The 700,000-sq.-ft. Cobo Center, Detroit, may be the largest convention center to privatize to date and, if the trend continues, the 2.6 million-sq.-ft. McCormick Place, Chicago, is on track to be the second and take that designation for its own in 2011.
On Oct. 1, the Detroit Regional Convention Facility Authority (DRCFA) selected SMG to manage Cobo Center, the nation’s 20th largest convention center. Gregg Caren, SMG senior vice president of strategic business development, said it’s a traditional deal other than the size factor. While SMG already manages some larger convention centers, those grew after privatizing, not before.
Thom Connors has been tapped as the general manager at Cobo Center. Connors was most recently GM for SMG of the new $133 million Irving (Texas) Convention Center at Los Colinas, which opens in January 2011. Connors grew up in the Detroit suburbs and is an alumni of Michigan State University.
The deal is for five years with a five-year renewal option. Based on IRS-regulated municipal deal rules, it calls for a base fee of $250,000 a year and an incentive capped at that base. SMG and the authority are working from a memorandum of understanding at this point, but Caren said the incentive will be both qualitative and quantitative.
The new multi-governmental authority now in charge of Cobo Center was formed last fall with representatives from the city, state and three counties. Its bylaws require that every decision be unanimous and it has been a united effort, Caren said. Their mission is to improve financial stability and customer service, and reestablish Cobo Center’s standing in the national convention and trade show marketplace.
With that goal in mind, SMG worked with Olympia Entertainment as a strategic partner in its bid to manage Cobo Center. The cross marketing of Olympia properties, including its arena, stadium and theaters, and its sports celebrities, will help in turning Detroit into a destination again, Caren said. Cobo Center is already home to the North American International Auto Show.
Caren said the transition of employees from city to SMG employ would probably occur Jan. 1.
The privatization of major convention centers is a hopeful sign for companies like SMG. Last year, because of the economy, there were very few RFPs on the street from convention centers. Caren could only think of one – the 20,000 sq. ft. center in Punta Gorda, Fla.
“I used to use McCormick Place as part of my sales presentation as an example of some buildings that will never privatize,” he said. “I’ll have to change that story now.” Besides Detroit, now done, and Chicago, which has RFPs on the street, there are other major markets looking at privatization, he added.
So, maybe it is a trend. — Linda Deckard
Interviewed for this story: Greg Caren, (610) 729-7922