A few shows and a lot of land: Should Raleigh sell Walnut Creek Amphitheater? | Music Feature | Indy Week
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A few shows and a lot of land: Should Raleigh sell Walnut Creek Amphitheater? 

When Raleigh opened the state's largest amphitheater in July of 1991, the venue's schedule suggested a sprint against the end of summer.

Local boys The Connells christened the space on July 4 of that year, drawing a crowd of almost 10,000. In the next two months, the 20,500-capacity venue hosted 30 more shows—Jimmy Buffett and Whitney Houston, Lollapalooza and Tom Petty, The Four Tops and Bonnie Raitt. During the next three years, attendance skyrocketed, hitting nearly 600,000 in 1994. The City of Raleigh owned the area's hottest entertainment property.

"In 1985, Raleigh's major music market took place in the Greensboro Coliseum," says Roger Krupa, the director of the Raleigh Convention Center, the property manager for Walnut Creek. "Thirty years ago, we were trying to build an arena downtown, but it didn't work. We said, 'If we can find 100 acres of lands, we can build ourselves an amphitheater.' They were all the rage."

Nearly a quarter-century later, however, these monstrous sheds are no longer all the rage. Walnut Creek, like many such large venues in other cities, sits just five miles southeast of downtown, a 10-minute drive in light traffic that turns into an hour-long trek if Kenny Chesney is set to take the stage. It remains a testament to urban sprawl. Some of the massive and antiquated venues, like the Starwood Amphitheater in Nashville, have closed, while their audience has discovered smaller amphitheaters and large theaters.

Through a cut of ticket and sponsorship sales, Walnut Creek Amphitheater has mostly paid for itself since it opened in the summer of 1991. But as the music industry has downsized and as the Triangle has built newer, more efficient rooms, the space remains a vestige of a different industry, era and city. Two decades after that record-setting 1994 season, Walnut Creek's once-central role in the area's nightlife has faded, so much that the world's largest concert promoter, Live Nation, struggles to book 20 shows there each summer. (Despite repeated interview requests, Live Nation officials only responded that they "don't discuss proprietary business strategy.")

Still, the city continues to sink the rental fees it collects into maintenance for Walnut Creek. And for the past two years, the venue has been without a title sponsor, a missed opportunity that's cost Raleigh more than $600,000.

Raleigh is no longer getting out what it's put into Walnut Creek, an enormous public space that serves a miniscule public function. It could be time to get rid of it.

Next year, the city might have a chance to do just that: In June 2015, Raleigh will make the final payment on the property's $20 million-plus loan. That move will potentially allow the city to spend the rent it takes from the venue on amenities beside the venue itself. Raleigh has the opportunity to re-envision a public property that currently caters only to a small chunk of the population for a sliver of the calendar year.

"I anticipate that we will renegotiate, but it would take both parties renegotiating," says Perry James, Raleigh's chief financial officer. "It's a major facility that has served the city well, paid for itself and served the Triangle. But as we look forward, we ought to have the capacity to make it a better business deal for us and the operator."

Live Nation's lease on Walnut Creek doesn't expire until 2031, but even while shows continue, at least part of the 310-acre property could be developed into a city park. Or the amphitheater could be sold to Live Nation or another company that actually stands to profit from Walnut Creek.

Or, while Walnut Creek fades into senescence, Raleigh could continue funneling money into it, even though its time has passed.

Over the last 24 years, the city has paid what amounts to its mortgage for the construction of Walnut Creek Amphitheater. To do that, they've had to do what every landlord does: Collect rent.

The agreement the city struck in 1990 with Sony Music/Pace, a precursor to Live Nation, is a dense stack of stipulations and conditions concerning issues both major and minute. But Raleigh's plan to pay for the project has remained simple: The city gets a 7 percent cut of everything amphitheater attendees purchase—tickets and T-shirts, food and beer, VIP packages and ATM fees.

After a decade under that agreement, the city protested that it was being shortchanged on sponsorship cash. Any company paying for the right to add its name to their property, Raleigh leaders contested, owed the city half of that sponsorship number. Since then, the venue's title sponsors, including Alltel and Time Warner, have paid the city several hundred thousand dollars each year. Combined rental and sponsorship payments to Raleigh from Live Nation and its predecessors have totaled more than $1 million per fiscal year; in 2000, those payouts were so high, in fact, that, the city even agreed to cap those funds through 2010.

But that's not city profit. The money that comes in soon goes out. Annually, since 1992, the city has spent from $779,000 to $1.1 million of that rent to pay the debt accrued by building Walnut Creek and an adjacent, city-owned softball complex.

Every dollar that Raleigh takes through the rent deal that's above $1 million goes into a holding pool, a "capital improvements fund" that pays for facility upgrades to the facility. What little is left between those two payments—to the debt and to the fixes—is the city's net profit.

Krupa says that Walnut Creek revenue has gone into the city's general fund, but James, the city's CFO, disagrees. Considering the city resources—such as staff time—that have gone into Walnut Creek, James says, the profit is nil. Brian Leden, a manager in the city's accounting department, agrees that city records don't accurately reflect what Raleigh funnels into the amphitheater.

"There's a lot of city time spent there," he says, "and we're not accurately capturing that expense, or at least all of it."

Like a landlord, says Krupa, the city is "obligated to maintain a viable facility." The escalating expenses for doing so suggest the upkeep of the old house that Walnut Creek has become. From 2004 through 2009, the city spent just shy of $1.2 million on amphitheater maintenance. Since 2010, Raleigh spent another $1.9 million.

Krupa contends those fixes were overdue, but he's unsure such maintenance costs will decrease. They might increase.

"We've got the place up to snuff, I think, but you never know," says Krupa. "Every time we have a storm, there's wash-outs in the driveway, and we think maybe we should re-channel the water. You can get into a lot of projects that get expensive fast. We just don't know."

As expenses have increased, Walnut Creek's cultural relevance and its revenue have decreased. The number of shows at Walnut Creek has fallen from 45 in 1993 to as few as 16 in 2009. Attendance has cratered, too, peaking in 1994 near 600,000 and falling to just 218,661 in 2011. (See box, page 27.)

Last year, Walnut Creek only hosted 20 concerts, the amount Live Nation is contractually required to produce on average without paying a penalty. Total attendance hovered around the average for the past decade, with more than 270,000 people purchasing tickets to Walnut Creek in 2013.

But Walnut Creek has become a city space that primarily serves one demographic: Nearly two-thirds of last year's sales went to modern country artists such as Tim McGraw or Miranda Lambert. All 10 of those shows sold more than 14,000 tickets each, while only one non-country show surpassed that number.

Of the remaining nine concerts, seven could have been sell-outs at Red Hat and Koka Booth, the respective smaller area amphitheaters that Live Nation either controls or has the ability to book.

In 2014, Walnut Creek is a country venue first, a music venue (a distant) second.

"The way music fans want to experience concerts is changing. The way musicians want to experience art is changing," says Ted Heinig, the vice president of concerts at AC Entertainment, a Tennessee company responsible for booking bands across the Southeast and for co-founding Bonnaroo. "We've moved from a world where everyone grew up with the same theme songs. If you look at how many artists have broken since 2000 and gained the critical mass to sell 10,000-plus tickets, the world just isn't the same."

That might account, in part, for Walnut Creek's current lack of sponsorship. When Time Warner didn't renew its naming rights in 2012, venue personnel gradually removed the company's branding throughout the next year. All that remains is one sun-faded, rain-stained rectangular wooden sign near a bike trail. "Time Warner Cable Music Pavilion at Walnut Creek," it reads.

No one is offering to take Time Warner's place.

"A name pops up every three or four months, but nothing has caught fire," Krupa says. "We're talking about $300,000 that would go into an account to maintain the property. I would like to go out there and start selling it myself, but it's never been on my agenda. I think I could."

In 2012, the city finally secured a title sponsor for its smaller downtown amphitheater. Red Hat bought the rights in a five-year, $1.2 million deal. Leigh Day, vice president of marketing at Red Hat, is a longtime Raleigh resident. The Red Hat Amphitheater not only offers prominent signage at the entrance to the city's center but it also suits the company's image. She never discussed sponsoring Walnut Creek.

"Our employees live downtown, and culturally, the amphitheater is part of that package. We're fun. We're hip. We enjoy each other," she says. "That sponsorship is just another extension of what our brand stands for."

The talent roster at Red Hat seems more consistent with the earliest vision for Walnut Creek, too. In the original lease, the tenant was required to offer "a reasonable proportioned blend of cultural experiences, recognizing and accepting the fact that some may not be as profitable as others." In 2007, Southeast Raleigh leader Bruce Lightner pleaded with the city council to enforce that policy and compel Live Nation to bring more black acts to the space. Last year, Live Nation booked only one black headliner, Lil Wayne. This year, of the 22 scheduled shows, the only black headliner is Lionel Richie.

The original contract allowed nonprofits and outside promoters to rent the amphitheater, too, and provided for free, citywide events in the new public space. Aside from Live Nation, Krupa couldn't readily name any organization that uses the amphitheater.

In May, the local charity Band Together borrowed the space to present Hall & Oates for a concert that raised more than $600,000 for local children. The city waived Band Together's rental fee at Walnut Creek, but Krupa had originally thought the charity's show would be at Red Hat, instead. The waived rent and missed opportunity downtown cost the city more than $50,000, he says. The city is now considering measures that actually restrict future nonprofit use, so that such shows never conflict with the financial prerogatives of the city or its partners.

"We're out there competing with ourselves," Krupa says.

In spite of changes in the music industry and area entertainment, Raleigh and Live Nation haven't reconsidered their Walnut Creek lease since 2005. Many of the policies under which the amphitheater still operates have officially expired, but there's been no urgency to reiterate them in writing.

When the city makes its final debt payment next year, though, what can it do with the extra $950,000 a year?

Krupa has considered using the annual windfall to turn the property into a more accessible park, with trails and the facilities to accommodate road races that now clog downtown Raleigh.

Krupa says a renegotiation with Live Nation won't be necessary.

"I don't think Live Nation would care as long as we don't disrupt their season," he says.

But he admits that these plans are contingent upon Live Nation's approval. James and Leder agree that Live Nation likely won't let the city do with the money as it pleases. In the past, the promoter contested what counted as gross revenue, demanded that the city handle extra maintenance costs and capped the city's profit margins.

Krupa sees no point in selling the property when it's paid for, no matter how high the upkeep-and-improvement costs, how little control the city has over its profit or how little of an audience the 20,500-seater serves.

"I'm a facility manager. It's a viable venue that is heavily populated with music fans, and I think it serves a valuable purpose in our community," says Krupa. "We've been good custodians. Let's continue that and not have the conversation of 'What happened to Walnut Creek?'"

This article appeared in print with the headline "Cripple creek."

CORRECTION: An earlier version of this story stated that Live Nation controls bookings at Cary's Koka Booth Amphitheater; they have the ability to book bands at Koka Booth, but they are not the venue's top promoter.

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