Clear Channel backs out of downtown theater (Herald-Sun, N&O)
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Tue Aug 24 12:31:38 EDT 2004
Clear Channel backs out of downtown theater
BY GINNY SKALSKI : The Herald-Sun
gskalski at heraldsun.com; 419-6636
Aug 23, 2004 : 10:00 pm ET
DURHAM -- Clear Channel Entertainment withdrew its name Monday as the
preferred operator for a proposed downtown performing arts center, leaving
the city in search of another company to take on the project under its
Officials with the media conglomerate said they wouldn't undertake the
project because the company is redefining its "strategic plan" and "can't
commit to a project like this under the conditions the City of Durham
proposes," according to a letter sent to Alan DeLisle, the city's director
of economic development.
City officials said the next step is to find other operators. But Mayor Bill
Bell said the city should only consider companies that don't expect the city
to take on financial liability for operating the arts center.
"My sense is that unless we are able to find someone to basically assume the
risk that we've been asking Clear Channel to assume in that deal, then it's
highly unlikely that we will be able to make that project work," Bell said.
Although specific terms were never hammered out, the city's goal was to have
the company assume the risk of operating losses while paying the city a
portion of the annual profits. In addition, most of the construction costs
would be paid for with an already-approved hotel-motel tax. Naming rights
and corporate sponsorships would cover the balance.
The initial plan called for a 4,000-seat theater costing about $42 million
and would have required taxpayer dollars to cover the costs. This month, the
plan was scaled back to 2,800 seats at a cost of $30 million.
Clear Channel's involvement has received heavy criticism from the local arts
community, which argued that the company monopolizes the music industry.
Maria Francesca Braganza, a founding member of Arts and Business Council of
Downtown, opposed having the company as an operator because she was worried
it wouldn't recruit diverse acts and would avoid using local labor and
With Clear Channel out of the picture, Braganza hopes the city will slow
down its efforts.
"I would really like the city to go back and re-evaluate the project from
the ground up ... [rather] than simply evaluating another operator for the
theater," Braganza said.
Community activist Josh Parker said he also believes the city should take
more time to determine what residents want. Parker represented ABCD earlier
this month during a visit by city officials to the Verizon Wireless Theater
in Houston. The city used that theater, as well as Cincinnati's Aronoff
Center for the Arts, as models for Durham's proposed theater.
"What happened in this whole process is we never asked the right questions,
we never really identified what our needs were," said Parker, a former
Durham County Commissioners candidate. "We got the money and decided we
needed to build something. The worse thing that could possibly come out of
this is that the city decides to just quickly find another promoter to do
this as planned."
In order to raise its hotel-motel tax to help fund the project, the city
must break ground on the proposed theater by the fall of 2005. That deadline
adds a sense of urgency to the vendor search, said City Councilman John Best
"There's a time clock on the legislation, and there's specific requirements
on how we can use the funds coming from the occupancy tax," Best said. "The
time's a tickin', so we probably need to move pretty fast on this to put out
a request for proposals from other operators."
Other operators do appear to be interested in working with the city,
including the House of Blues, Bell said. But whichever operator the city
picks, Bell said the company must be willing to take on the financial risk.
"Unless we can find someone who can do this, I doubt that we'll be able to
make it work," Bell said.
Proposed arts center loses operator
By MICHAEL BIESECKER, Staff Writer
News & Observer
DURHAM -- Clear Channel Entertainment officially withdrew Monday from a
proposal for a performing arts center in downtown Durham, leaving the status
of the long-planned venue in limbo.
Negotiations between the San Antonio-based media giant and the city had been
stalled for months. Mayor Bill Bell said the breaking point was rooted in
the city council's condition that that Clear Channel bear the sole risk for
any potential operating losses. The company notified the city of its
decision in a brief letter faxed to Durham's economic development office.
"They basically said they couldn't move forward under the conditions we laid
out," Bell said. "Unless we can find another operator willing to step in, we
won't have a theater."
Bell and other city leaders traveled to Houston this month to meet with
Clear Channel executives and tour a similar venue there. He said the
proposed deal had problems from the start.
"I've always seen this as a long-range effort," said Bell, who was elected
mayor in 2001. "I don't think a lot of thought was given to anything but
spending the hotel tax. I'm not faulting anyone in particular, but that's
the way it was."
The city has been working on plans since 1999 to build the performing arts
center. The theater is to join the redeveloped American Tobacco complex and
the Durham Bulls Athletic Park in an emerging entertainment district just
south of the city center.
Plans originally called for a $42 million, 4,000-seat multiple-use venue
that would be the largest of its kind in the state. The city was to own the
theater and contribute $24 million from hotel tax revenues, with another $18
million coming from private donations.
But the city came up $7 million short after Duke University offered to
contribute only about $3 million and officials were unable to make up the
difference from corporate sponsorships and naming rights.
Last month, the city scaled back its plans to a $25 million to $30 million
venue that would have at least 1,000 seats, so as not to directly compete
with the city-owned Carolina Theatre.
Josh Parker, who went on the Houston trip representing the recently formed
Arts and Business Coalition of Downtown, said the company's representatives
seemed generally receptive to moving forward with the deal.
"They seemed like they wanted to work with us," Parker said. "But I'm not
surprised. The city didn't make an effort to find out what the company
needed to make the deal work."
Many in the local arts community had spoken out against Durham's potential
partnership with Clear Channel, saying the nation's largest broadcaster and
concert promoter kills homegrown diversity. In the Triangle, Clear Channel
owns five radio stations, operates the Alltel Pavilion at Walnut Creek and
books shows at Raleigh's BTI Center for the Performing Arts.
Clear Channel's withdrawal could set the stage for participation by others.
Robert Errato, a Connecticut theater developer, had proposed building a
similar-sized theater for $10 million less, but city economic development
officials said they wanted more time to negotiate with Clear Channel's
development team. Another potential operator is the House of Blues chain,
based in Cambridge, Mass.
Meanwhile, two deadlines loom.
Under an agreement with Capitol Broadcasting Co., the developer of American
Tobacco, the city must approve a preliminary development agreement for the
theater by October or Capitol can exercise an option to purchase the
proposed site for an office building.
Construction must begin by September 2005, the deadline imposed by the
General Assembly when it approved increasing the county hotel tax to help
pay for the theater, which is supposed to be completed by 2007.
Councilman John Best, who cast the lone dissenting vote in June against the
city's proceeding with Clear Channel, said he felt sure Capitol wouldn't
move forward with its development plans while the city was still actively
working to make the theater a reality.
"From our discussions with them, I think they will be receptive to the idea
of extending the option," said Best, who also attended the Houston meeting.
"We're going to pursue other operators, and this time we need to do it
Staff writer Michael Biesecker can be reached at 926-2421 or
mbieseck at newsobserver.com.
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