An affiliate of Anschutz Entertainment Group won a bid to run the Los Angeles Convention Center, following a unanimous vote today by the full City Council to begin contract talks that will begin the process of privatizing the city-owned venue.
AEG Facilities beat out one other bidder for the contract, and is expected to begin negotiating specific terms with city officials in the coming months. Contract terms will be brought back to the City Council in 30 days.
City officials hope a private manager will be able to attract more widely attended national conventions and increase the number of hotel stays.
The overwhelming majority of events at the Convention Center are trade shows, whose attendees live close by and do not need to book hotel rooms.
“At the end of the day, (trade shows are) not why the city is in the convention show business,” City Administrative Officer Miguel Santana said during a committee meeting Tuesday.
The Convention Center’s general manager will still have “decision-making authority,” Santana said.
Convention Center General Manager Robert “Bud” Ovrom said before today’s vote that he was “anxious to see this decision get made in a timely manner,” so his team can “hit the road running” when the busy season for conventions starts in the fall.
The motion approved today also directs city staff put together a plan for placing current Convention Center employees in other city departments and to deal with other fallout to city employees as the center is privatized.
The City Council also voted to reject a protest letter from the losing bidder, SMG, as having “no merit.”
SMG contends AEG is not only unqualified for the job, but also benefited from special treatment from city officials.
SMG Senior Vice President Gregg Caren wrote in the company’s protest letter that AEG does not have the five years of experience “in a similar market” that was required in the request for proposal.
Caren contended AEG has never operated an entertainment and convention venue in the United States, and that its experience outside the country, such as in Qatar, should not be considered as being in a similar market.
AEG was also unfairly given a second chance to submit a bid after failing to produce requested financial documents, even as SMG complied with those same requests the first, according to Caren.
AEG was nearly disqualified in April, but City Council members decided to re-issue the bid.
Because AEG operates hotels within a mile of the Convention Center, such as the JW Marriott at the adjacent L.A. Live entertainment center, there may be a conflict of interest in allowing the company to also run the venue, Caren said.
Santana said the city attorney determined there is no conflict of interest, and AEG’s experience outside of the country, including 20 years in Australia and Qatar, counts as sufficient experience.
The company also has “key personnel with upper-level convention center management experience that exceed the five-year requirement,” Santana wrote in
a June 21 response to SMG’s complaints.
Officials said the request for proposal was re-issued because the disqualification of AEG would have left the city with just one bidder to choose from.