The city will look into creating a bidding process for groups and companies to manage the Tulsa Performing Arts Center, said Mayoral Chief of Staff Terry Simonson.
"Much like the city of Tulsa with the zoo ... we've had to make some hard acknowledgements," Simonson said. "Maybe as we go forward, the Performing Arts Center won't be able to count on the city of Tulsa as much as before because of the poor performance of the economy."
In an effort to combat the economy and trim the city's spending to focus on core services, private companies, organizations and the current PAC administration will have the chance to compete for the management of the PAC. Mayor Dewey Bartlett approached SMG, the company that manages the BOK Center and the Tulsa Convention Center, to ask for a management proposal. This resulted in rumors of privatization being launched as if a foregone conclusion, Simonson said.
Since the PAC was built in 1977, the venue has never generated enough revenue to cover the amount of expenses involved. This serves as a testament to how much Tulsa values the arts, said John Scott, PAC director.
But when news surfaced that the city was exploring options with privatization, PAC staff and some local groups that rent the facility became concerned that Tulsa might lose its strong tie with the arts. Even with an open contest for management, Scott said the current PAC administration would not have a fair fight competing against private companies with people who specialize in this type of bidding process.
As the general manager of SMG in Tulsa, John Bolton believes SMG can save taxpayers money, he said. He credits the private company for decreasing the Tulsa Convention Center net operating loss by 30 percent after SMG began operating the venue three years ago.
SMG will present a proposal to the mayor once it receives more financial information on the PAC. Until the next step is taken, PAC employees and groups that rent the venue wait for possible changes.
Scott is one of the people who have been left wondering how a change in management could affect the 27 PAC employees. Since he became PAC director 21 years ago, Scott said he has kept his main focus on the local arts groups using the facility.
"We have managed the building with a certain philosophy ... and that is that the building is not only here to house but to support its local non-profit user groups," he said. "At no time has anyone come to me and said we need to change our philosophy."
Even without making revenue the center of his management policy, the PAC's average revenue has increased throughout the past 10 years, Scott said.
In fiscal year 2000, the PAC's revenue hit almost $800,000, covering only 32 percent of the facility's total expenses, according to a PAC revenue summary. Last fiscal year, the PAC's revenue, which is deposited into the general fund, was nearly $1.7 million, covering 58 percent of its expenses. Scott credits the PAC's online ticket purchasing system -- used at venues throughout the state -- and other changes for this increase.
The proposed budget for 2011 will include about $2.2 million from the city's general fund, with taxes generating 71 percent of this fund's revenue, and $463,000 from the convention fund, which is based on the hotel-motel tax. This is an 11 percent drop from the PAC's budget in fiscal year 2010.
Bolton, who manages the BOK Center and Tulsa Convention Center, is confident that if SMG ran the PAC, the management company would be able to produce more revenue to cover much of the annual subsidy given to the PAC.
"The key is to try to take advantage of the synergy we have from already managing the BOK Center and the Convention Center," he said. "A lot of the functions that we do from booking to marketing to sales -- we have a lot of those in place."
And it is not just this synergy among the venues run by SMG in Tulsa that has Bolton speaking with confidence. Although Bolton said SMG would continue to work with the organizations that already use the venue, the 51 other theaters SMG manages throughout the country would further help the venue.
SMG would be able to use contacts from other theaters it manages to bring in shows, Bolton said.
However, with the PAC hosting 547 events last year, Scott is wary over what might happen to the 14 groups that use the facility if a change in power occurs.
"You would have to create more space on the calendar to have more events in order to make more money," he said. "That could amount to having to push the arts groups to some of the corners of the calendars where they don't want to be ... in order for a for-profit management company to bring in more events."
There are other opportunities for SMG to be involved with the PAC without a move toward privatization of management, Scott said.
"When they made their bid to manage the convention center and the arena, in their bid book there's a paragraph that says they would offer marketing assistance to the PAC at no additional charge," he said. "They've never made any move in that direction, but it's in there."
The question of privatization was one the mayor had to ask, said Marcello Angelini, Tulsa Ballet artistic director. But only considering the costs of any endeavor could be shortsighted, the director said. He notes a recent study of the economic impact of non-profit arts groups that showed that the average person spends $27.79 per event in addition to ticket purchases.
With approximately 30,000 people attending Tulsa Ballet performances this season, "that means just Tulsa Ballet might have generated upward of $800,000 for the local economy," Angelini said. "If we are given higher costs for presenting our performances at the PAC, we will have to cut on somewhere, and it might force us to present less appealing shows for the community.
Executive Director of the Tulsa Opera Jeep Jeffries understands how much a move to privatization can change the opportunities for groups like his organization.
In fact, Jeffries has gone through this process before while working at two other theaters; although, they both went through the same major change.
At one theater that was privatized in Fort Lauderdale, the city made an agreement with the new management company requesting that the theater make as much money as possible.
"The first thing the management firm did was book a 16-week run of a Broadway musical that basically closed all the local users out of the theater for the first year," Jeffries said.
But Jeffries has also seen a theater managed by a company, SMG in Michigan in this case, that worked to respect local arts organizations. Jeffries said in both cases, the mandate the city gave to the new managers, not the managers themselves, either lifted up the local arts organizations or left them exiting the stage.
"What the deal the city gives to these folks and the instructions they provide them has a pivotal impact on what it means to us," Jeffries said. "It might mean little change, or it might mean titanic change."
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