Palace Sports could buy into competition

It's the "why' behind the curious silence of the Times Forum's owner on a new venue.

By JEFF HARRINGTON, Times Staff Writer
© St. Petersburg Times
published March 1, 2003

TAMPA -- The prospect of a new amphitheater arising on the Florida State Fairgrounds has drawn the ire of Tampa Mayor Dick Greco and other officials who fear the project will steal concerts from the St. Pete Times Forum in downtown Tampa.

Noticeably silent in the debate has been Palace Sports & Entertainment, which operates the Times Forum. For good reason: The Detroit-based operator has hedged its bets to protect its interests.

If the 20,000-seat amphitheater is built as planned, Palace Sports can exercise an option to become a 50 percent partner with media giant Clear Channel, splitting construction costs for the $18-million project and sharing in the proceeds of big acts coming to town.

Palace Sports quietly secured the option in July 2001 after first talking with Clear Channel about it in 2000, according to Ron Campbell, president of both the Times Forum and the Lightning hockey team, which is owned by Palace Sports.

Greco on Friday said he had not known about the 50 percent option and called it "kind of strange" that Palace Sports might enter an arrangement to compete against itself. But he said he wasn't bothered by the business deal.

Campbell calls the deal an "insurance policy" to offset another blow to revenue at the Times Forum if Clear Channel proceeds as planned. Palace Sports estimates it will lose $10-million to $15-million on Times Forum operations this year. It says that will bring its losses to between $48-million and $53-million since buying the Lightning franchise and taking over the lease at the arena in 1999.

The arena was long known as the Ice Palace. Last year, the St. Petersburg Times signed a 12-year sponsorship deal with Palace Sports. The newspaper is paying $2.1-million in the first year and $30-million over the life of the contract for marketing opportunities that include putting the Times' name on the building.

Clear Channel intends to break ground on the amphitheater at the fairgrounds this month. The Florida State Fair Authority wants to have it up and running by February, the 100th anniversary of the fair. Clear Channel representatives could not be reached for comment on Friday.

With an unrivaled network of radio stations and billboards, Clear Channel is the biggest promoter in the concert industry. The fear among critics of the amphitheater, such as Greco, is that Clear Channel will steer top acts to its own facility outside of Tampa, where it can make the most money. In the process, Tampa would lose tourists drawn by events at the Times Forum and government revenue from ticket surcharges.

Palace Sports has had a relationship with Clear Channel for 15 years and has stayed out of the fray about the amphitheater's impact on the Times Forum partly "out of respect," Campbell said. "We understand what they're trying to accomplish."

The ties that bind the two entertainment companies are strong. Clear Channel books more than 75 percent of the acts playing at the Times Forum and has an equally deep relationship at Palace Sports' other venues in Michigan, its home state.

Campbell said Palace disclosed its option with Clear Channel last April, when it told state fair authorities that's why it would not submit its own bid on the amphitheater project. When county officials asked questions three months ago, Campbell said the amphitheater option was discussed with them as well.

"We've been an open book at all times," he said.

Yet Hillsborough County Commissioner Jim Norman, a leading critic questioning the amphitheater's impact on the Times Forum, said he learned about the option only after digging into the fairground's plans a few months ago.

Norman said Palace Sports should have disclosed the deal with Clear Channel when it was reached. But he also said he understood the underlying rationale: Clear Channel, he said, holds all the cards and Palace Sports is pursuing "a survival strategy."

The commissioner said he believes Palace Sports would have objected strongly to the amphitheater plans "if Clear Channel didn't have the purse strings for all the events. They're sort of like, "Okay, give me my crumbs and I'll shut up.' "

Campbell acknowledged his company is torn between what makes business sense and what's in the best interest of the Times Forum.

"You always try to make the best business decision based on the facts in front of you. That's how we've always proceeded," Campbell said. "Unfortunately, due to the staggering losses we've had here it makes it much more difficult to continually reinvest."

Hillsborough County, in an estimate it deems "very preliminary," said the Times Forum could lose 23 shows a year to the amphitheater, representing an attendance of almost 240,000, or 65 percent of its concert attendance. (The county disputes an earlier estimate by Tampa's city government that pegged the arena loss at up to 350,000 seats, representing nearly all of its concert events.)

Campbell said his company's owner, Detroit billionaire Bill Davidson, has not decided whether to exercise the amphitheater option. Palace Sports has a two-month window to act after receiving notice from Clear Channel.

Asked why his company doesn't sell the Lightning, pull out of the Times Forum and go with the lower-cost amphitheater, Campbell quipped, "That would make too much sense."

But he quickly added, "We do ultimately have a belief that (the Times Forum) and the National Hockey League franchise can be a viable one or we wouldn't be in the business."

-- Jeff Harrington can be reached at harrington@sptimes.com or (813) 226-3407.

© 2006 • All Rights Reserved • St. Petersburg Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111

Contact the Times | Privacy Policy
Standard of Accuracy | Terms, Conditions & Copyright