Performing Arts Center Management Co. Will Stay On—With Some Caveats

The Burnsville City Council opted for incumbent management firm, VenuWorks, to helm the city's $21 million performing arts center, but some had a stern message for the company: Beat the bottom line, or else. 

"Gone are the days when we'll accept a $200,000 or $250,000 operating loss. I just don't believe anyone has the stomach for that," said Council Member Dan Kealey. "No one really believes that's acceptable."

The Burnsville Performing Arts Center has run up an annual deficit ever since it opened in 2009. VenuWorks has managed the center from its opening day forward.

The city began exploring new management options in late summer of 2012, with one year left on VenuWork's contract. Over fall and early winter, the center attracted two suitors in addition to VenuWorks, said BPAC Advisory Commission Chair Sal Mondelli. Only one of them, LHR Hospitality Management, submitted a full proposal before the deadline on Jan. 10, 2013.  

VenuWorks was the clear winner for both a special panel selected for the exploratory effort and the BPAC's Advisory Commission. Both bodies unanimously voted to recommend VenuWorks to the council.

"VenuWorks has a track record here with us. They have strong financials and industry backing," Mondelli said, when explaining the reasoning behind their recommendations.

LHR is primarily a hotel management company, he said, with limited experience in entertainment, though company had brought shows into its hotels.

"We had two concerns: They did not have in their bid the name and resume of a potential executive director, and their strategy on booking acts is to go directly to the talent," Mondelli said. "That may work in a hotel or country club but doesn't in a 1,000 seat theater. We asked them about it and they had no responses there."

Mondelli conceded that VenuWorks' first years had been "a little bit rocky," but said that the company had shown continuous improvement.  

"As of Wednesday, the (projected deficit) is $239,000 for this calendar year and that's with a lot of runway. We believe we will significantly beat the forecast and perform better than we did last year," Mondelli said.

Nevertheless, Mondelli and others on the advisory commission advocated for stricter terms in the new contract. At present, the city pays the company a monthly flat fee. The commission recommended that the city offer VenuWorks a contract with built-in performance incentives: Specifically, a lower percentage per month, with add-ons based for milestones like improving revenues, selling naming rights to the BPAC and clocking fewer dark days in the theater.

Furthermore, the city council insisted on having more discretion over the BPAC's top leadership, with a proviso to nullify the contract if VenuWorks chose an executive director they found objectionable. The proviso reflected satisfaction with current Executive Director Brian Luther, however, rather than the reverse.

"Before (Luther) came on we had an overwhelming amount of complaints. [Luther] has done a wonderful job and I'm concerned that its performance is highly tied to his presence here," said Council Member Mary Sherry.

"We never can go back there," Kealey added in response to Sherry's comments. "We took heat galore in many different forms and flavors for a long time for that." 

All told, though, the council expressed confidence that better days were ahead for the BPAC, which could perhaps become revenue neutral.

"I think there's a belief that it can be (revenue neutral). It may never make money but we shouldn't accept less than a zero," Kealey said. "We're inching our way there...but not traveling that road as quickly as we'd like."