LTC 243-2006 re: "Best and Final" Term Sheet Offers for the Future Use and Operation of the Jackie Gleason Theater
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MIAMI BEACH
OFFICE OF THE CITY MANAGER
NO. LTC # 243-2006
LETTER TO COMMISSION
TO:
Mayor David Dermer and Members of the City Commission
FROM:
Jorge M. Gonzalez, City ManageJ__........~
October 12, 2006 ()
DATE:
SUBJECT: "Best and Final" Term Sheet Offers for the Future Use and Operation of the
Jackie Gleason Theater
On September 6, 2006, the City Commission approved Resolution No. 2006-26320 that
formally established a process and guidelines for submission and receipt for "Best and Final"
proposals for the future use and operation of the Jackie Gleason Theater of the Performing
Arts ("JGT"). The process and guidelines set a deadline for "Best and Final" term sheet
offers from AEG Live, Live Nation, and Cirque du Solei I for September 29, 2006. The
resolution also requested the City Mana~er to schedule at least one public meeting to gain
community input between September 29 h and October 1 ih in preparation for a Special City
Commission Meeting on Wednesday, October 18, 2006 to consider the proposals and to
select a future operator for the facility.
Attached are summaries of the "Best and Final" Term Sheet offers received from AEG Live,
Live Nation, and Cirque du Soleil. Each summary provides the main deal points in a
consistent presentation for each company. I will be providing you complete copies of the
"Best and Final" Term Sheet offers, along with supporting information about each company
as provided by the companies, staff research, and third parties no later than Friday, October
13, 2006. The resulting package should provide you with a complete picture of each
company and their vision for the JGT. In order to facilitate public access to this information,
staff has also created a webpage on the City's website with links to the background
information which has been provided to you. This webpage can be accessed via link on the
city's homepage at www.miamibeachfI.Qov.
In addition, the following meetings, open to the public, are scheduled to gain community
input on the future of the JGT, as well as insight on the term sheet offers. The intent of
these meetings is to receive as much public and community input as possible in advance of
the Special Commission meeting scheduled for October 18, 2006. General comments from
both meetings will be provided to you in follow-up materials to be provided to you no later
than Tuesday, October 17, 2006.
Cultural Arts Neighborhood District Overlay (CAN DO)
Mayor's Blue Ribbon Committee
City Commission Chambers, City Hall
1700 Convention Center Drive, Miami Beach
Thursday, October 12,2006
10:00 AM
At this meeting, which was well attended, we provided an overview status of the
JGT and discussed the general elements of the options being offered for the
mcnffy. .
Letter to Commission
October 12, 2006
Page 2
Community Meeting
Jackie Gleason Theater of the Performing Arts
1700 Washington Avenue, Miami Beach
Monday, October 16, 2006
5:00 PM
At this meeting, we will provide as much information as possible as a staff
presentation to help make sure the comments and dialogue is as informed on the
issues as possible. The purpose of this meeting is to gain general input from the
community at large regarding preferences and vision for the next stage of
programming for the JGT. The format of this meeting is expected to be a staff
presentation, followed by direct interaction with the members of the public present
at the meeting. Although there is no role contemplated for the three companies,
they have been invited to attend and may respond to questions if appropriate.
Special City Commission Meeting
City Commission Chambers, City Hall
1700 Convention Center Drive, Miami Beach
Wednesday, October 18,2006
5:00 PM
It is anticipated that staff will make a presentation, as will each of the three
companies, to the City Commission for your deliberation and consideration. Staff
and representatives of the three companies will be available to respond to
questions and comments, as well.
We have made every effort to disseminate notice of each of these meetings as widely as
possible to ensure attendance from as many interested parties as possible.
Finally, we are scheduling individual briefings with each you to discuss the three companies
and their respective proposals. These are intended to occur between October 12, 2006 and
October 17, 2006. In the meantime, please feel free to contact me if you have any questions
or concerns regarding this process or the proposals. Additionally, we held a press briefing
on Thursday, October 12, 2006 from noon to 1 :30 p.m. to provide the reporters covering this
story with an opportunity to get full briefings on the matter.
As you know, we have been diligently working on this matter for several months. The above
schedule of events is reflective of our effort to make sure that as much comment and
opportunity for public input is provided as we lead up to the Special Commission meeting of
October 18, 2006.
Should you have any questions please feel free to contact me.
Attachments
C: Jose Smith, City Attorney
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Parties AEG Live LLC (AEG) and City of Miami Beach (City)
Concept Traditional performance venue with diverse venue bookings using existing seating
capacity of 2,700
Project Improvements include sound and lighting systems; orchestra pit; concession areas;
electrical upgrades for audio & lighting; acoustical treatments; emergency system
linkages & interfaces; and marquee signage.
Proposed Use - Types of Events 140 ticketed events per year with attendance projected to total 246,000 by 2008. Types
of Events include Award Shows, Holiday Festivals, Community Nights, Consumer
Shows, Concerts, Family Shows, Festivals, Film Premieres, Film Festivals,
Meeting/Catering Events, Speaking Association, Television Productions, Theatrical
Productions, Trade Shows
Form of Agreement Management Agreement
Proposed Term Initial 10 year term and two (2) five-year options, up to 20 years; Termination Right for
AEG after 2 years if AEG sustains losses in excess of $500,000 in a year.
Base Compensation to CMB $250,000 per year, adjusted by CPI after 2008
Bonus/Percentage Rent/Facility Fees City will retain 100% of all facility fees ($1.50 per ticket), estimated to be $300,000 by
2008. City will receive 50% of the ticketing convenience charge rebate received from
Ticketmaster, estimated to be $242,000.
Real Estate Taxes $0, theater is currently exempt from property taxes. If venue becomes taxable, then
City pays property taxes.
Project Investment City: $0
Other: $2,000,000
Social/Community Benefits . The City may use venue rent free 10 days per year; the City reimburses operating
expenses.
. 60-80 free tickets for seniors and students (per event).
. Assume commitment to Invitation to the Arts Festival with annual event advertising.
. Work with local schools to provide after school programs.
Naming Rights AEG will have the right to sell naming rights. City will receive 50% of any naming rights
revenue based upon the assumption that name in title sponsorship will be approved by
the City Commission.
Sponsorship $0
Maintenance AEG will be responsible for day-to-day operational maintenance, as well as minor
fixture and small equipment replacement up to an amount to be determined.
City will be responsible for all capital renewal and replacement for the theater.
Insurance AEG will obtain spectator and general liability insurance; the City will continue to be
responsible for property insurance.
Operations AEG shall provide all event-related operations and pay all event related expenses
Corporate Guaranty All obligations will be guaranteed by AEG Live, LLC
Art in Public Places TBD
10 Year - Total Value
Rent
Facility Charge
Taxes
Incremental Parking
Community Benefit
Private Investment
Maintenance Cost deduct
Sum $13,220,000
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Parties Live Nation Worldwide, Inc. and its subsidiaries (LVN) and the City of Miami Beach (City)
Concept Live performance venue with flexible seating to allow for a variety of entertainment options, such
as comedy and live concerts
Project Improvements include: seating re-configuration with re-grade on ground floor to create terraced,
general admission floor areas (2,750 total event capacity); updated auditorium finishes; updated
draperies, lighting and paint in the lobby; new bars, lighting, finishes and furnishings to create an
upscale atmosphere and more points of sale; $200,000 allowance for a significant new exterior
sign; update and reconfiguration of dressing areas and band accommodations.
Proposed Use - Types of Events Projected 120 events in the first full year of operation with potential to grow to 150 to 180 events
per year. Projected to grow past 240,000 tickets per year in 2008. Public entertainment, live
entertainment, public assembly, bar and/or restaurant and anciliary uses. Proposed types of
entertainment include concerts, comedy acts, private rentals, television broadcasts, artist
recording studio, filming events
Form of Agreement Lease or Management Agreement
Proposed Term Initial 15 year term with two (2) five-year options, up to 25 years
Base Compensation to CMB $1,000,000 per year, 2% escalator per year
Bonus/Percentage Rent/Facility Fees $1 per ticket after 240,000 tickets per year (excludes community benefit fund program tickets,
charitable events, third party rentals). $2,000 per event above 200 events (same exclusion)
Real Estate Taxes $0, theater is currently exempt from property taxes. If venue becomes taxable, then City pays
property taxes.
Proiect Investment City: $0
Others: $3,500,000
Social/Community Benefits .The City may use venue rent free twice per year for City events, once per year for charitable
use; once per year for Play Ground Review event; the City reimburses operating expenses; L VN
keeps f&b revenue; no sponsorship violation; no concerts.
eAnnual Event and Auction for Community Needs consisting of autographed memorabilia of the
performing acts at the JGT
eResident Ticket Program - Live Nation will make 100 tickets for specified events available for
purchase 2 days early to City residents
eCommunity Benefit Fund - Live Nation will continue the current discounted ticket program for
senior citizens and students w/o City contribution
eFree booking/programming Consultation to City for Byron Carlyle and Colony Theaters
e20 tickets to City for each event.
Naming Rights If naming rights are approved by City and Theater name is changed from "Jackie Gleason" then
Live Nation will share 25% of net naming rights with City
Sponsorship $0
Maintenance Live Nation will cover all costs, including capital plant renewal and replacement
Insurance Live Nation will cover all costs
Operations Live Nation will cover all costs
Corporate Guaranty Provided by Live Nation Worldwide, Inc.
Art in Public Places TBD
10 Year - Total Value
Rent
Facility Charge
Taxes
Incremental Parking
Community Benefit
Private Investment
Maintenance Cost deduct
$10,000,000
$0
$0
$1,500,000
$6,000,000
$3,500,000
$0
$21,000,000
Sum
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Parties
Concept
Project
Proposed Use - Type of Event
Form of Agreement
Proposed Term
Base Compensation to CMB
Bonus/Percentage Rent/Facility Fees
Real Estate Taxes
Project Investment
Social/Community Benefits
Naming Rights
A joint venture consisting of Cirque du Soleil, Inc. with its affiliated partners (CDS)
and the City of Miami Beach (City)
Permanent Cirque du Solei) Show, with related facilities including a theme
restaurant, show related retail boutique, theme lounge, and special events venue
that provides both private and public live entertainment, which can be operated as a
nightclub up to three nights a week.
Economic Development project that converts the Jackie Gleason Theater and the
adjacent 555 building into a multi-purpose entertainment complex. Includes the
complete renovation of the theater and adjacent 555 buildings to accommodate the
proposed uses. Current components include a 1,700 seat theater, 250 seat theme
restaurant with a related 300 seat lounge, and a 600 to 1,500 person special event
area for private rentals that will open as a live entertainment or nightclub venue for
the public up to three nights a week.
Permanent theater venue for a CDS live show production with a projected 430 shows
annually; theater adjacent concessions and merchandising retail; theme restaurant
and lounge; special event area for private and public functions; surrounding gardens.
The proposed show is anticipated to qualify as a partially nude establishment under
the City Code and state law.
A development agreement for the development and constructon of the project; and a
lease agreement for the use and operation of the project.
Initial term of 15 years with 10 year subsequent renewals up to 50 years. There are
two related, substantive agreements, one for the show and one for the lease on the
property. Both include a termination right: for the Show if after two years the
expenses exceed revenues for 12 consecutive months; for the lease after 4 years if
expenses exceed revenues for 12 consecutive months. If either is involved, the term
ends no later than year 15.
$4,200,000 (estimated) in year 1, based on percent of gross show ticket sales and
other revenues (boutique, VIP, food & beverage, restaurant, lounge, special event,
etc.).
$6,100,000 (estimated) in year 6, based on a percent of gross show ticket sales,
which increases this year, and other revenues (boutique, VIP, food & beverage,
restaurant, lounge, special event, etc.).
$1,100,000 (estimated, based on $2 per ticket) for years 1 through 5; $1,400,000
(estimated, based on $2.50 per ticket) for years 6+. This is a facility surcharge on
each ticket sold.
$1,500,000 (estimated for all overlapping jurisdictions) CDS is responsible for
payment of all taxes.
City: $40,000,000 to $45,000,000
County: $15,000,000 to $10,000,000
Others: $75,000,000
· $1,000,000 (estimated, based on 1 % of project revenues) to social programs on
Miami Beach (at least 50%) and in developing countries. Proposed programming to
focus on youth-at-risk, cultural programs to promote/support emerging talents, in-
school/extracurricular activities for youth.
· Availabilty of rehearsal nights for fundraising opportuntiies for non-profit
organizations
· The City shall have booking rights (subject to availability) to the special events
area for City use.
. 4 premium seats per performance for City use.
Not applicable
Sponsorships
Maintenance
Insurance
Operations
Corporate Guaranty
Art in Public Places
Revenue generated by sponsorships and non-facility naming rights shall be used
toward capital construction costs during the development phase and towards debt
service and building maintenance during operation phase.
CDS is responsible for all regular, "day to day" maintenance activities, such as
painting, carpeting, filter replacement, light bulb and fixture replacement, etc., as well
as minor equipment and machinery replacement.
City maintains responsibility for replacement of capital equipment and machinery in
the project, the cost of which are funded through the facility fee.
CDS shall maintain all risk casualty insurance, including windstorm (unless not
commercially available) & flood; general commercial liability; business interruption
insurance; performance insurance; auto liability insurance; worker's compensation
insurance; intellectual property.
CDS is responsible for all operational requirements.
All obligations will be guaranteed by CDS and its joint venture partners.
$1,500,000 projected value of proposed public art to be in and paid for by the
project.
10 Year - Total Value
Rent
Facility Charge.
Taxes
Incremental Parking
Community Benefit
Private Investment
Maintenance Cost (deduct)
$33,100,000
$12,400,000
$15,000,000
$15,000,000
$10,000,000
$75,000,000
($10,000,000)
Sum
$150,500,000
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