Lollapalooza finally will pay what it owes

March 15, 2012

In a tacit admission that Lollapalooza’s original long-term, tax-free deal with the city, crafted in part by Mayor Daley’s nephew Mark Vanecko, was inequitable and possibly corrupt, promoters have reached a new agreement with the Chicago Park District under which they finally will pay all of the city, county and state taxes levied on every other for-profit concert, entertainment and sporting event.

The economic benefit over the course of the deal—which now will keep Lollapalooza in Grant Park through 2021—will increase to $4.05 million the monies raised from the event by local government this year, up from $2.7 million collected for parks improvements under the old deal last year.

In addition to the revenues from the previously waived city and county amusement taxes and state liquor taxes, Lollapalooza claims the deal will bring a billion dollars into the local economy over the next 10 years, via income for hotels, restaurants and other businesses, though neither the promoters nor any local governmental body ever has done an economic impact study to verify these alleged anicllary benefts or the negative impact on existing local music businesses. Once again, the Lollapalooza contract is being awarded without any request for proposals being issued and with no consideration of what any competing concert in Grant Park could bring in terms of benefits.

Here is the story as covered in the Tribune, the Sun-Times and Crain’s Chicago Business. Inexplicably—or perhaps not, given the extensive reporting on the old sweetheart deal done by WBEZ—neither this blogger nor anyone at Chicago Public Media received the notification of the new agreement sent to those publications.

Lollapalooza originally dodged the taxes expected of every other event by partnering with the nonprofit Parkways Foundation. “As Lollapalooza has succeeded and grown over the years, we understand that Parkways’ engagement with the Festival is no longer the best way to ensure that Chicago’s people and their parks benefit from this annual event,” Parkways interim director Jay Terry said in a statement.

Terry recently replaced Parkways executive director Brenda Palm, a favorite of the Daley family, who saw her salary jump from $62,000 to more than $109,000 a year during the time her organization partnered with Lollapalooza. Parkways was a favored charity organization of the late Maggie Daley.

Lollapalooza is co-owned by Austin, Tex.-based concert promoters C3 Presents and the Hollywood-based William Morris Endeavor talent agency. The latter is run by Ari Emanuel, brother of the new mayor, which means his administration could have been subject to charges of favoritism if Lollapalooza continued to receive its unprecedented tax waivers. The old tax-free deal was set to run through 2017, but it had become the subject of increasing criticism from public officials struggling with the current budget crises after the inequities in the deal were reported here and in the Sun-Times and attacked in strongly worded editorials in the Tribune.

“This is a good deal for the city and we felt it is the right thing to do,” C3 executive Charlie Jones said of the new deal in the Tribune. “But it will affect ticket prices. There will be an increase. How much? To be determined. But it’s been keeping me up at night.”

Charlie Jones of C3 Presents.In the Sun-Times, Jones added: “I don’t think it was necessarily public pressure [that led to the new deal]. It was time to look at a new agreement.” He repeated his comments about the need for an increase in ticket prices, and echoed them to Crain’s as well: “Obviously there’s going to be additional expenses to produce the show this year that make an increase necessary.”

Last year, Lollapalooza charged $215 for a three-day pass. The two other American music festivals of similar size and scope, Coachella in California and Bonnaroo in Tennessee, both pay all applicable local taxes and, like Lollapalooza, still generate considerable profits after expenses for their owners. A three-day pass to Coachella for 2012 costs $285, while a three-day pass to Bonnaroo costs $259.50 (though the earliest bargain presale price was $209.50).

Does the new Lollapalooza deal do anything to address Lollapalooza’s infamously restrictive radius clauses that prohibit bands playing on its stages from performing elsewhere in Chicago for a total of nine months before and after the big festival? None of the stories made mention, and presumably other media have not yet scrutinized the new deal for if or how it addresses that issue and others. WBEZ has requested prompt delivery of a copy of the contract under the Freedom of Information Act, but Park District spokeswoman Jessica Maxey-Faulkner said it does not exist yet, and that today's action by the Park District Board only gives the superintendent authority to enter into the agreement.

Lollapalooza 2012 takes place from Aug. 3 to 5, and ticket prices and a lineup are expected to be announced on April 9.

EARLIER REPORTS IN THIS BLOG ABOUT LOLLAPALOOZA’S SHENANIGANS

Feb. 4, 2012: Lollapalooza gets set to spin

Feb. 1, 2012: County to Lollapalooza: Pay up!

Jan. 29, 2012: State rep probes Lollapalooza sales tax

Jan. 25, 2012: The county targets Lollapalooza's tax exemption

Sept. 18, 2011: Another pass for Lollapalooza: Restoring Grant Park

Aug. 8, 2011: Demand builds: Probe Lolla sweetheart deal

Aug. 2, 2011: Rahm: City will review Lollapalooza tax question

Aug. 1, 2011: Does Lollapalooza $hort Chicago?

April 7, 2011: Two key differences between the mega-fests, Dave Matthews Caravan vs. Lollapalooza

Feb. 24, 2011: Dear Rahm: How to quell fears about your ties to Ticketmaster/Live Nation and Lollapalooza and fix relations with the Chicago music scene

Feb. 7, 2011: Rahm Emanuel pledges hands off all dealings with Ticketmaster/Live Nation and Lollapalooza

Feb. 4, 2011: Rahm Emanuel: Pal$ with thuggish concert giants Ticketmaster/Live Nation and Lollapalooza

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