Bakersfield City Council members on Wednesday will consider whether AEG Facilities, manager of the Staples Center in Los Angeles, should replace SMG as the manager of the Rabobank Arena, Theater & Convention Center complex, the San Joaquin Community Hospital Ice Center and Bright House Networks Amphitheatre.
SMG also submitted a proposal to manage the facilities, and the city has "generally been pleased" with the company's management, City Manager Alan Tandy said in an administrative report. But AEG is the better choice for several reasons, Tandy said.
SMG has managed the arena, theater and convention center since 2000. It took over management of the ice center in 2003 and the amphitheater in 2007, when those facilities were built. Its contract with the city is set to expire June 30.
One important factor in city staff's recommendation to go with AEG, Tandy said, is that AEG will guarantee that the city's loss on the facilities will never be more than $415,718 a year, whereas losses in past years under SMG's management have been higher. If a guarantee like that had been in place over the last 14 years, the city would've saved more than $1 million, Tandy said.
The proposed contract is for AEG to manage the facilities for 10 years, with an option to extend that another five years. The management fee of $400,000 a year is higher than what SMG proposed, according to the report. That's the base fee AEG would get every year, with incentive payments added depending on how AEG does in keeping operating losses low.
The 27-page proposed agreement includes other commitments by AEG: retaining current staff at the facilities where possible, bringing a Los Angeles Kings preseason hockey game to Bakersfield every year and coordinating community soccer clinics with the Los Angeles Galaxy professional soccer team at Bakersfield's State Farm Sports Village.
AEG has stakes in both those teams and owns the Amgen Tour of California bicycle race, which came through Bakersfield in 2012 but will bypass the city this year. AEG has also promised to maximize Bakersfield's presence in future Amgen races, according to the report.
As another significant part of the contract, AEG would dedicate $500,000 to capital improvements, $250,000 to a fund to attract and underwrite big-name events, and $200,000 worth of real estate consulting services. Those services would help the city finish its mixed-use development in the South Mill Creek area, according to the city manager's report.
SMG also pledged $1 million for capital improvements and event development.
"AEG is the only management company that directly owns or controls concert and sport event programming," Tandy said in the report. AEG's event-booking subsidiary, AEG Live, "has strong relationships and influence with performers, managers and agents that will provide a distinct advantage in securing events for the Bakersfield facilities."
AEG had been up for sale until last week, when owner and Denver billionaire Philip Anschutz said he has decided not to sell the company.
Aside from the management contract, the council's Wednesday agenda is pretty packed. Council members also will consider:
* Two zone change applications by real estate developer Black Ops, which has raised the ire of Bakersfield residents over two multi-family housing developments it's planning to build in west Bakersfield.
The council already has considered one of those zone change applications, for a development planned for the north side of Rosedale Highway just west of Allen Road, and imposed some limits on that plan. It will consider the application again on Wednesday, along with another zone change application by Black Ops for a plan to build duplexes and multi-family homes on land near the intersection of Panama Lane and Stine Road.
* An ordinance to change the city's sign regulations, which would allow downtown and Baker Street-area businesses to erect signs that project out into the street. That would encourage a more "pedestrian-oriented" character in those areas and help attract visitors, according to a report from Community Development Director Doug McIsaac.