City re-examining theaters’ operation

Emily Kaiser

The Minneapolis City Council and the Historic Theatre Group have begun negotiations on a new contract for managing the Hennepin Avenue theater district in downtown Minneapolis.

The proposal would allow the city to give all of the theaters’ financial responsibility to the Historic Theatre Group, Clear Channel Entertainment and Hennepin Theatre Trust -groups represented in the plan – with a 30-year contract. Currently, the city owns the Orpheum Theatre, Pantages Theatre and State Theatre – the theaters in the district. The Historic Theatre Group manages them.

The proposal, which will be negotiated over the next 3 1/2 months, came under scrutiny because it includes Clear Channel Entertainment in the deal. The company currently works with the Historic Theatre Group.

“Clear Channel currently serves as our consultant on the marketing of our theaters,” said Tom Hoch, Hennepin Theatre Trust president.

Under the current system, if theaters fall short on revenue, Minneapolis is responsible for picking up the loss.

Hoch said that after the proposed 30-year contract is up, the new proposal would pay off bonds – current theater debt and capital improvement costs. The bonds would be repaid, and Hennepin Theatre Trust would own the theaters.

“Contrary to much of the information that has been circulated, Clear Channel will never own the theaters under our proposal,” he said.

During the council meeting Nov. 19, Paul Ostrow, Ward 1, proposed to delay the vote on negotiations for three weeks so the council could gather more information on the issues.

“We had no written report to compare proposals with financial analysis,” Ostrow said. “We ended up just having one side with no objective analysis.”

The council voted 7-4 to proceed with negotiations.

Ostrow said theaters are an important asset to the city and the council needs to be careful about handing them over so quickly.

“These theaters are real jewels of the city and a significant city investment,” he said. “We helped develop this district into the third-largest theater market in the country.

“This is really a legacy decision and I don’t feel we have analysis to make the decision,” he said.

The other major proposal put before the council involves the Ordway Center for the Performing Arts in St. Paul. It has proposed a regional approach, said David Lilly, Ordway board member.

Lilly said the current theater market is too competitive and would work better as a regional community.

“That’s the fundamental problem Ö the business model isn’t good today,” he said. “We have two competing communities, and what we are doing is accepting the status quo.”

Lilly said the theaters often play similar shows, dividing the Twin Cities theater audience.

“We both inadvertently lose,” he said.

Hoch said he does not understand how Ordway and Hennepin Avenue theaters could collaborate.

“Why do we think that when it comes to arts organizations, that the question of regionalism is somehow easier, and these people should somehow assume the burden of regionalism alone?” he said.

Hoch said other area industries – such as newspapers or sports arenas – do not work in regional programs, and the competition is not always bad.

“People who are taking that position are adopting it when they don’t know how the industry works,” he said.

Paul Zerby, Ward 2, who represents the Minneapolis campus and surrounding areas, said he understands where the majority of the council is coming from on its stance, but he thinks the regional approach is a possibility.

“From the standpoint of the Minneapolis City Council, we have to look at what is best for Minneapolis, not the entire Twin Cities,” he said.

Despite the assurance from the groups within the proposal, outside groups and council members said they are still wary about including Clear Channel in the deal.

“When there is a solid financial base and you are looking at a guarantee from Clear Channel, they are going to have quite a bit of leverage on how the theaters are run,” Zerby said.

Ostrow said the proposed contract could potentially be successful, but the council could have looked at more options.

“I agree with those that this is not a sale to Clear Channel, but I do wonder if we missed an opportunity to have a bolder vision for the theaters,” he said.

Zerby said 30 years was a very long contract and it was unsure if a long-term contract would be good for the theaters.

Hoch said there is no need for concern about including Clear Channel in the contract. He said the company is there to support the groups if a financial problem occurs.

Hoch said Clear Channel, for example, would help the theaters if they exceed their operating budget during the next 30 years. The proposal allows Clear Channel to have a permanent spot in the theater district.

Hoch said he hopes the council accepts the proposal by early next year.

“I am very committed to these theaters,” he said. “We are going to continue to create a strong, lively and vital community, because this is a terrific opportunity that people on my team are committed to make happen.”