalieri said.

Brian Luther, current general manager at MetroCentre, will be leaving. Cavalieri said SMG is currently recruiting a new manager. Some SMG staff are already in Rockford, though the changeover will take place Sept. 1.  Centerplate is the concessionaire.

The arena hosted 90-95 events in 11 months last year, including 40 AHL games. Cavalieri believes that will be improved to 120-130 events under SMG management.

Cavalieri noted that the environment in Rockford is “what I experienced in Reading (Pa.), a community that decided to all pull in the same direction.” RAVE is made up of businessmen and community leaders dedicated to improving the quality of life for the citizenry, and MetroCentre can be a catalyst of revival.

Interviewed for this story: Bob Cavalieri, (610) 729-7920

Perth (Australia) Arena

Management Company: AEG Ogden

Terms: AEG Ogden has been notified it is the preferred tender. The new arena opens in 2012. There are two contract options, one for 10 years and one for five plus five. Both are “a management fee formula with a fair bit of risk,” said AEG Ogden’s Rod Pilbeam. “We are guaranteeing them a minimum return on operating profits.”

Comments: The contract is still being negotiated. Pilbeam said one bid includes FF&E, one doesn’t. He’s not sure what the final deal will bring. Generally speaking, an arena the size of Perth, 14,000 seats, can return an operating profit of anywhere from $10 million to $12 million Australian, he said.

Perth Arena is an unknown. There has been no major indoor arena in that Western Australia city since the Perth Entertainment Center closed six to eight years ago.

Concerts will be the mainstay for the new venue. It will also house the Hopman Cup, a major tennis tournament. It has no tenant sports team, though the National Basketball League is trying to restart itself, Pilbeam said. The concert season generally runs September to March, which is summer in Australia.

AEG Ogden already operates three theaters in the market. Others bidding on the arena management contract were SMG and Spotless Catering.

Interviewed for this story: Rod Pilbeam, +61 418 74 2342

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