The phrase “if you can’t beat ‘em, join ‘em” fits the origin story of the recently launched 313 Presents to perfection. The joint venture that brings together Detroit’s Olympia Entertainment (OEI) and Palace Sports & Entertainment (PS&E) brings to an end years of head-to-head competition between the two biggest live entertainment giants in town.
The combined company will manage concerts and events at six venues throughout the metro area: the brand new Little Caesars Arena, DTE Energy Music Theatre (consistently one of the top-grossing amphitheaters in the nation), Fox Theatre, Meadow Brook Amphitheatre, Comerica Park and Michigan Lottery Amphitheatre at Freedom Hill.
“We were in protracted negotiations with the Pistons and PS&E for years — as we were building Little Caesars Arena — about them coming down to join us as a partner, as a tenant… and almost fundamental to those discussions was the thought of, ‘what would we be able to accomplish if we put all our assets together?’” said Tom Wilson, president and CEO of Olympia Entertainment and 313’s acting president.
A year after plans for the merger were first announced by Ilitch Holdings Inc., President/CEO Christopher Ilitch (the Detroit Red Wings of the National Hockey League and Detroit Tigers of Major League Baseball, Little Caesars, Blue Line Foodservice Distribution, MotorCity Casino Hotel) and PS&E owner Tom Gores (Detroit Pistons of the National Basketball Association, DTE Energy Music Theatre, Meadow Brook Amphitheater, Palace of Auburn Hills), 313 has begun merging the two company’s scheduling, production, marketing and media relations for the six venues. Once the Pistons decided to close the aging, suburban Palace at Auburn Hills, the combined company can now offer what Wilson deemed a “soup-to-nuts” variety of options: from an amphitheater, to theaters, a stadium, an arena, the 400-cap City Theatre and the 1,500-cap MotorCity Casino’s Sound Board inside the MotorCity Casino.
“Really anything you’d want to play in the city from 400 seats to 40,000 seats, indoor, outdoors, summer, winter, anything an artist would want is all here. There was a certain undeniable logic that resulted in the coming together of these two entities,” said Wilson, who declined to provide financial details of the deal between the two privately held companies.
PS&E was long the dominant force in town thanks to the now-shuttered suburban Palace of Auburn Hills arena, as well as DTE and Meadow Brook, while Olympia had downtown locked in with the Olympia, the shuttered Joe Louis Arena, Fox and Comerica Park events. Wilson said there is a “a bit” of redundancy between the companies, but given the major undertaking it will be to put on the 400-500 events a year they plan to take on — above and beyond National Basketball Association and National Hockey League games — he doesn’t expect there to be any lay-offs.
“The teams are separate, but we’re joined at the hip on everything, so we’re going to put our entertainment people together as well as marketing, sales, booking, accounting and production, and I think it will be additive,” he said. “We’ll be doing more shows, not less and there might be days when we have 2-3 events a night or that day at a theater or the arena.” The demands on the combined organization’s time will increase, but Wilson is confident that when they sit with agents or managers and ask to go over their entire roster and figure out routing, they will have an answer any time of year at any size venue.
“The savings in headcount, synergies and efficiencies of getting more out of each employee is an important [addition to the bottom line],” Wilson said of the possibility of both cost savings and a higher gross potential than the separate companies realized. “Whether we’re purchasing ad space or billboard space or radio and TV time, when you bring the two entities together you’re buying more of this and that and can do it more efficiently if it’s a year-round buy and not just for the summer or fall.” Prior to their merger Wilson said OEI did around 300 shows a year, while PS&E had closer to 200 bookings a year.
The super-producer — whose name is an homage to the city’s area code — will be responsible for all those concerts, National Collegiate Athletic Association games, family shows and other live events, as well as Pistons and Red Wings games at the new Little Caesars Arena, with tickets, venue information and scheduled updates for all six available at a single site, 313presents.com.
The combined site, optimized for mobile viewing, allows users to not only purchase tickets for all the buildings, but also sign up to receive access to the latest information on presales, members-only experiences, contests and special offers as well as review seating maps and dining options and download concerts and events to users’ desktops and mobile calendars. 313 will continue to honor their longtime deal with Ticketmaster, and Wilson said that although their focus at the moment is not on acquiring other buildings, there is a possibility that the portfolio could grow in the future.
A search is currently on to hire an executive to run the company, whose offices will open in Little Caesars Arena in November. There are currently 40 staffers on the payroll at 313, made up of employees from Olympia and PS&E, and Wilson said it’s possible that there may be some new hires. “There are lots of operations people coming down from the Palace to be part of Olympia Entertainment, which is doing most of the execution of events at the amphitheater and theaters, and the plan is to grow acts locally and take them from the City Theatre to Sound Board, Meadow Brook and beyond,” said Wilson.
Charlie Goldstone, president of Madison, Wis.-based Frank Productions said his company does occasional business in Detroit and he’s looking forward to seeing how 313 changes the game. “More and more you’re seeing individual markets getting consolidated, which is the way things used to be and I think there’s a benefit to that,” he said. “Having local promoters with a strong presence in the market can not only get the word out in a big way, but manage traffic and inventory and make sure shows are not stepping on each other.”
Goldstone said the dynamic is a bit different in Detroit because Olympia always bought their own shows while serving as the primary venue operator. If 313 starts preventing the promoters from using their facilities it could create a problem, but given their history of partnering with Live Nation, AEG and Frank Productions, among others, Goldstone sees plenty of benefit to outside promoters.
Like Goldstone, Jerry Mickelson, co-owner of Chicago’s Jam Productions, said he’s not too concerned about the ramifications of the merger and thinks it actually makes very good business sense. “It’s probably a really good idea because the Palace and Joe Louis [Arena] were beating each other up on dates and performers, and they probably had to lower their rents to get shows in,” he said. “Instead of competing they joined forces, which makes sense, especially if they still rent to outside promoters.”
Wilson declined to predict what the combined company’s grosses could be, but said given the increase in the amount of shows and the ability to offer acts multiple bookings at different-sized venues in the same calendar year, he expects exponential growth that one could speculate would be in the “eight figures” region. “They can play outdoors in July, then in a theater downtown 35 miles from the amphitheater and then another play downtown for the people who didn’t get to see them in the 4,000-seat theater,” he said of the infinite routing possibilities.
While continuing to work with Live Nation, AEG and other promoters, Wilson said 313 can’t solely count on their outside partners to fill every available date, but they will also have enough flexibility in those contracts to “put our promoter hat on and find shows as well.”
SEEK RECIPROCITY; AVOID BANKRUPTCY
REPORTING FROM NASHVILLE — The importance of negotiating all contract details up front, with a complete understanding among all parties, was a top take-away from the Terms and Conditions session at this year's International Entertainment Buyers Association (IEBA) conference held here Oct. 15-17.
According to IEBA membership information, 72 percent of IEBA members review and red line their own contracts, and less than three percent have said their contracts are reviewed by outside attorneys.
Panelists included Jason Bernstein, AEG Presents; Brent Daughrity, Anderson Benson Insurance; Tim Epstein, Duggan Bertsch LLC; and Berkeley Reinhold, attorney at law. It was moderated by IEBA Executive Director Pam Matthews.
Because so many buyers don't use lawyers for their contracts, the session allowed attendees to seek the counsel of experts with the goal of better understanding the implications, risks and costs associated with the pages and pages of repetitive and conflicting terms that follow an offer’s acceptance.
Of particular interest is the allocation of risk and the relationship between insurance and indemnification.
Knowing the difference between indemnity and reciprocal indemnity clauses in a contract is paramount. The indemnity clause is simply a promise by the other party to cover losses. If there is a graph in the contract the signee doesn't understand in the area of indemnity, then try to make it reciprocal. That would mean both parties take on certain responsibilities.
Bernstein said the other party may not want it to be reciprocal, but it is another way to negotiate terms.
The panel also suggested knowing from what state the contract is coming. State laws vary on indemnification. In addition, state laws differ from federal laws.
The panel spoke on bankruptcy issues such as what happens if a promoter does declare bankruptcy before the event. Reinhold told attendees that bankruptcy supersedes anything else.
"If you have given your promoter a deposit, you may not be able to get it back," Reinhold said. "If you owe the promoter a deposit, the promoter may be able to sue to get it even though the show won't go on. There is what is called a claw back in the bankruptcy law, whereby the promoter, in this case, has 90 days in which to go after the deposit.
"Make sure your promoter is solvent," she said. — Pam Sherborne