The Alabama Shakes and other acts tentatively booked for dates at the Saenger Theatre for the remainder of this year may have to “Hold On” at least another week to find out if their gigs will be confirmed, as the Mobile City Council voted down an agreement for SMG to manage the historic theater. However, if one councilor’s prediction proves true, then the theater could be up and running under SMG management on Oct. 1.
After weeks of delaying a vote on an agreement between the city and SMG, four councilors pushed for a vote during the Sept. 10 council meeting. But the forced vote did not work in favor for those supporting the union, as three councilpersons still wanted adjustments to the contract.
The measure failed by a vote of 4-3, with councilors Gina Gregory, John Williams and Bess Rich opposing the three-year deal.
The agreement needs at least five votes for the partnership and that could very likely happen when it is placed on the agenda again Sept. 17. Gregory said with just a few modifications, the contract could meet her approval.
“Three years is a long time for a contract, especially if there are councilors who are not comfortable with all the terms and want benchmarks,” she said. “I think with a few tweaks to the contract, there is a good chance we can work this out next week.”
One of the adjustments Gregory was talking about referred to Rich’s request for reports or benchmarks every six months. Rich asked for financial benchmarks to be set for the company, but SMG Regional General Manager Sam Voisin quickly said that was impossible.
“What would happen if there was something like a hurricane?” he asked. “SMG does financial assessments after every show. We know where we are at.”
Voisin added that the assessment information could be provided to the city. Gregory agreed with Rich that there should be some type of benchmark. Rich also wanted specific information stating that the city would only pay up to $200,000 for the Saenger each year.
The councilors, however, were set to hold off on the vote until Sept. 17 at the request of two key players. Voisin and Mobile Symphony Orchestra CEO Diana Brewer asked that if the agreement wasn’t going to be approved, then to lay over the issue one more week.
Gregory recommended laying over the decision, which seemed to be the consensus of the council, until Councilman Fred Richardson said he was ready for a decision.
“I’m ready to vote,” he said. “When it comes to finances, the council is always divided. Our mayor-elect ran on an idea of ‘One Mobile.’ When I look, the citizens are getting along. Here (the council) is where the division is. The council can’t even vote to make money.”
After Richardson’s comments, the vote to lay over the matter failed by a vote of 4-3 with Richardson and Councilmen CJ Small and William Carroll opposing tabling the issue.
That ultimately quashed any possibility of the management agreement being passed today.
Rich said part of why she voted against the agreement was because of new information she just learned about the contract between the city and SMG.
“I am not prepared to vote for this contract because I just learned about the escape clause,” she said.
Within the contract between the city and SMG, there are a few ways either party can have early termination. The agreement could be terminated if either party defaults on the sum payable within 30 days after it is due or if a party fails to perform or comply with terms for more than 60 days. In other words, if the city or SMG don’t pay each other what they are supposed to in the required terms, either can terminate the contract.
Another condition of early termination has to do with the Civic or Convention centers, which are both managed by SMG.
The contract reads, “SMG shall have the right to terminate or renegotiate this Agreement with respect to the Theater in the event that the City elects to; demolish the Civic Center, redevelop it for another use or terminate or not renew SMG’s management agreement at said facilities. SMG may exercise this right by giving the City at least six months prior written notice of its election so to terminate this Agreement in contemplation of such.”
That means if the city plans to demolish or use either building in a different manner, then SMG can renegotiate or terminate the contract. Williams was rather reserved during the Sept. 10 meeting, but during a City Council Committee meeting on Sept. 9, he voiced vague concerns about the agreement.
Williams said he had more questions following the Sept. 9 meeting than answers.
“I would move the committee to not recommend this agreement,” he said. “There are too many questions still out there.”
Although the Sept. 10 meeting was a setback for SMG and Huka Entertainment, Voisin and Huka President A.J. Niland are hopeful for approval Sept. 17. However, each said while the council weighs its options, the city and surrounding businesses lose money.
As of Sept. 2, Huka had six acts booked to play the Saenger based on the contingency of the theater being managed by a professional entity and not the city. When the council delayed the vote during the Sept. 2 City Council meeting, Niland said two of those acts canceled their pending performances in Mobile. He said there is a possibility one or more of the remaining four unnamed acts at the Saenger could be next to cancel.
“We have been producing and sticking our necks out on the line,” Niland said. “The acts don’t want to come without a management partnership with SMG. This is the best option for the city.”
Voisin said while the venue has already lost two acts due to the city’s delays, he hopes for the best Sept. 17.
“Some councilors have more questions, and we will do everything to answer them between now and next week,” he said. “I feel like this truly is the best deal for the city of Mobile.”
During the Sept. 9 committee meeting, Voisin outlined how SMG plans to make money from managing the Saenger Theater and why it’s the best deal for the city. When the CLA was in charge of the Saenger, the city paid the group $200,000 annually. Based on that benchmark, the performance-based contract was created.
If SMG can’t decrease the $200,000 spent by the city each year for the Saenger, then it does not receive any performance money. However, SMG can keep half of whatever it saves the city, up to the first $200,000. SMG gets to keep 25 percent of any actual profit once the initial $200,000 in operation expenses are covered.
Voisin projected in the first year of management (from Oct. 1, 2013, to Oct. 1, 2014), there will be 64 shows or events at the theater. Those events would be attended by approximately 54,240 people and produce $261,808 in revenue. The revenue would offset the $430,364 in expenses, which would leave a net loss of $168,556.
Since that net loss is still less than the city’s current Saenger expense of $200,000, SMG and the city would split the $31,444 savings. That means if SMG is approved to manage the theater and performs as expected, it will receive $15,722 as its fee and the city would pocket that same amount as a savings from the $200,000 originally budgeted.
The second year projections by Voisin see 67 performances with 57,841 attending. That would hopefully produce revenue of $286,578, with expenses totaling $441,879. The theater will still have a net loss of $155,301. If these numbers prove to be correct, then SMG will be paid $22,349 and the city would save that same amount from the original $200,000 budgeted.
The third year Voisin projected the Saenger to have 69 performances with 60,763 people in attendance. The revenue would be approximately $306,410, but the expenses would be $453,501. That would still result in a loss of $147,084, which would mean a savings of $52,916.