s Executive Interview
What kind of problems
have you encountered?
Mike McGee
L
Leisure Management International
eisure Management International Chairman
and CEO Mike McGee heads a company
specializing in public facility management and
project development. McGee was
involved in starting the company in
1984 and has seen LMI become an
industry leader, managing the development of facilities around the
world. LMI’s clients include the
Nashville Arena; The Pyramid in
Memphis; the Docklands Stadium
in Melbourne, Australia; the Miami
Arena; the Compaq Center in
Houston; the recently-opened National Car Rental Center in Sunrise,
Fla.; and the ALLTEL Arena in
Little Rock, which is scheduled to
open in the fall of 1999.
McGee knows first hand that
timing isn’t the only thing in his
business, it’s everything. Even before
he got involved in facility management, McGee had a knack for being
in the right place at the right time
and knew a good opportunity when
he saw one.
While attending college at LSU
in Baton Rouge, McGee focused on
radio and television broadcasting.
He put himself through school spinning platters and had high hopes of
becoming a network newsman. But
he became disenchanted with
broadcasting and took a job as a
sales manager at a Ramada Inn in
Louisiana. He soon after segued
into public facility management
and by the time he was 24, he was
the manager of the Monroe Civic
Center in Louisiana. “I remember
people coming up to me and saying,
‘We’d like to see the manager,’ and
I’d say, ‘I am the manager,’ and
they’d say, ‘No, we want to see the
real manager.’”
POLLSTAR
At what point did you know
that you wanted to stick
with facility management?
After three years in Monroe, I
went to work at the Lakeland Civic
Center in Florida as the assistant
to Neal Gunn, who got me into the
business in the first place. Neal
went to New Orleans in 1976 and I
became the director of the civic
center. We had a tremendous run
in Lakeland because at that time, it
was the only major building in
central Florida. There weren’t any
big buildings in Tampa or Orlando, so we kind of had the best
of all worlds and did a lot of great
things. I was very fortunate to be
there at that time.
In 1979, I received a phone call
from the folks who oversaw the
Arena Operating Company in
Houston and they asked if I’d like
to talk to them about becoming
the president and general manager
of The Summit arena. We talked
about it for two-and-a-half
months, negotiated a contract, and
at the ripe old age of 32, I came
over to The Summit.
In 1980, I formed a television
production company called John
Crow Productions which grew
into a company that did all the
point-to-point telecasts for the
Rockets, the Mavericks, the Spurs,
the Texas Rangers, the Houston
Astros, the Oilers, the Cowboys,
and things like the Cotton Bowl,
the Liberty Bowl, the Republican
National Convention in Dallas,
and the 1984 summer Olympics in
Los Angeles.
We launched LMI in 1984. At
that time, it was a joint venture between the ownership group at the
Astrodome and The Summit, myself included. And through an evolution of things over the last 14
years, I wound up here. I was doing both jobs — managing The
Summit and LMI — until about
three years ago, when I came over
to LMI full time. I brought Jerry
McDonald down here from Memphis to run the Compaq Center
(formerly The Summit).
What role do you have
in opening a new LMI building?
I want to make sure we are
providing to our venue client the
best of what we have through the
staff that’s there on a day-to-day
basis. We supplement those people
with key players from within the
LMI company.
There are many facets to the
opening of a building and we have
as much experience, if not more,
than anyone who is opening buildings, or building them, for that
matter. So we want to share our
expertise with the people who
have not been through the opening of a facility. We want to anticipate the problems that we know
will occur so we’re not reinventing
the wheel each time.
From a logistical standpoint,
you just never know what’s going
to happen. Six years ago, when we
opened The Pyramid in Memphis,
we had some problems with a lift
station relative to the water system.
The capacity was not adequate to
deal with everything that was happening on opening night. Subsequently, there was not enough
water pressure to shut the toilets
off and they continued to run.
We learned from that experience, so when we opened the
Nashville Arena, we got the Boy
Scouts and Girl Scouts to come in
and flush the toilets simultaneously. We did the same thing
with the National Car Rental
Center on September 5 with the
Boys and Girls clubs. It’s just part
of the shakedown of the building.
We also have what I call a soft
unveiling of the building where
people can come out and experience the facility. They come out
and walk through it, see what it’s
like and what it’s all about. We’ve
been able to see what kind of
problems we might encounter
with the way people queue up to
get in the building. It’s an opportunity for us to test the concessions
and crowd control — whether
or not we’re going to have PA
problems, marquee problems,
scoreboard problems — things of
this nature. Hopefully, these things
will manifest themselves as we go
through this process. It allows us
to be more prepared for the things
we might not have anticipated
otherwise.
The Nashville Arena was really
put to the test when the two
tornados hit earlier this year.
Russ [Simons] and his staff have
done a marvelous job interfacing
with the city’s emergency action
office and they’ve run mock
drills in the past, so everyone
could anticipate their level of
involvement. It’s nice to know that
Fall 1998
Page 29
Executive Interview s
if you anticipate and plan for an
emergency, that when you are
unfortunately faced with that situation, the system works much the
way it was designed to work. It was
unfortunate that they had to suffer
through a tornado but if anything
positive came out of it, it was that
what we anticipated and planned
for did, in fact, work.
What are some of the benefits
of turning a public building
over to private management?
The term private management
is somewhat of a misnomer. We’re
contract managers. Our clients are
generally municipalities or some
governmental body. We provide
contract management services to
these municipalities. Our mission
is to listen to the client and determine with the client what their expectations are for that facility.
A lot of people think that since
we’re a private company, it’s all
profit motivation and so forth,
and that’s not the case. That’s not
to say that we won’t run a facility
with a keen eye to the financial
side, because certainly we do.
However, we won’t scrimp or compromise on personnel or upkeep.
We want to be as cost effective and
prudent with the economics as we
possibly can.
Having said that, there are other
objectives and other expectations
in regard to the community and
we want to perform those roles as
well. I think in order to become an
integrated part of the community
– for us to function as a service
within the community – we have
to invest that time and effort.
We’re not a panacea for every
problem in every public assembly
building. In many instances, we
bring a lot to the table that can certainly be beneficial to a facility of
this type. But I can’t make a blanket statement saying, “We can do
this better.” We have to look at
these situations on a one-on-one
basis and make the decisions
accordingly.
Page 30 Fall 1998
How is LMI involved in
marketing its buildings?
When you talk about marketing,
there’s a two-fold approach. You’ve
got the institutional side of positioning the facility within the market – the market it’s in as well as
the marketplace – and there’s promoting the product that appears in
that building. Each goes hand-inhand because it’s critically important to establish relationships with
touring acts, the agents that have
those acts, the promoters that
work the market, and the owners
of the family shows in order to
create an identity.
If the market is Houston, you
want the people to think of the
Compaq Center. If it’s Miami, you
want them to think of the Miami
Arena. You don’t want there to be a
question in anyone’s mind where
they’re thinking about two or three
different buildings.
We spend a lot of energy and we
cross-collateralize the contact resources of our managers. That enhances their facility and the sister
facilities as well. It’s a springboard
effect and it works very well for us.
It sounds like communication
is extremely important
within LMI.
Absolutely. If one of the managers within our company is talking
to an entity like Ringling Bros.
Barnum & Bailey Circus, not only
can they represent their facility but
they can discern a problem or create another opportunity for another facility relative to that show.
And if I’m having a conversation
with a representative of Ringling
Bros., I can speak from a corporate
perspective and for each LMI
arena.
How do your people facilitate
that kind of communication
as LMI continues to grow?
First and foremost, as a company, we have a responsibility to
each individual account
and that responsibility is
more important than
LMI’s best interest. Having said that, we also
have to focus on the fact
that whatever we do in
one market could have a
global effect on our
other facilities. So it’s
critically important that
we sustain a level of
communication with
each other.
We don’t want something to happen in one
market that will have a
negative or diminishing
effect on another market. That’s something we BREAKING GROUND for the ALLTEL Arena: (L-R)
LMI’s Mike McGee and Michael Marion, Bob
constantly talk about.
Kimming of VCC/Turner Construction and LMI’s
Our existing account
Mark Miller.
base – and I’ve stressed
this since day one – is
the life-blood of our company,
where, so the problem-solving
long-term.
knowledge already exists someWe need to focus on the needs of
where in the organization.
our clients accordingly. And if
we’re not stressing that, we’re not
Do you have concerns about
going to be in that facility or that
the concert season being so
market for a long period of time.
concentrated in the summer?
We address the client’s needs
Historically, before the
and at the same time, realize that
amphitheatres had the presence
those needs can have a positive or
that they do now, the concert pornegative impact on other markets.
tion of a building’s revenue was
It’s a balancing act achieved
quite large. In secondary markets,
through communication. Everyit still is to a great degree. But in
one knows the parameters that we
markets where there are profeswork within.
sional sports franchises, when the
The managers have to have a
bulk of the concert business
knowledge and understanding of
moved outside, the arenas kind of
what’s going on at the other LMI
floundered for awhile. Then they
buildings. We need to understand
found ways to effectively generate
who we’re servicing and be sensicomparable revenue.
tive to those needs. If a patron exI’m not trying to minimize the
periences a problem at a building,
importance of concerts because
we don’t work the system to the
they are critically important to faproblem, we work the problem
cilities. The scary thing is that the
back to the system.
acts are so compacted in the sumSimultaneously, the managers
mertime period and I don’t know
need to understand and have a
level of sensitivity to the criteria or if the acts’ best interests are being
served – if development can be
problems that exist in one market
sustained – in that situation.
even though they might not exist
I am also concerned about how
in another. A lot of problems that
this affects developing acts and
our buildings encounter on a daytheir ability to live up to their
to-day basis have occurred elsefull potential.
POLLSTAR
s Executive Interview
In a market such as Houston, if
you cram three or four acts into an
eight-day period, there’s only so
much elasticity in the economy. At
some point, someone is cutting
into someone else’s opportunity. If
they were spread out over a period
of time, the upside would be enhanced. I think everyone in this
business is concerned about that
situation. I’m sure some of the
amphitheatre people are, too.
For many, many years, the
buzzwords were “strategic alliance” and “synergy,” and now that
these things are actually occurring, “consolidation” has become
the buzzword. In the past, some
people confused an entitlement
with an opportunity and now they
are having to rethink that. It’s going to change the dynamic of how
the business works. The major
We’re selling proximity, association and escape. People can’t pull
something out of their pocket and
say, “I spent my $50 and I have
value received.” All they have is
quality of service, quality of show
and fulfillment of expectation.
A lot of us have been flippant in
our approach, thinking that we do
the audience a favor by having this
show. That’s wrong. People are af-
Are you concerned about
the seemingly disposable
nature of today’s new artists
and the lack of long term
career development?
Some of these groups get a big
hit on radio and MTV, and there’s
all this hype surrounding them,
and when they perform live, it’s a
“less-than” experience. A lot of
groups that tour on one hot record
may have the ability to sell tickets
because of that one hit song, but
that’s only going to work once.
Most people are not willing to sit
through a set of music that they
are not familiar with in order to
hear one song that might not live
up to their expectations.
We haven’t done our job when
that occurs. There are a tremendous amount of good acts out
there who are at the forefront of
the new sound or who have a high
profile right now. They are very
entertaining and very enjoyable
but the opportunity to go see them
is diluted because of all of the
other acts that are on the road and
people have to choose. If you look
at some of the ticket pricing, it’s
pretty exorbitant in a lot of situations. These younger groups really
need a chance to grow into their
touring situations and doing a tour
of larger buildings right off the bat
might not be the best way to ensure their long-term survival.
Has the corporate consolidation
of concert promoters changed
the way buildings deal with
concert tours?
POLLSTAR
When the business was soft two
or three years ago, it amazed me
that there were some artists who
did stellar business. Garth Brooks
is an example. He keeps his ticket
price in line, he’s available and accessible not only to the people he
works with, but to the audience as
well. Everybody in the audience
feels like he’s singing to them alone
and that has earned him a very
strong, loyal audience.
That’s where we haven’t connected in a few situations in the
past years. You go back and look at
the artists who have had sustained
careers and there’s a direct connection with the audience that is
much stronger than just having a
popular song.
What about the new groups
that are bringing teenagers into
arenas? Does that trend bode
well for the future?
MIKE MCGEE and Ticketmaster chief Fred Rosen take part in a panel during the first
Concert Industry Consortium.
question is whether the changes
brought on by consolidation will
be for good or for bad. It’s going to
allow people to get creative. I think
we’ll see some unique approaches.
Things were the same for so
long, people took it for granted
that you’d get that tour when it
came through your market. All of
a sudden, it’s important just to
have the opportunity to play the
act in the market. There are other
competitive factors and the artist
doesn’t automatically go with
your building.
It seems that arenas are
putting more time and money
into becoming more attractive
to acts and to their audiences.
That’s true and it’s something
that’s probably long overdue. The
reality of our business is that, at
the end of the day, we don’t deliver
a tangible product to anybody.
ter the steak, not the sizzle. We
have a more sophisticated, intelligent audience. The quality of the
experience had better be good and
the prices had better be reasonable. The idea of the captive audience is neanderthal.
There is so much competition
for entertainment and leisure
dollars; how has that changed
the arenas’ business approach?
That little box that sits in your
house is a powerful medium, especially when you can surf through
200 channels. It’s hard to get the
couch-dwellers out of their seats
sometimes. But I still think people
need the live experience and the
association with others. We go
back and look at merchandise
sales and all that, and that’s the
only tangible thing that allows
them to say I saw X,Y and Z.
It’s a cyclical thing. I remember
when the Osmonds were attracting the same age group. Menudo,
Rick Springfield, Andy Gibb, the
Jackson 5 – they all had the same
kind of appeal. That just happens
to be the nature of the business
right now. I wouldn’t bank on it for
the future necessarily.
Some acts appear to be
more willing to play arenas
during the summer now.
That has to do with a maturing
of the audience. No disrespect to
some of our competition, but
I’ve got to tell you, sitting in
105-degree heat in Houston when
the humidity is 90 percent is not
an enjoyable experience.
If you look across the board, a
lot of the older acts are the ones
that have been able to sustain big
grosses on tour. The bulk of those
audiences are an older demographic. The artist has worked
on establishing a relationship.
There’s a bond with the audience
and the artist knows what it takes
to please that audience. That may
mean the show needs to be more
Fall 1998
Page 31
Executive Interview s
of an “event” and an arena might
be a better setting for that kind of
show. They also are very aware of
what their audience will and will
not pay to see.
How do corporate sponsorships
help buildings keep prices
in line?
It certainly doesn’t hurt. There
are a whole set of dynamics that
represent the economics of margins regarding what a building
should sustain or maintain in order to provide what the people are
accustomed to and expect.
Most of the sponsorship packages now in place are there to offset the debt burden incurred in the
building process. New facilities
can cost $200 million and that’s a
big debt burden. It has to be offset
somehow. That’s where naming
rights, sponsorships, and club
seats and suites come in.
When you’re looking at doing
a (show) deal for a facility, you
have to look at all the yields,
margins and revenue sources and
all of it goes into one economic
package relating to the expense for
that building.
Do arenas need to have sports
franchise tenants in order
to survive today?
That’s part of the tradeoff that
happened when the concert business went outside. The sports franchises have helped in a lot of ways.
Interestingly, you only have to look
over the last four or five years in
some secondary markets like
Monroe or Shreveport in Louisiana or Augusta, Georgia, to see
where professional hockey has
come in and been reasonably successful. It’s affordable family entertainment and well-played. People
can enjoy it and get into it. It’s a
live event that you don’t have to
mortgage your home to have season tickets.
Some professional franchises –
if you want four season tickets
for half court for an NBA team,
Page 32 Fall 1998
and you make a $100,000 a
year – you’ll probably spend
12-14 percent of your gross salary
to be a season ticket holder. The
tax on the most expensive ticket is
three times what the face value of
the ticket was 20 years ago. The tax
alone is 300 percent of what a
ticket used to cost. The tax!
I was telling someone that I
could build a very plausible case
where in the future, an arena for
basketball or hockey in a top market would be a 7,500-seater where
every ticket cost $100 because the
market would be deep enough.
Maybe it would have 100 suites
and charge $100,000 to $150,000
per suite. That would create a big
market for pay-per-view – it would
be a far bigger market than what
ticket sales could generate. The
short-fall would be parking, ancillary, food and beverages. But that
would be recouped many times
over by increasing the television
market.
Do buildings run the risk
of having the resident teams
eating up all the available
concert dates?
I absolutely think there’s a way
to work that out. If the people who
do the scheduling for the facility –
unless they give the tenant unilateral control of the dates – are doing their job properly, then there’s
enough room to adequately service the tenant, a secondary tenant
and still work in a tour. That’s not
to say that everything that comes
down the pike will fit, nor does it
mean that the franchise is going to
work every Saturday night.
A lot of people say, “The team
has the right to do this and there’s
nothing I can do.” Well, that’s a
throw-your-hands-up and walk
away kind of attitude. In some instances, the team may have that
right, but if you can develop the
relationship and have them understand what your concerns and circumstances are, and at the same
time respect their problems, there
will be room for compromise.
There are other factors that
come into play when you’re trying
to balance having a team in the
building with doing other events.
In my personal experience at The
Summit, we were able to balance
that out but there were difficulties.
One of the problems I had at The
Summit was the fact that we had
no parking allocated for the day
time, which meant we weren’t able
to do events before 6 p.m., Monday
through Friday. We had to create
other ways to sustain the business.
Is the art of compromise
too often neglected?
Yes, and I think there’s a lot of
one-upmanship and gamesmanship. It’s been my experience that if
you’re going on a bus ride, just
make sure you’re on the bus. You
don’t have to be the driver or sit in
the front seat. Just make sure
you’re on the bus and make sure
you get there safely. I think a lot of
people take the approach that, if I
can’t drive or choose the route,
then I’m not going to participate.
In that case, everyone loses.
You’ve seen the new Event
Builder software, which will
allow facilities to put their
calendar’s online. Agents and
promoters will be able to
reserve dates, get specs and
take care of other business
without making all the usual
phone calls. Do you think
the industry is ready to take
this technological step?
We’re at the tip of the iceberg for
communication technology. I’m
very excited about Event Builder
because it has a lot of broad-based
applications that will be useful to
us from an internal perspective.
It will be a great tool for the entire
industry. If people take the time
to find out what it can and can’t
do, I think they’ll see what an
important step it is.
Everybody wants to horde
information which is kind of crazy
because that’s what you’re selling.
It’s comparable to a car dealership
saying, “We’re in business to sell
cars but we’re not going to tell you
which cars we have or what color
they are or how much they cost.”
Once the software’s security features are demonstrated and people
are confident that their sensitive
and confidential information is
secure, then this can be a marvelous tool for enhancing all of our
opportunities. Those who are
aggressive and attentive as to
what’s going on in the marketplace
are going to have much better
opportunities.
What other benefits
will come from simplifying
the booking process?
If you can provide a window of
opportunity that makes routing
the tour easier, then you’ve helped
yourself as well. In the final analysis, those situations are long remembered. If the act comes in and
has a positive experience, then
that’s going to enhance your opportunity. In most instances, the
act’s management or agency is
handling a host of other acts, so it
pays to position yourself well with
those in control.
Money is not the quintessential
decision maker in my opinion. It’s
certainly important, but don’t
think for a second that relationships and experience don’t play a
major role in succeeding in this
business. Those things pay off
whether you’re the act, the representation or the facility.
What do you see as the key to
surviving in this rapidly
changing business climate?
When we look back on all of
this – the consolidation, the way
artists and tours are handled, the
way money is earned and spent,
the onset of new technology –
you’ll see two groups of survivors:
There will be those who have been
good at what they do and those
who have just been lucky. *
POLLSTAR