Set to take place in the heart of the Texas capital at Zilker Park Friday through Sunday, the Austin City Limits Music Festival is the smaller sister of Lollapalooza — maximum capacity 75,000 a day there versus 90,000 daily here — though the success that promoters C3 Presents have had with their hometown shindig since its launch in 2002 is what inspired them to expand to Chicago’s Grant Park in the first place in 2005, and to sign a deal that keeps them here through 2018.

However, starting with the great “Dillo dirt” scandal of 2009 — it turns out that festival-goers were emerging from Zilker Park literally covered in crap, thanks to compost covering the grounds that partly was made of treated sewage sludge — Austin residents have started to question many aspects of the way C3 does business there, just as Chicago residents are questioning the way it operates here.

An increasing number of Austin promoters, club owners, musicians, and band managers — many have contacted this reporter in recent months, all of whom spoke on the condition that they not be named — now are raising similar concerns about C3’s heavy-handed business dealings and the ACL Fest’s radius clauses hurting that city’s vibrant music scene the same way that Lollapalooza’s clauses decimate club calendars in Chicago for several months every year.

These sources say that C3 threatens to ban acts from its festivals if they perform at non-C3 venues during other times of the year. And two of these Austin insiders compared the company’s tactics to “something out of “ËœThe Godfather.‘”

The ACL Fest radius clauses are similar to Lollapalooza’s, sources say, prohibiting bands that appear at the festival from playing elsewhere within a radius of hundreds of miles from the city for as much as six months before and three months after the mega-concert — unless of course C3 grants its permission.

Though the office of the Illinois Attorney General continued to decline comment last week, sources say its investigation of the Chicago radius clauses, first reported here in June, continues.

The venerable “Austin City Limits” Public Television show that gives the Texas festival its name also has distanced itself from promoters C3 in the last two years.

Much as C3 purchases the rights to the name “Lollapalooza” — which its executives call “one of the most recognized brands in music” — from its owners, Jane’s Addition singer Perry Farrell and the powerful Hollywood talent agency William Morris Endeavor, C3 licenses the name “Austin City Limits” from the show originating at KRU-TV, even though the mainstream rock acts booked at the festival have much more in common with those appearing at Lollapalooza than they do with the country and roots musicians that the TV show has been presenting since 1976.

For the first five years of C3’s agreement with “Austin City Limits,” the promoters were much more involved with the TV show, working with the producers “to freshen the look of the show and with regards to C3 making talent suggestions for future bookings,” according to a spokesperson for the show. Sources say that two of the “three Charlies” who run C3, Charlie Jones and Charles Attal, frequently could be seen in the control room during tapings, where their meddlesome presence was a source of considerable annoyance to the experienced producers of the legendary TV show.

That no longer is the case. “In 2008, KLRU renewed their relationship with C3 solely as a licensing agreement,” the show’s spokesperson said.

Now, starting in March, the TV show will be taped in a new theater with a much larger capacity than its old studio. Located in a glitzy development including a W Hotel and luxury condominiums, the new Moody Theatre will be booked by a veteran of C3’s — and every other independent promoter’s — major competitor, the national concert giant Ticketmaster/Live Nation. And the new theater’s capacity is such that it will directly compete with the major concert venue owned by C3 in Austin, Stubb’s Bar-B-Q.

Finally, the Austin press now is raising questions about how much that city benefits economically from the ACL Fest. According to a report by KAXN.com last week, the Austin Convention and Visitors Bureau claims that ACL brings $80 million a year into the local economy. “But how much of that goes into the city’s budget?” reporter Reagan Hackleman asked. “Roughly $100,000.”

Hackleman wrote of C3’s agreement with the city of Austin that:

[It] allows ACL to close down the great lawn of Zilker Park for three weeks, and the entire park for three days during the actual festival. To close the park down, C3 pays a $20,000 rental fee to the City of Austin. They also pay $1,000 per day for utilities, $30 bucks for a sound permit and $1500 to use Republic Park for shuttle service.

C3 also donates a portion of its ACL ticket sales to the non-profit Austin Parks Foundation, Hackleman wrote. But neither C3 nor the foundation would tell the KXAN.com reporter how much.

A few days after the KXAN story, and apparently in response to it, the Austin Business Journal ran an article touting just how much C3 and the ACL Fest give back to the community. Wrote staffer Sandra Zaragoza:

C3 Presents, the production company behind ACL and Lollapalooza music festivals, makes a point of giving back to the communities in which it host events. In Austin, C3’s giving spans health care, education, food banks, environmental, literacy and music/arts education charities. “It’s a part of everything we do, whether its volunteering, mentoring or going to speak to classes,” said Lisa Hickey, C3’s director of marketing. “It’s a big part of the company culture. The partners at C3 really want us to get involved in the community.”

Zaragoza proceeded to describe some of the specific givebacks: $50,000 in tickets to charities and community outreach programs annually (the reporter claimed that Lollapalooza also donates $45,000 in tickets); an $875,000 donation last year to the Austin Parks Foundation via a deal similar to Lollapalooza’s that bases the payment to the nonprofit parks group on a percentage of tickets sold, and recent donations of $20,000 each to St. Jude’s Hospital, the Health Alliance for Austin Musicians, and the SIMS Foundation, which provides mental health services to musicians.

Although Lollapalooza is by far its largest annual project, C3 maintains a much lower profile in Chicago than it does at home in Austin. To date, the company still doesn’t even have a listing for an office in the Windy City, and it does not play as big a role in musicians’ charities here as it does in Austin.

Nevertheless, the perception in C3’s hometown persists that Chicago benefits more from Lollapalooza than Austin benefits from the ACL Fest. Wrote KAXN’s Hackleman:

When compared to Lollapalooza, another three-day festival in Chicago produced by C3, the numbers look a little better for Chicago’s parks department. Although Chicago does not charge C3 a rental fee, C3 did pay $1,050,000 to The Parkways Foundation (Chicago’s non-profit park foundation).

However, as reported yesterday, serious questions loom about whether Chicago is collecting all of the money that it should be getting from Lollapalooza — especially at a time of massive budget woes, with city services being slashed and lay-offs looming or already underway.

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Earlier reports in this blog about Lollapalooza:

Oct. 4: Is Chicago earning all that it should from Lollapalooza?

July 13: Lollapalooza, liquor sales, and the links to the mayor’s nephew

June 29: What’s behind the Attorney General’s investigation of Lollapalooza?

June 24: Illinois Attorney General investigating Lollapalooza for anti-trust