Photo courtesy of CCTB
The Metropolitan Pier and Exposition Authority (MPEA) recently approved the selection of private convention venue management firm SMG to run McCormick Place starting July 1, 2011. The move toward private management continues the implementing of reforms enacted by the Illinois General Assembly last year to streamline operations and lower costs for McCormick Place customers.
The final recommendation that the contract go to SMG was made by Jim Reilly, the state-appointed trustee of the MPEA.
“We’re very pleased that SMG will be overseeing McCormick Place operations,” said Reilly. “The company has a proven track record of running some of the finest convention venues, arenas and stadiums across the country. The action we have taken today is the latest and one of the most significant in a series of historic reforms that have been greeted with overwhelmingly positive support from the convention and tradeshow industry.”
The MPEA believes its ability to turn over operational responsibilities to a private firm will result in operational cost reductions and continued improvements to the customer experience and that it will ultimately enhance the ability of McCormick Place to compete in an increasingly competitive convention and tradeshow industry.
“We are honored by our selection and look forward to operating this world-renowned convention and tradeshow facility,” said Wes Westley, president and CEO of SMG. “Chicago is a world-class city, and we are committed to making sure that every customer who comes to McCormick Place has a world-class experience, and that it continues to be an industry leader for decades to come. SMG has both the experience and success to enhance Chicago’s draw as a world-class convention destination.”
Following a highly competitive bid process, SMG was chosen because of its focus on cost reductions and customer experience enhancements. The company reiterated its large market experience, industry relationships, CVB partnerships and labor relations expertise as hallmarks of its approach to McCormick Place management.
SMG is fully aware of the legal battles facing the MPEA and McCormick Place, but the company is ready to manage the facility regardless of the outcome.
“Our role will be to provide professional management services under whatever circumstances are eventually set by either legislative or judiciary directive,” said Gregg Caren, senior vice president of strategic business development for SMG. “We operate in so many diverse environments that they all provide us the experience to deal with whatever is put before us.”
SMG will receive an annual fee of $450,000 to manage the complex. An additional $450,000 in bonuses may also be collected if all financial and service benchmarks set by the MPEA are met.
SMG beat out Global Spectrum, a public assembly and venue management firm. The recommendation by Reilly may come as a surprise to some, since Tom M. Mobley Jr., Global Spectrum’s senior vice president of convention centers, was previously the general manager at McCormick Place and worked for Reilly.
SMG has served as the management firm for Soldier Field, home of the Chicago Bears, since 1994. It also operates 90 percent of the publicly-owned exhibition space operated by private companies in North America with facilities ranging in size from 30,000 square foot exhibit halls to the one million plus square feet of Reliant Park in Houston.
“Chicago is one of the nation’s most attractive tradeshow markets because of its size, space, location and the recent reforms put in place,” said Caren. “Having the expertise to manage the facility is critical but understanding how to enhance the customer experience through relationships and industry partnerships is where SMG differentiates itself.”
The re-appointment of David Causton as general manager of the facility was also announced by SMG.
The MPEA will be giving Causton an early retirement package now that he is joining SMG.
“David is an industry leader who has successfully led the most recent efforts to enhance the customer experience at McCormick Place,” said Westley. “We are thrilled to have him as part of the SMG team and know that the continuity he will provide will ensure a seamless transition to private management.”
SMG met with current staff members at McCormick Place on Tuesday, April 26, to share its plans for the convention center.
“We reinforced our respect for McCormick Place and its prominence in the industry,” said Caren. “While there are cases where SMG is brought in to ‘turn things around’ or ‘fix it,’ this is not one of those times. Our role is to help deliver on the promise of last year’s legislation, and help take a great facility to even further levels of success.”
Aside from a management firm, McCormick Place may have also found a business partner in SMG.
“SMG enjoys very close relationships with national meeting and convention planners,” said Caren. “We have not made any guarantees of new business to the MPEA, but our relationships absolutely provide another layer of comfort to planners taking a fresh look at Chicago given all the other changes.”
Since 1977, SMG has managed more than 220 municipal and private venues in nine countries.
The MPEA Board also approved a long-term lease with Navy Pier Inc. (NPI), the not-for-profit corporation that will separately govern and manage Navy Pier. The lease is effective July 1, 2011 and expires June 30, 2036. As reported earlier this year, the corporation includes 13 Chicago civic, business and community leaders who will serve as the first board of directors.
Creation of the not-for-profit corporation was prescribed by Reilly in his January 2011 report on future Navy Pier governance to the Illinois General Assembly, as required by the MPEA reform legislation. The driving factor for a separate governing board was Reilly’s recommendation to give Navy Pier its own champions who would focus their attention on advocating only for Navy Pier.
As part of the lease agreement signed today, MPEA and NPI will develop a comprehensive, long-term plan to maintain Navy Pier as a high-profile public attraction and to guide its redevelopment. That framework plan will be developed between now and the commencement of the lease on July 1. Other elements of the lease state:
• MPEA will retain ownership of Navy Pier but give Navy Pier Inc. the authority to make key decisions on operations, maintenance and implementation of the Pier’s revitalization.
• MPEA will provide an initial infusion of capital for deferred maintenance and seed money for Pier redevelopment. That amount has yet to be determined and is contingent on the remaining funds available after the Hyatt Regency McCormick Place planned expansion.
• MPEA must approve major physical changes to Navy Pier. However, the new Pier corporation can move ahead with pre-approved changes outlined in the framework plan that will be appended to the lease agreement later this year.
• Senior Pier management will be retained for at least two years for continuity.
• NPI Board members will not be compensated.
• Renewal lease options include four contiguous 20-year automatic options based on MPEA’s consent.
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