Miami Herald Article: Cirque deal has strings 10/16/2006

GLEASON THEATER

Cirque deal has strings

Cirque du Soleil wants the Gleason Theater, but it also wants escape clauses in case tickets don't sell or it costs too much to renovate.

BY DOUGLAS HANKS

dhanks@MiamiHerald.com

• On the web | Read the Cirque du Soleil proposal
• Video | Gleason community meeting tonight

Cirque du Soleil could abandon its plan to revamp Miami Beach's Jackie Gleason Theater even before construction begins if the entertainment company faces unexpected building costs or trouble securing lenders, according to newly released documents.

The exit clause is one of several protections Cirque wants before bringing its popular human circus to South Beach, a market with far fewer tourists and hotel rooms than the places where Cirque currently operates theaters.

City Manager Jorge Gonzalez's staff released more than 200 pages of documents over the weekend from Cirque and its two rivals for the Gleason lease: national concert promoters AEG Live and Live Nation. The documents offer the first look at proposals submitted last month and kept confidential by the city until days before commissioners are expected to vote on them.

The first public hearing on the Gleason lease is set for 5 p.m. today at the theater. City commissioners scheduled a special meeting Wednesday to select a winner.

Among the highlights from the new documents:

• Cirque would design a South Beach show around its interpretation of Brazil's carnival tradition. Some parts apparently will be racy: Cirque wants a waiver from city liquor laws to show partial nudity during afternoon shows.

• AEG Live promises a range of acts in the 2,700-seat Gleason, from reggaeton rapper Daddy Yankee to family Christmas concerts.

The nation's second-largest concert promoter also touts its ability to bring high-profile television broadcasts to the Gleason, noting an affiliate produced the MTV Movie Awards and VH-1's Diva concert series. And AEG said it would bring Broadway plays back to the Gleason through its theatrical division -- reviving a tradition that ended when Live Nation moved its Broadway Series to Miami's new performance hall.

• Three mock handbills for the Gleason from Live Nation offer a peek at how the company would reposition the theater. The hypothetical headliners come from the alternative side of popular music: folk duo Indigo Girls, punk rockers New Found Glory and roots-rocker Jackie Greene.

AEG's proposal also includes an endorsement letter from singer Lionel Richie, which comes on the heels of Live Nation signing Marc Anthony and Jennifer Lopez as partners in its Gleason bid.

AEG would spend $2 million renovating the Gleason and rent it for $250,000 a year, plus bonuses for higher ticket sales.

Live Nation, the country's largest concert promoter, offered $3.5 million of renovations and $1 million annual rent and limited incentives. Unlike its competition, Live Nation would also pay the Gleason's maintenance costs.

Cirque wants $55 million from the city for a $100 million redo of the Gleason, including adding a restaurant and nightclub. It would give Miami Beach 3.75 percent of its ticket sales and 6 percent of all other revenue in return. Cirque would keep all revenues from naming rights to the building, but could not drop Gleason from the title without city permission.

City staff members predict that will average $6.7 million in rent a year. The forecast hinges on attendance hitting 80 percent for the 415 shows Cirque plans in a new 1,700-seat theater.

Cirque says its six permanent shows in Las Vegas and Orlando all sell at least 80 percent of their tickets, though those markets attract about double the tourists of the Miami and Fort Lauderdale areas.

The new documents show Cirque wants several safeguards in case the Gleason venture disappoints:

• Miami Beach would see its ticket revenue cut in half for any month when attendance falls below 65 percent.

• Though Cirque would have a 50-year hold on the theater, after 10 years it could close its show. If Miami Beach hasn't recouped its $55 million investment, Cirque would reimburse the difference up to $5 million.

• Cirque could close the show after three years if the theater loses money for 12 straight months. Cirque would maintain its lease on the theater and be required to book acts there.

Live Nation did not include an exit clause for its 15-year deal, but AEG Live could walk away from the Gleason after three years if annual losses exceeded $500,000.

The preconstruction provisions would give Cirque an early exit. The deal puts Cirque in charge of construction but also allows the company to back out if it finds that building costs, taxes or insurance have rendered the project ``economically unfeasible.''

Cirque could also drop the project if it can't secure financing.

Gonzalez said the exit clause is fairly typical for city development projects and that the deal overall matches agreements Cirque has for its other theaters.

''I think they're very confident'' about coming to Miami Beach, Gonzalez said. ``What any good business does, though, is mitigate your risk.''

Merrett Steirheim, the former Miami-Dade county manager, said it's unusual for governments to grant such a broad exit clause.

''They're the ones supervising the construction and they can walk away if they feel it's too high? You've got to put some safeguards in that,'' he said.