The future direction of Hamilton’s beleaguered Hamilton Entertainment and Convention Facilities remained very much up in the air following council’s decision to reject advice from consultant KPMG to narrow the list of private sector proponents to two—Global/Live Nation and SMG/Forum. Instead the consultant will now negotiate with three players who were left off the short list—AEG/Katz, Carmens and Sonic Unyon, the latter two both local bidders. Only the two finalists in the RPMG ranking submitted proposals to operate all three HECFI facilities namely, Copps Coliseum, Hamilton Place and the Hamilton Convention Centre; the other bidders were only interested in single facilities.
The bids were as follows:
Global Spectrum / Live Nation – Operation of all facilities
SMG / Forum Equity – Operation of all facilities
AEG/Katz Group – Operation of Copps Coliseum only
Carmens – Operation of Convention Centre only
Vrancor – Operation of Convention Centre only
Sonic Unyon – Operation of Hamilton Place only
At the end of an exhaustive KPMG presentation to council it was clear that the mood around the table was decidedly against the shortlist presented. Councillor Terry Whitehead led off by making it clear he wanted to see a hybrid model explored that would have the effect of bringing AEG/ Katz back into contention by combining its bid with the local bidders. Indeed, the only possibly “hybrid” combination other than something involving the two major players that were recommended, would be a consortium of AEG/Katz managing Copps, Carmen’s operating the Convention Centre and Sonic Unyon controlling Hamilton Place.
Katz, which scored third in the KPMG ranking, is seen by observers of the process to be favoured by some councillors because of its two year involvement with some members of Hamilton Council. Katz was brought into the limelight two years ago during the deadlocked stadium debate. It was suggested that Katz might be prepared to take over the Ticats and agree to a new stadium in the west harbour. This angered Ticat owner Bob Young who blamed Councillor Lloyd Ferguson for introducing Katz into the debate and interfering with his business. At that time Katz also expressed an interest in managing Copps Coliseum, but rumours also swirled that Katz, owners of the Edmonton Oilers, might assist Hamilton with its long held dream of an NHL franchise. Those dreams have persisted as evidenced by the fact that Oilers President Pat Laforge met with a group of councillors in January of 2011—a meeting that triggered complaints to the integrity commissioner and the Provincial Ombudsman that the meeting constituted a secret meeting of the NHL Subcommittee of city council. Those charges were dismissed by Ombudsman Andre Marin although he cautioned councillors to be careful about “attracting speculation and suspicion.” Interestingly those present at the meeting , while denying any substantive discussion of the NHL, said they did discuss the upcoming RFP regarding HECFI. Asked whether he thought Katz had an advantage over other bidders by virtue of its past relationship with councillors Councillor Lloyd Ferguson replied, “The only thing that will make a bidder successful is to provide the best proposal to reduce or eliminate the annual grant, improving entertainment and reduce dark nights.”
KPMG in its report noted that “while AEG/Katz has the potential to be a “game changer” and has the experience and resource capabilities, its preference is to only operate one facility. Such a “hybrid” option may not provide for as large an opportunity to identify savings due to having different
operators for the three facilities.” KPMG’s recommendation to go with the two largest players was
“ based upon the depth of the professional venue management programs and expertise of these parties, combined with their ability to operate all three facilities.” Whitehead said bidders should have been made aware in the RFP that heavy weighting would be applied in favour of bidders willing to take on all 3 venues.
Another of the bidders has some history with Hamilton council as well. Forum Equity Partners is teamed with SMG—a worldwide manager of entertainment and convention facilities. Forum Equity partnered with the City of Hamilton in 2006 to form the Hamilton Realty Capital Corporation—currently managed by city employee Glen Norton. Hamilton Realty Capital Corporation’s mandate is to invest in and refurbish core-area properties that are too risky for conventional financing. Forum refers to the Hamilton Realty Capital Corporation on its website as a “subsidiary.”
|Proponent||History and Capabilities|
|Global Spectrum/Live Nation(All facilities)||Global Spectrum is a facilities management company owned by cable giant Comcast of Philadelphia. Comcast also owns the Philadelphia Flyers and NBC Universal. Annual sales 2009 $30 BillionLive Nation is the world’s biggest concert promoter. Last year it staged 20,000 shows worldwide. It recently merged with Ticketmaster and is also active in talent and facility management. Sales (2011) $5.3 Billion,|
|SMG/Forum(All Facilities)||SMG is one of the worlds largest venue operators. Its properties include the Houston Astrodome and Soldier Field in Chicago. SMG is owned by American capital which has $68 Billion in assetsForum Equity Partners is a privately-owned Canadian infrastructure and real estate investment and development firm. Forum specializes in public private partnerships (PPPs0. Forum is a 50% partner with Hamilton in the Hamilton Realty development Corporation.|
|AEG/Katz(Copps Coliseum Only)||AEG is one of the leading sports and entertainment presenters in the world. AEG, a wholly owned subsidiary of the Anschutz Company. Philip Anscutz’s personal fortune is estimated at $7 Billion. The company owns the Staples Centre and the Los Angeles Kings.Katz Group operates 1800 Drug stores across Canada under a variety of names and , under its Rexall Sports banner is owner of the Edmonton Oilers. Annual sales $7Billion.|
|Carmens(Convention Centre Only)||A Hamilton success story, Carmens ‘ was founded as a bakery and catering business in the 1970’s. In 1987 The Mercanti brothers took a gamble and built the 1500-seat Carmen’s banquet centre on a deserted stretch of Stone Church road, and developed into the regions number one banquet facility. In 2011 they opened the C Hotel. Carmens’ partnered in their bid with entertainment entrepreneur Loren Lieberman—operator of the Festival of Friends.|
|Vrancor(Convention Centre Only)||Another self-made Hamiltonian Darko Vranich has become a major commercial property developer focusing on downtown Hamilton. His son Dennis owns several establishments in Hess Village and is developing condos on King Street at Hess. The Vrancor bid was rejected in the first round because it called for $20 Million in capital investments by the city.|
|Sonic Unyon(Hamilton Place Only)||Sonic Unyon Recording Company is an independent record label based in Hamilton a retaill store is located on Wilson Street near James Street North). They have put out releases by bands including Tristan Psionic, Sianspheric, Shallow North Dakota, Eric’s Trip, Hayden, Chore, Frank Black and the Catholics, A Northern Chorus, Raising the Fawn, Teenage Head and Voivod.Founded in 1992 by Mark Milne, Sandy McIntosh and Tim Potocic of the band Tristan Psionic, Sonic Unyon is one of the largest independent labels in Canada. As of 2005, Sonic Unyon releases were distributed in the United States exclusively by Caroline Distribution|
Adding to the confused mix of possibilities there is another bidder—the City itself through HECFI. HECFI has submitted a revised business plan which will be evaluated against the privatization bidders. It is possible that HECFI could retain operation of one or more of the facilities and then form a partnership with one or more of the private bidders.