SIOUX CITY | Sioux City could boost revenue and cut expenses at the Tyson Events Center and Orpheum Theatre by millions over the next three to five years, according to ideas put forth in a pair of competing proposals for the management of the two venues.
After putting out a request for proposals for private management of the city-run Tyson Events Center and Orpheum Theatre, Sioux City officials are currently weighing the pros and cons of hiring the venue management firm Spectra or maintaining public management by city staff.
Representatives from Spectra and from the city's Events Facilities Department presented on Wednesday for 90 minutes apiece in front of members of the Sioux City Council and the Orpheum Theatre and Events Facilities boards with their pitches. The City Council now awaits recommendations from the two boards to make a final decision.
In the meantime, proposals submitted to the city by the two competing groups and obtained by the Journal Thursday reveal a closer look at what each has proposed.
Sioux City's Events Facilities Department projects it could boost revenue by $777,250 in its first year and, by year five, bring that total to $4,656,050, under a series of operational tweaks laid out in its proposal.
The boost would come primarily through ramping up its sales focus, adding new capital projects at the Tyson and partnering with the Hard Rock Hotel & Casino to bring in six shows to the Tyson per year.
An increase in revenue would, as a result, reduce the amount of property tax and sales tax dollars spent each year to fund the venues. The Events Facilities Department's total subsidy from the city is currently around $1.7 million per year. In turn, the department estimates events held last fiscal year generated around $57 million in economic impact within the community.
More than $1 million in additional revenue over five years would come from the addition of a partnership sales position, whose full-time job would be to generate venue and event sponsorship sales, write grants, obtain sponsorship for building renovations and work with local businesses.
"Every year, money is left on the table for venue and event sponsorships," the proposal states. "Walk in to most other arenas, and it’s clear additional sponsorship opportunities exist."
Other personnel maneuvers would include new job descriptions for several positions, removal of a part-time clerical position and elimination of a maintenance repair worker at the Convention Center. In all, the reshuffling is expected to save $1,472,150 over the five-year period.
A deal with the Hard Rock, first outlined last month during a joint meeting between EFAB and the City Council, would bring in six additional shows each year to the Tyson Events Center, with the Hard Rock acting as the promoter. It is estimated to generate $205,000 per year, or $1.025 million in five years.
The city would also prioritize capital improvements that would generate more revenue, such as the addition of four suites, four club seating boxes, a permanent bar in the northwest corner of the north concourse, a permanent outdoor fire feature with season-specific food and drink menu and pre- and post-event indoor destination club space on the southwest plaza upper level.
Revenue generated by those additions would bring in an additional $2.26 million, the proposal states, and create ongoing revenue streams. The potential costs of those capital projects are not clear, however.
A list of capital improvements currently budgeted for by the city in upcoming years has a $2.4 million price tag, the proposal states. Those and more will need to be done whether the venue is privately or publicly managed, it says.
The proposal also states that, if the city moves to private management, employees would still need to remain on city payroll as Convention Visitors Bureau employees, employees who will oversee capital improvements and employees who will oversee maintenance and administration of the private management contracts.
Spectra, a firm that manages 151 venues in North America and South Asia, including 54 arenas and 17 performing arts centers or theaters, proposes to add 26 events and increase revenue by $573,000 in its first year if granted a management contract for the Sioux City venues.
The company also proposes to lower the city's operating subsidy by $235,000 in the first year.
Over three years, Spectra plans to add more than $600,000 in revenue and lower the city's operating subsidy by $530,000 -- totaling more than $1.1 million in cumulative savings.
The company's compensation would include a base $110,000 management fee, plus 25 percent of the gains over the previous three years' average net operating loss. A separate "qualitative incentive fee" would provide up to $25,000, based on the company's meeting performance benchmarks.
Spectra would receive a 5 percent commission on all existing sponsorship, ad and premium seating sales, as well as 12.5 percent on all new sales and renewals. If new sales and renewals exceed $250,000, Spectra would receive 17.5 percent commission on all sales above that amount.
Spectra would, in turn, contribute $200,000 to the city for capital improvements in year one, with an additional $50,000 in year six if the city renews the contract.
If Sioux City also contracts with Spectra for food services, Spectra would additionally receive 3 percent of gross food and beverage sales. Its contribution to the city for capital improvements would rise to $375,000 in the first year, with $125,000 more in year six if the city re-ups the contract.
All financial projections factor in Spectra's fees and commissions.
Spectra additionally outlines two potential candidates for general manager, both with ties to Iowa. The first, Brian Hixenbaugh, is an Iowa native and Iowa State University grad with 10 years of experience with Spectra, most recently as the general manager of CFE arena at the University of Central Florida.
The second candidate, Andrew Luther, is a University of Iowa graduate who has seven years of experience with Spectra and is currently the director of events at Ford Idaho Center in Nampa, Idaho.
Spectra's proposal stresses the advantages of its routing, bringing concerts in multiple dates to its venues. Its proposal mentioned its influence to bring Justin Moore and Lee Brice's recent "American Made" tour through four venues in Independence, Missouri; Enid, Oklahoma; St. Louis, Missouri; and Loveland, Colorado.
The organization's proposal said that it believes some shows thought by local stakeholders to be out of Sioux City's league might not be as far off.
"Most have the opinion that certain shows are considered to be out of reach," the proposal states. "However, as supported throughout this response, we strongly disagree with this point of view."
Could Sioux City, for example, have snared a concert like the Foo Fighters, who play Nov. 11 at the Denny Sanford Premiere Center, away from Sioux Falls? Maybe, according to Spectra officials.
Spectra representatives told members of the City Council and the Orpheum and Events Facilities board they think they would have stood a better chance.
Spectra has already been in discussion with promoters including LiveNation, the WWE, VStar Entertainment Group and Cirque du Soleil, who it says are interested in bringing events back to Sioux City.
The 58 new events added over three years would include 32 at the Orpheum and 26 at the Tyson, according to the proposal. The Tyson would hold three more concerts, two more family shows, nine more youth sporting events and 12 miscellaneous events. The Orpheum would hold three more comedy events, three more Broadway shows, three more family events, seven more concerts and 16 more miscellaneous events.
The City Council has requested recommendations from the city's Events Facilities Advisory Board and Orpheum Theatre Board to aid in its decision making.
The Events Facilities board will hold a public meeting noon Friday at the Sioux City Convention Center, 801 Fourth St. The management discussion is listed as the fourth item on the agenda.
The council's final vote will potentially only involve four of the council members, as Mayor Bob Scott has said he will likely abstain from the discussions and vote due to his private sector position as managing partner of the Sioux City Bandits, an indoor football team that plays its home games at the Tyson.