Business analyst Mark Lacter joins KPCC once a week for an in-depth look at economic issues in Southern California.
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Oscars; L.A. Convention Center

KPCC's business analyst Mark Lacter talks about why the Academy Awards ceremony could have a new venue in the near future; he also talks about why the city of Los Angeles and concert promoter AEG are making another big push for conventions now.

Steve Julian: On Tuesdays we talk about the latest business stories with Mark Lacter. Mark, there has been talk of the Oscar ceremony leaving the Kodak Theatre... possible?

Mark Lacter: It’s possible Steve, but quite unlikely considering that the folks who operate the Academy of Motion Picture Arts & Sciences insist that they like the Kodak and would like to stay there (and of course this year's Oscar ceremony is less than three weeks away). What's happening is that under a long-running contract with the owner of the Kodak - that's a real estate company called the CIM Group - the Academy has the option to consider another venue after next year's telecast. If the academy did not exercise that option, it would be committed to the Kodak under the same terms for another eight years. And like any prudent business, the Academy decided to consider its options - probably with the idea of using that opt-out clause in the contract as a
negotiating ploy.

Julian: The Nokia Theatre comes to mind.

Lacter: Well, there had been reports that the Academy was already in discussions with Anschutz Entertainment Group about moving to the Nokia Theater downtown. And considering that the Anschutz people have a way of going after anything that's not nailed down, it's easy to see how this story gathered some attention. But the Academy says there's really nothing going on. Actually, the Kodak Theater has an ideal design for the Oscar show and there's a huge backstage to accommodate the program. The Nokia Theater, by contrast, is a more generic type venue.

Julian: So they’ll probably stay at the Kodak….

Lacter: Well, the real story at the Kodak Theater is that it won't be the Kodak Theater much longer. That's because Eastman Kodak just filed for bankruptcy protection, and it wants out of its naming rights contract, which runs $4 million a year. As you might imagine, the main reason any company would want its name on that theater is to be attached with the Oscars. If there weren't any Oscars, they might as well just call it the Steve Julian or Mark Lacter Theater. That, of course, is bound to give the Academy even more leverage. And while all this is going on, they’re working on a naming rights deal for the entire Hollywood and Highland shopping center, which includes the Kodak. This naming rights stuff has become big.

Julian: The city of L.A. - and AEG - are making another big push for conventions now.

Lacter: Yes, it’s it's part of the proposed construction of a downtown football stadium. So under the plan, the West Hall would be torn down and replaced with a hall that would connect to the South Hall. The idea is to have one large contiguous space instead of being broken up, which is the current setup.

Julian: Would remaking the convention center actually result in a lot more conventions coming to L.A.?

Lacter: Not necessarily. Matter of fact, the convention business is in decline; only 86 million people attended conventions in 2010, that's down from 126 million 10 years earlier.
Now, proponents of the new center will point out that it's being paid for by Anschutz Entertainment - that's unlike other cities where taxpayers have been putting up much of the tab. But there will be costs in L.A. - infrastructure expenses, for one thing, and in addition the City Council has given tentative approval to a tax subsidy for a hotel developer who wants to build two Marriott properties that are close to the convention center. The developer gets to keep half of the tax revenue from the two hotels.

Julian: So why is the city doing this?

Lacter: Because officials say there aren't enough hotel rooms to make L.A. competitive in trying to attract more conventions. The question, of course, is whether all of this – the convention center, football stadium, hotels - is really worth it, whether it will ultimately generate the kind of business that will mean many more jobs being created. It's a very big bet for the city.

Julian: Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA