ORPHEUM THEATER Transition of Management Services PROPOSAL OVERVIEW - PowerPoint PPT Presentation

ORPHEUM THEATER Transition of Management Services

PROPOSAL OVERVIEW • Transition management of Orpheum Theater o from SMG / Spectra o to Washington Pavilion Management, Inc. (WPMI) • Effective July 1, 2019 • Requires amending the existing WPMI management agreement to incorporate the Orpheum Theater • Requires termination and assignment of the Orpheum Theater management responsibilities in the existing SMG and Spectra management agreements

ORPHEUM THEATER HISTORY AND OVERVIEW • Opened 1913, presently owned by City of Sioux Falls • Historically showcased Vaudeville, repertory theater, movies and other entertainment • Currently hosts plays, concerts, dances, banquets, weddings and other events • Historic theater with 686 seats • Anne Zabel Studio Theater seating up to 450 • Classroom space • CityLink co-located in Orpheum complex • Last renovated in 2007

ORPHEUM THEATER HISTORY AND OVERVIEW • Primary User Groups: • Sioux Empire Community Theater (SECT) • Sioux Falls Jazz & Blues Society • Sioux Falls Municipal Band • Total Attendance averages approximately 30,000 people annually • Average of 110 to 144 event days annually

ORPHEUM THEATER HISTORY OF CITY INVESTMENTS • Major Renovations (2007) $1.8MM • Seat Replacement (2009) $275K • HVAC Upgrade (2011) $118K • Rigging / Stage Lighting (2017) $407K • Courtyard Improvements (2018) $12K • Next up: Boiler Replacement

ORPHEUM THEATER TRANSITION OBJECTIVES Preserve the Orpheum Theater as a community asset downtown, maximizing utilization and access to the arts for Sioux Falls residents in the most cost effective way for the City.

ORPHEUM THEATER TRANSITION OBJECTIVES • Aligns management of city-owned performing arts venues downtown • Create efficiencies in terms of events booking, ticket sales, promotion • Performing Arts Program continues to grow at Washington Pavilion • Synergies in booking across the spectrum of three seating capacities • 1881 seats Mary Sommervold Hall • 686 seats Orpheum Theater • 450 seating capacity Anne Zabel Studio Theater • 400 seating capacity Pavilion Stage Seating • 300 seats Belbas Theater

ORPHEUM THEATER TRANSITION OBJECTIVES • Continue to build momentum in development of downtown as an arts district o Washington Pavilion, Orpheum, Levitt, State Theater, Sculpture Walk, Museums • Non Profit Management o Opportunity to raise charitable funding to support the Orpheum o Facilitates collaboration of arts organizations • WPMI now better positioned to take over management of Orpheum • Aligns SMG / Spectra management focus on the Premier Center Campus

ORPHEUM THEATER FINANCIAL PERFORMANCE 2014 2015 2016 2017 2018 Total Revenue $156.6 $165.2 $188.8 $151.1 $154.5 Total Cost of Events $23.4 $47.6 $67.3 $41.6 $36.3 Net Events Revenue $133.2 $117.6 $121.5 $109.5 $118.2 Operating Expenditures $440.6 $527.4 $616.1 $623.1 $632.9 Net Operating Income (Loss) ($307.4) ($409.8) ($494.6) ($513.6) ($514.7)

WPMI MANAGEMENT AGREEMENT AMENDMENT • No Change in Term: Originally effective Jan 1, 2018 through December 31, 2022. Option for five year extension. • Adds Orpheum Theater as facility under management • Orpheum Theater management subject to same terms and conditions as the Washington Pavilion management • Exhibit A: Termination, Assignment and Assumption Agreement o Assumes contracts and obligations for Orpheum Theater as assigned; and simultaneously terminates management of the Orpheum for SMG / Spectra.

WPMI MANAGEMENT AGREEMENT AMENDMENT • Requires submission of separate budgets for each facility • Requires supplemental reporting in audit showing each facility • Moves Audit submission date from July 31 to November 30 o Align to new WPMI fiscal year • Eliminates Article 16 related to compliance with requirements due to bonding (bond compliance language) o Outdated article to when bonds were outstanding

MANAGEMENT STRUCTURE COMPARISON • SMG / SPECTRA • For profit third-party management agents • Receive management compensation (fee and/or portion of sales/revenues) • Responsible for promoting, operating, and managing facilities • All revenue and expenses (combined facilities) run through single operating account in SMG’s name but ultimately owned by City, managed by SMG • Orpheum losses absorbed by other managed entities (i.e. Denny Sanford Premier Center) • Net equity position of combined facilities reported as part of the Entertainment Tax Fund • City provides funding to support the maintenance, preservation, capital improvements, and operation of the facility.

MANAGEMENT STRUCTURE COMPARISON • Washington Pavilion Management, Inc. • Non profit entity • City provides funding to support the maintenance, preservation, capital improvements, and operation of the facility o Subject to City annual appropriation from entertainment tax fund • Washington Pavilion responsible for operations • No management fee or direct compensation

ORPHEUM MANAGEMENT TRANSITION TIMELINE Completed • SMG and Spectra have accepted and signed the Termination and Assignment Agreements • Washington Pavilion Board of Directors approved the Amended Management Agreement and have executed the amended agreement • Washington Pavilion presentation to Orpheum Theater Advisory Board • Transition coordination meetings between WPMI, SMG, and Spectra continuing Next Steps • Informational Presentation to City Council – May 14 • Request approval resolution of Amended WPMI Management Agreement – May 21 • Coordinate final transition of management responsibilities to WPMI effective July 1