Kings, LN, SMG form Sacramento Dream Team

Consortium is negotiating to operate city-owned convention center, auditorium and theater

  • by Linda Deckard
  • Published: August 30, 2017

Memorial Auditorium is one of three Sacramento venues the consortium is bidding to operate.

The consortium that includes the Sacramento Kings of the National Basketball Association, SMG and Live Nation, which are negotiating to run the Sacramento Convention Center, Memorial Auditorium and Community Theatre for the city, may be a trend in an industry that is emphasizing entertainment districts above standalone arenas and stadiums.

“For us, we consider ourselves an entertainment company and local advocate for Sacramento and developers in town. I’ve been on the board of Visit Sacramento for the last 12 years. I’m very familiar with that business,” said John Rinehart, president of the Kings, who took that role when Chris Granger moved on to Detroit a month ago.

Under Granger and now Rinehart, the Kings are committed to growing Sacramento, which started with the opening of Golden 1 Center a year ago and continues with a major development opening in increments around that arena, including a hotel.

Rinehart doesn’t see an end to growth plans, considering the Kings a global company and, in the near term, considering all entertainment options in the region.

“For a convention center guy like me, anyone in the hotel business is a player as a convention partner,” said Gregg Caren, EVP, convention centers, for SMG, referring to the 250-room Kimpton Hotel the Kings are about to open. As to Live Nation, SMG has collaborated with them in Baltimore and Syracuse already.

Live Nation’s Ben Weeden, who is in charge of theaters and clubs for the promotions company, is particularly excited about the potential for Memorial Aud, noting the 2,000-4,000 capacity venue is a sweet spot for tours.

Live Nation already operates Sacramento’s Punchline Comedy Club, which has been around for years, and the 1,200-capacity Ace of Spades Club, which Live Nation brought into its portfolio a couple years ago. They also have the Toyota Amphitheater and close ties with Golden 1 Center. “The missing link has always been a 2,000-4,000 cap. room. The opportunity presented itself. The three of us as partners are more than equipped to work with the city to grow those venues,” Weeden said.

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The Sacramento Convention Center is due for some major renovations under the city's plan.

The consortium grew organically. The city issued a Request for Information for the Privatization of the Sales, Marketing & Operation of the Convention Center Complex in late May. After the prebid walkthrough and given a long history of working together and knowing each other, the three powerhouse firms came together to bid on the contract.

Two other bids were from the current management team, operating as an enterprise fund, and a consortium of Danny Wimmer Presents, Spectra Venue Management and Thunder Valley Casino. The city selected the Kings/Live Nation/SMG group to negotiate with, allowing 90 days (ending late October, early November) to develop a plan. There is a lot of wiggle room and even still the potential of doing nothing.

Stats released by the city reveal the Sacramento Convention Complex hosts over 400 events and over 940,000 visitors annually. The convention center totals 137,000 square feet of exhibit space and 31 meeting rooms, including a 24,000-sq.-ft. ballroom. Additionally, the complex includes the 2,398-seat Community Center Theater; a 3,849-seat Memorial Auditorium and 272-seat Jean Runyon Little Theater.

The convention center originally opened in 1974 and an expansion, tripling the size of the facility, was completed in 1996. The Community Center Theater also opened in 1974 and Memorial Auditorium opened in 1927, and then reopened in1996 after renovating the Jean Runyon Theater.

The complex is supported by the Convention Center Fund, which operates as an Enterprise Fund, and is primarily funded by user- fee revenues and Transient Occupancy Tax. The Complex employs approximately 60 full-time employees and 125 part-time employees.

In fiscal 2016, convention center revenue totaled $30,575,269 against expenses of $28,403,965. The convention center hosted 239 events with an attendance of 559,932; Memorial Auditorium, 111 events, 160,852 attendance; and Community Center Theater, 52 events, 219,770 attendance.

“We’re on the rise,” said Matt Voreyer, general manager of the Sacramento Convention Center Complex, who joined the organization in 1999. The opening of Golden 1 Center combined with the city’s commitment of funds to improve all its facilities has spurred growth.

Preliminary plans are to invest $85 million in the Community Center Theater, beginning May 2019; $16 million in Memorial Auditorium, beginning March 2018, and $125 million to expand the convention center, including all costs associated with labor, design, construction and environmental review. That will also kick off in March of next year.

The architects are Westlake Reed Leskoski and Populous. “We’re still identifying the scope of work at the convention center,” Voreyer said. Hunt Construction is the project manager. The plan is to stay open the entire time at the convention center, though the theater and auditorium will be closed for portions of those renovations.

For the Kings, the opportunity “is a matter of continuing to grow Sacramento and being part of that,” Rinehart said. “We’ll continue that growth with these three iconic buildings and bringing them back to life.”

The partners are looking for operating efficiencies and new revenue streams. “We’ll make it so the city comes out on top,” Rinehart said. “At the end of the day, this will be a better operation for the city as well as our partnership.”

“I’m looking it as more than just basketball,” Rinehart said of the Kings’ mission. “We’re about creating an entertainment and living culture in Sacramento where everybody can thrive.” Asked if other basketball teams could do the same, he responded, “The right public/private partnership is definitely transferable.”

The density of the entertainment districts (another Sacramento developer has one underway as well), all the way past the convention center and Memorial Aud. to the riverfront, will aid all players, the partners said

“Our bid was about opportunity,” Rinehart said.”  Due diligence just got underway. “We’ll see now if there is a deal that makes sense for all parties.”

While the Kings bring local advocacy to the partnership, SMG is all about operations. Caren said SMG is not shy about partnering, often with a local or diversity partner that brings knowledge of the market to the table. “Municipalities want us engaged with local business. That’s not uncommon,” he noted.

Partnering with Live Nation is not uncommon for SMG either, having already partnered with them at Pier Six Pavilion in Baltimore and Lakeview Amphitheater in Syracuse, N.Y., where SMG already has the private management deal with OnCenter. In Syracuse, the city “put us together, not unwillingly,” Caren said.

“In Sacramento, it was sort of through a natural evolution of conversations among peers,” Caren said. “Our perspective has always been having a fair slice of a pie that makes sense rather than grabbing more.”

Caren also noted SMG has 65 performing arts centers in its management portfolio. As to food and drink, Caren said Classique Catering, a division of Centerplate, has the food and beverage operation with the city through 2020.

“The city, as far as I know, believes there is upside at all their venues,” Weeden said of the marching orders. His goal for Live Nation is “capacity utilization,” noting the expertise of “people who do it every day” in this group is a dream team.

Live Nation also has a history with the Kings and works with SMG every day, well beyond Baltimore and Syracuse. “Everyone brings best-in-class skill set and it’s a really big project,” Weeden said.

He compared Memorial Auditorium to the Hollywood Palladium, the Masonic in San Francisco or the Fox in Oakland, “that gives you an idea of what we’re going to shoot for,” he said. “The capacity and setup is similar; programming can be comparable. It’s a flexible room. It has a loge and balcony, but also a flat ballroom floor that can be seated. In fact, the floor can be tilted. It’s a very functional room.”

It also lends itself well to loadin, loadout, and getting trucks and buses in. “Logistics are not a problem. The stage is also huge. That’s why I think there is opportunity,” Weeden said.

“The city has been very proactive. This is something they absolutely want to get done. We’re in a good place. With the Kings and SMG, I’d bet on us,” Weeden added. “It’s something we would look at in all markets. This is a bit of a new thing for us, three venues in one footprint, a destination. It’s something I’d like to continue to look at going forward.”

  • by Linda Deckard
  • Published: August 30, 2017