Curtain Call

Alas, poor corporate conglomerate, we hardly knew you

Alas, poor corporate conglomerate, we hardly knew you

Two years ago, debate raged over the city's historic theater district downtown.

During the previous three decades, the city had spent millions to rehab the State, Orpheum, and Pantages theaters on Hennepin Avenue, revitalizing a notoriously seedy part of downtown. The effort worked, bringing some 500,000 visitors to shows annually.

But success proved bittersweet. The city of Minneapolis struggled to manage the theaters' operations and pay off the $22 million in bond debt it took on to fund the revitalization. So the city sought bids from private companies to bail it out.

One of the interested bidders was Clear Channel Entertainment, the promotions arm of the nation's largest radio station company, which owned some 1,200 stations in 250 markets nationwide. It booked music and theatrical acts at 135 venues owned or operated across the country.

Clear Channel proposed partnering with the Hennepin Theatre Trust and Historic Theatre Group, local groups that together had managed the theaters for a decade. Surely, some council members argued, the media behemoth was well-equipped to handle Hennepin Avenue's theater business.

"The idea was to get the lucrative touring shows in here, develop a better theater district, and get the theaters paid off," says City Council member Gary Schiff.

But others dissented. Paul Zerby, then the council's Second Ward rep, questioned the wisdom of committing to a 30-year agreement with a company that, in the era of corporate mergers, might not even be around for the contract's duration.

"The concern was that this megalopolis would have control of the venue, and what was going to happen down the line?" Zerby says.

First Ward leader Paul Ostrow called the decision to partner with Clear Channel a "missed opportunity to look at the logical way to run these theaters," and questioned whether Clear Channel's cookie-cutter business model would work in Minneapolis.

Despite these reservations, the City Council signed on the dotted line.

Now it looks like the fears were well-founded. Over time, Clear Channel spun off its entertainment division into a separate company called Live Nation. And on March 1, a press release announced that Live Nation was getting out of the theater business altogether.

"We went with a really big player in the industry," says council president Barb Johnson, "and when you do that, the industry can be unpredictable."

The signs of trouble began almost before the ink on the deal was dry. Clear Channel started a national touring series, but a few bombs spelled big financial losses. Live Nation fared no better, and began backing away from Broadway and turning its attention toward concert promotions.

The three theaters are a crucuial cultural asset in Minneapolis, all dating back to the glory days of local theater in the 1920s. With a combined 6,000 seats, the theaters host around 150 events a year. More importantly, the theaters have been responsible for bringing to town such highly regarded productions as Miss Saigon and Aida, as well as countless musical acts ranging from Tom Waits to Al Green.

"Clear Channel was taking what had been a grass-roots business model and was trying to make it into a national, tidier business model," says Jamie Rocco, vice president of programming at the Ordway theater in St. Paul.

Tom Hoch, head of the Hennepin Theatre Trust, admits that the arrangement to run the theaters is "very complicated." Hoch and others at the Hennepin Theater Trust are monitoring the situation, waiting to see what will become of Live Nation's assets and agreements. No potential buyers have yet surfaced, and some wonder who, if anyone, will buy the company.

Of greatest concern is Live Nation's bond-debt responsibility, which comes in the form of a rent payment to the tune of $150,000 a month.

"Who is going to take over that note? That's big," says Rocco. "Is there somebody out there who's going to take all that on?"

The matter concerns Hoch as well, but he notes that Live Nation ultimately is responsible for the debt payment, whether the company sells its theater assets or not.

"Whoever pays that doesn't just get to walk away," Hoch says. "They are obligated to pay contractually. We were very thoughtful in spelling this out, because of the length of the agreement."

Despite all the uncertainty about who will fill Live Nation's void, Hoch says that for now, most shows and touring productions are going off as planned. But even national observers aren't sure what the Live Nation move will mean, and its effect on the local theater district is an even greater unknown.

Who will fund the State, Orpheum, and Pantages theaters? What will happen to day-to-day operations, to say nothing of the general maintenance and significant rehabbing Live Nation was supposed to support? Will the theaters continue to book successful Broadway tours like Wicked?

The unsettling answer is that no one really knows.

"We're not really sure what it means," concedes Hoch. "We can anticipate that somewhere along the line, there will be changes."