City Council Meets in Tuesday Special Session to Consider Amphitheater Options
“Wait for the day you’ll go away / Knowing that you warned me / Of the price I’d have to pay” —Gary B. White, Long Long Time (performed by Linda Ronstadt)
The Irvine City Council will hold a special meeting on Tuesday, February 21, at 6:30 p.m. to consider whether to pursue further negotiations with Live Nation (“LN”) over the construction of a 14,000-seat amphitheater or to opt for a smaller, 6,000-8,000-seat facility favored by many Irvine residents. The item was originally on last Tuesday’s agenda. Still, Council action was delayed by a large number of public comments, many from non-resident LN supporters, and Councilmember Mike Carroll’s need to leave early for a previous commitment. Also on the special meeting agenda is a proposal by Vice Mayor Tammy Kim regarding district elections. The agenda packet is here.
New LN Counterproposal
In addition to the staff analysis prepared for the last meeting, the packet includes two subsequent communications from LN. The first is an email to City staff summarizing new cost estimates, with total construction costs estimated to be $134,277,995. The second sent on February 13, 2023, is a four-page letter to Mayor Farrah Khan and councilmembers, along with a summary of the updated cost estimates and a new set of requested “redline” changes to the Design, Construction, and Operating Agreement (“DCOA”) approved by the Council in September 2022.
LN Felony Conviction? No Problem
Among the more interesting of its proposed changes is LN’s attempt to ensure that it’s allowed to continue operating the amphitheater even if it’s convicted of a felony. Section 24.1 of the DCOA lists a series of situations in which LN would be in default, and the City would have the right to terminate the agreement. The last of these is: “j. Live Nation is convicted of a felony after the Date of the Agreement.” LN’s counterproposal redlines this provision. Without it, the City could be stuck in a 30-50 year relationship with a convicted felon.
The issue is significant because of an ongoing investigation of Live Nation and its Ticketmaster subsidiary by the U.S. Justice Department’s Antitrust Division. That division has the authority to bring criminal prosecutions for antitrust violations.
Increased Costs
LN’s letter to the Council states in part:
“We are committed to investing $20 million in this amphitheater and building a world-class amphitheater at the approved budget of $130 million. The original deal that the City and Live Nation agreed on is sound in design and economic structure. Live Nation has not deviated from our original agreement. Additionally, we are enclosing the latest capital budget, which should enable the City and Live Nation to build a world-class amphitheater at the approved budget.”
There are at least two problems with LN’s statements. First, by its own estimate, total construction costs will exceed the $130 million cap approved by the Council in the DCOA, and the City’s share of those costs would exceed by nearly 4% the $110 million authorized by the Council. Meanwhile, despite the increased cost estimate, LN has not budged in its insistence that it will contribute only $20 million of its own and seeks to shift some costs from itself to the City.
Second, LN’s claim that it “has not deviated from our original agreement” lacks credibility. The truth is that there has never been a final agreement between the City and LN. The staff memo states, “Neither the City nor Live Nation has executed the DCOA. Instead, on November 11, 2022, Live Nation rejected the deal terms approved by the City Council and made an extensive counterproposal. The counterproposal made multiple material revisions to the City Council-approved deal terms.” Then, on the eve of last Tuesday’s meeting, LN submitted another counterproposal. As of now, there is no agreement between the City and LN, simply ongoing negotiations. LN essentially acknowledges this point in the first sentence of its letter: “Live Nation is committed to working diligently with the City of Irvine to negotiate the terms of a definitive agreement for a permanent amphitheater in the Great Park.” The question before the Council is whether to continue those negotiations or to pursue a smaller amphitheater.
Noise Issue
One of the primary concerns expressed by residents favoring a smaller facility is noise. Public commenters have complained of being disturbed by noise (particularly bass notes) from the interim amphitheater as far away as Woodbridge and even Turtle Rock. LN counters in its letter: “Reducing the size of the amphitheater will not reduce noise impact in the community and may actually increase noise impact. We conduct our operations so that there are minimal noise impacts on our neighbors.”
LN’s generalizations are belied by specific findings cited in the staff report:
“[T]he City commissioned a sound analysis to identify how the physical noise mitigations planned for the new Live Nation facility (e.g., a 20’ earthen berm, stage sunk 20’ below grade, directed speaker projection) would mitigate sound impacts. The assessment forecasts that all of the noise mitigations planned will not be sufficient to keep noise and bass levels below acceptable ranges in residential areas ….”
“Therefore, if the City wants to address the noise and bass impacts, the mitigation will need to be driven by operational measures tied to reducing the maximum volume and bass levels at the facility. Staff is working through these issues with Live Nation, but Live Nation has thus far been unwilling to agree to any operational measures aimed at reducing volume and bass levels.”
The staff report explains why sound levels could be reduced in a smaller venue:
“[T]he medium-sized venue would likely offer a greater degree of local control and operating flexibility to address noise and other impacts. One of the challenges of a large venue operated by a promotor, such as Live Nation, is that each musical act brings its own sound system, which presents wide variability in the type of equipment, sound/bass projection levels, and positioning on the performance stage. This factor has been one of the primary challenges to mitigating the noise/bass impacts at the Five Point temporary amphitheater.
“In contrast, there are a number of successfully operating smaller amphitheaters [where] the venue is controlled by a local operator on contract with the City, rather than being controlled by the concert promoter. In this model, the sound is run through a house speaker system rather than sound systems brought in by the musical acts themselves. By running the sound through a single, operator-controlled system that is consistent across shows, the City, or its contracted operator, is better able to anticipate and control volume and bass tone sound levels, as well as the types of acts and the hours of operation. In discussions with people familiar with the Greek Theater, this local operator control has been important in their mitigation of neighborhood impacts.”
Staff’s point about LN performers bringing their own sound systems is underscored by LN’s proposed amendment to DCOA section 8.10(f) to provide that “sound amplification equipment utilized by Facility performers shall be exempt from … City approval provided such sound amplification complies with the sound amplification standards of this Agreement.” Additionally, LN’s summary sheet expresses concern with City’s ability to alter the noise ordinance “and create non-compliance in the future.” Thus, after the language in DCOA section 12 requiring compliance with the noise ordinance, LN’s counterproposal contains the following note: “[Live Nation needs remedies if City changes ordinance in a way that materially impairs our operations—TBD].
Obscene Language Allowed, But Nudity Banned?
One aspect of the noise issue is that nearby residents have complained of hearing obscene language over the sound system at the interim amphitheater. Section 8.4 of the DCOA includes the following sentence: “Live Nation shall not schedule any Event that includes obscenity.” LN’s counterproposal redlines “includes obscenity” and substitutes “is publicly known to include artist nudity in the performance.
Naming Rights
The staff memo states, “The City Council approved DCOA is silent on sponsorship and naming rights. In its counterproposal, Live Nation has added language allowing it to own all sponsorship and naming rights and retain all revenue generated from those revenue streams.” LN’s current counterproposal reiterates its demand for these rights and revenues. However, in its summary sheet, LN claims that the “Framework document approved by Council gave LN 100% of all sponsorship revenues.”
The basis for LN’s latter claim is unclear. LN added language giving LN exclusive sponsorship and naming rights as section 8.20 of its November redline counterproposal. Similar language appears in LN’s current redline counterproposal in section 8.18, beginning:
“[Note to City—LN Rent commitment and budget depend upon Sponsorship revenue to LN; it was in Framework document as well] Sponsorship Rights. Live Nation shall have the rights to all sponsor naming and participation, and all revenue derived from that place as described in this Section 8.18 (collectively, ‘Sponsorships’).”
In my September Irvine Watchdog piece on the amphitheater proposal, I asked whether the City would retain any naming rights, having found no mention of the topic in the DCOA before the Council. I cited the history of the Dos Equis Pavilion, owned by the City of Dallas and operated by LN. In its 34 years of operation, the venue has been known by at least eight different former names: Coca-Cola Starplex Amphitheater, Starplex Amphitheater, Smirnoff Music Centre (alternating with The Music Center at Fair Park during underage shows), SuperPages.com Center, Gexa Energy Pavilion, and Starplex Pavilion. If LN prevails on this issue, there is nothing to prevent it from perpetrating a similar series of name changes here while reaping all the proceeds along the way.
Exclusivity
According to the staff memo, “Under Live Nation’s counterproposal, the City cannot hold live music events with more than 10,000 attendees anywhere in the Great Park, and Live Nation would have the exclusive right to host all events with more than 5,000 attendees anywhere in the Great Park.” Section 18.19 of LN’s new counterproposal reiterates this exclusivity provision, and further would allow LN the exclusive right to rent the amphitheater to a third party. It would also grant LN a “right of first refusal to promote any ticketed event held or sponsored by City in the Great Park for less than 5,000 people.” (This would include, for example, ticketed City events in the soccer stadium. Thus, LN would be involved in Great Park events away from and completely unrelated to the amphitheater.)
Secret Agreement?
LN apparently seeks to keep its final agreement with the City secret, notwithstanding that the Council-approved DCOA and LN’s two redline counterproposals are public records. LN’s counterproposal would add section 25.23, titled Non-Disclosure. The proposed language states in part: “City and Live Nation agree that the terms of this Agreement are confidential and constitute proprietary information of the parties hereto.”
Unresolved Issues
This article addresses only a few of the many issues raised by LN’s proposed changes to the DCOA. Its current redline counterproposal highlights more than 60 issues that must be negotiated or discussed before the parties can reach a final agreement. Thus, the two options before the City Council on Tuesday are to (1) direct staff to continue negotiating with LN; or (2) pursue construction of a smaller amphitheater independent of LN.
Long Long Time
Throughout City staff’s negotiations with LN, one provision that hasn’t changed is the term of the proposed agreement: thirty years, with two unilateral LN options to extend for ten years. That’s potentially fifty years–Irvine could still be locked into the LN deal when it celebrates its centennial in 2071. This is an extraordinarily long term for such an agreement or most any agreement. Although marriage vows typically say “until death do us part,” the median duration of marriages in the United States is about 19 years. The City of Irvine shouldn’t agree to a one-sided agreement with LN that could last twice that long. Option 2 is the wiser course for many reasons.
Make Your Voice Heard
Comment in person at City Hall or via Zoom. Instructions are here.
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