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LTC 068-2004 Theater Management - Byron Carlyle and Colony Theaters CITY OF MIAMI BEACH Office of the City Manager Letter to Commission No. 068-2004 m From: Mayor David Dermer and Date: March 25, 2004 Members of the City Commission Jorge M. Gonzalez '\ .r-'" - /' City Manager U "l:> THEATER MANAGEMENT - BYRON CARLYLE AND COLONY THEATERS To: Subject: This Letter to Commission is in response to your request for additional information on the management of the Byron Carlyle and Colony Theaters during the Commission Workshop of January 8, 2004. With the Byron Carlyle and Colony Theaters presently under renovation and scheduled to open in the near future under the City's jurisdiction, it is now important to identify an efficient and professional management system for both venues. During the fall of 2003, the Tourism and Cultural Development Department conducted an in-depth survey of management structures for theaters in South Florida and other selected metropolitan U.S. areas. Included in this survey was expense and income information related to the last three years of the Colony Theater's operations prior to its closing for renovation in July 2002. The purpose of this survey was to assemble what is believed to be an equitable rental plan and project annual operating budgets for the Byron Carlyle and Colony Theaters. It is estimated that in the first full year of operation, the Colony and Byron Carlyle Theaters may expect to reflect the following ranges of revenue and expense: Byron Carlyle Est. Projected Revenue Est. Projected Expenses Est. Projected Operating Income (Loss) Worst Case *$65,950.00 ($267,874.00) $333,824.00 Best Case **$137,998.00 ($195,826.00) *Represents 25% use of 12 month period or 91 rental periods **Represents 60% use of 12 month period or 220 rental periods Colony Est. Projected Revenue Est. Projected Expenses Est. Projected Operating Income (Loss) *106,950.00 ($256,680.50) $363,630.50 **$174,288.00 ($189,342.50) *Represents 37% use of 12 month period or 135 rental periods ** Represents 60% use of 12 month period or 220 rental periods Furthermore, it is estimated that with an aggressive marketing campaign for rentals that it will take two years to reach high end revenue projections for the Byron Carlyle and one year for the Colony. The range of the above projections has been confirmed by the Dowling Study, SMG and City Staff. It is the recommendation of staff that the over arching goal of the operations of the Colony and Byron Carlyle Theaters is to ensure an open process for the support of small and emerging local arts organizations and develop a unique and diverse cultural experience in keeping with our thriving tropical metropolis. This will be important for not only effective marketing and audience development but for creating a solid prospectus for increased financial support in the future. The management company selection is pivotal to this process. There are four available management systems for consideration in this matter. A brief description of each follows: 1. The City may exercise the option in the current management contract to have SMG manage and operate the two theaters. This is the most expedient method for getting immediate theater management in place. Although details still need to be negotiated and agreed upon, the City's option provides for SMG to assume all management and services responsibilities for the venues similar to the operating structure for the Jackie Gleason Theater. SMG has demonstrated their ability to manage small theaters through their current national portfolio. However, it is important to note that concerns have been expressed by the Cultural Community regarding SMG's ability to serve the unique needs of the non-profit/performing arts organizations. There appears to be a public perception that SMG is a large corporate entity solely interested in managing a "turnstile" rental operation. While the assertions about SMG and their relationship to non-profit/performing arts organizations are undocumented, the City believes SMG is more than capable of operating both the Byron Carlyle and Colony Theaters and would clearly offer potential cost efficiencies. Furthermore, AMS recently completed a study in which there was a detailed assessment of the existing performing arts venues in Miami Beach and their management systems. This study made a series of recommendations including a structure for managing the Byron Carlyle and Colony Theaters. That recommendation was a hybrid model where SMG would assume the portion of the theater management related to services (marketing, ticketing, box office and concessions) and another independent entity would assume the operationslfacility management (facility-related services, technical assistance and staff, programming, rentals, maintenance) portion. While this model was recommended by the AMS study, there is unanimous concern about the difficulties and confusion that could arise with two individual companies responsible for managing the theaters. Having two separate entities involved in the day-to-day management of the venues lends to potential breakdowns in communication. City Staff discussed the communication concerns with AMS after reviewing their recommendation. AMS recommended this model in order to take advantage of SMG's core competencies and address the concerns expressed by the non-profit/performing arts organizations. It is with this goal that the City Administration and SMG have met to discuss a potential management structure forthe two theaters and have developed a model which, the Administration believes incorporates the AMS suggested hybrid and addresses the concems of the non-profit/performing arts organizations. The proposal assumes the City Tourism and Cultural Development Department would handle the booking and overall oversight of the facility and its mission and objectives. SMG would then provide operational support services, to include event Front of House functions (ushers, ticket takers, box office, and security) and overall facility operations management services (financia/s, housekeeping, maintenance). The City through the Tourism and Cultural Development Deparlment will drive the marketing functions, with SMG staff providing some supporl through its existing MBCC/JGT staff. SMG has advised the City that they are willing to hire a staff person within the organizational structure of their operation specifically assigned to manage the Byron Carlyle Theater. As per the City's contract with SMG, they would receive an agreed upon management fee, and all personnel, including a manager, would be operating expenses of the two venues, similar to the operating relationship the City has established with SMG for the management of the Miami Beach Convention Center and Jackie Gleason Theater. A draft of the shared responsibilities is attached for your review. Finally, the City Administration also feels the concerns of the non-profit/performing arls organizations can be furlher addressed through an established contractual tier rental rate program. A draft of these rates is also attached for your review. 2. A performing arts company-in-residence may be hired to assume all management and services responsibilities for the venues. This could be a viable solution in the long term, but not one that will be easy to craft and implement with the window oftime remaining before the facilities open. This option would be advantageous as the company-in-residence would not only be responsible for the day to day operations of the theaters, but there would be a single, ongoing arlistic presence in the theaters which would help maintain consistent audience growth and visibility for the theaters in the long run. The possible downside would be that the calendar could, ultimately, have limited availabilities for other organizations wishing to book the space. It is appropriate to evaluate this option as a long term alternative but it is not recommended in the shorl term. 3. An appropriately drafted Request for Proposals (RFP) may be issued by the City of Miami Beach requesting proposals for the management of the venues. Issuing an RFP for management of the theaters would be an equitable process for identifying a proper entity for this responsibility and would give the City the opporlunity to review all potential proposals and alternatives. This process would not be as expedient as engaging SMG immediately, but would be an efforl to allay public concerns demonstrating an efforl on the parl of the City to review all options for the management of the Byron Carlyle and the Colony Theaters. The two most viable options are to exercise the option available in the SMG's current contract (option 1 ) or to issue an RFP soliciting proposals and identifying the most suitable management company and structure for the management of the City's two theaters (option 3). Considering that the Byron Carlyle Theater construction is nearing completion, the Administration recommends exercising the option available in the SMG's current contract with a scope of work as described herein (option 1) for an initial term of one (1) year at which time the Administration will review and analyze the it,"'",e to delennlne the be,t manne' In which to proceed. JMG\dk\~\bb C: Christina M. Cuervo, Assistant City Manager Max A. Sklar, Tourism and Cultural Development Assistant Director Doug Tober, General Manager, Miami Beach Convention Center Bill Baites, Cultural Affairs Program Manager F:linfo\$ALLIMax\TCDlL TCIFacilities Management.doc DRAFT Byron Carlyle Theater Management Structure City Manaaement Responsibilities General Management: . Liaison with local arts organizations . Liaison with City of Miami Beach Administration . Develop and oversee mission/strategic vision for venues . Develop marketing program for theater . Develop Annual Budget Production: . Oversee Stage Manager, who will: o Contact client for technical ri o Evaluate time necessary to se show (time in theatre) o Supervise the load-in / show / a oad out of every production vide crew technical rider, light plot, ground plan and any other material advance by visiting artists crew billing sheets to SMG Finance for settlement answer technical questions regarding venue. ter production equipment in excellent working condition ent parts and lamps for all equipment) e management on grants ctive departments Booking . Answer telephone booking inquiries . Show theater to all potential clients . Keep Calendar of Events f . ability and . Generate Lease Agreement . Disseminate booking and con Byron Carlyle Theater Management Structure Proposal Page 2 of 2 DRAFT SMG Responsibilities Business Operations: . Verify or purchase Insurance . Accept payments (deposits and final payment) . Prepare Settlements . Prepare payroll . Procure operating supplies . Process Accounts Payable . Process Accounts Receivable . Assist in the development of Annual Budget . Generate Monthly Financial Statements Facility Operations: . Schedule the opening and . Maintain utilities and teleph Venue cleaning Venue security Maintain all theater non-producti Oversee maintenance contracts a Keep theater in accordance with 10 fire alarms and extinguishers Coordinate and assist Property Manag nt and CIP office in the installation and . control of all capital improve ents B ting assistance as requested for events and venue buys website development of the facility as per lessee needs e ing condition Event . Pro . Staff c . Provide s . Coordinate er, ushers and ticket takers required clients for special receptions, events Box Office . Build shows . Daily settlements . Show settlements . Answer telephone inquiries . 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