Atlantic City, NJ – In a vote that might end a 17-year relationship, the Atlantic City Convention & Visitors Authority (ACCVA) on December 6 awarded a five-year management contract for the city’s convention center and Boardwalk Hall to Global Spectrum, beginning February 1, 2013.
The move came despite ongoing legal action in federal court initiated by SMG questioning whether a mandatory arbitration clause in the RFP meets the ACCVA’s own governing regulations.
Frank E. Russo Jr., senior vice president of business development and client relations for Global Spectrum, said one key factor in the decision was the potential to co-market Comcast’s Wells Fargo Center in Philadelphia and Atlantic City’s Boardwalk Hall. Jeff Vasser, president of the ACCVA, said other selling points in favor of Global Spectrum included the company’s considerable cable and TV assets nationwide. Global Spectrum seeks to leverage the advertising assets of parent company Comcast in securing management contracts in publicly owned venues and in booking and promoting talent. Another factor was Global’s track record of transitioning new management to other buildings and making operations more efficient.
SMG has operated the Atlantic City Convention Center since 1995, and this year won a Power of Green Award from North American Power for its environmental efforts. That followed on the heels of a 2011 Prime Site Award from Facilities & Destinations magazine based on the quality of the facility, the professionalism of its staff, the attractiveness of the destination, and other factors. Those accolades followed numerous others dating to 1999.
“SMG has been here 17 years and has done a great job,” said Vasser. He noted that IRS Revenue Procedure 97-13 sets certain term limits that require clients to re-bid management agreements periodically, typically every five to ten years. “We issued an RFP and Global came in with a creative, aggressive deal,” he said.
Not a Done Deal
Despite the vote, Vasser said the contract is not 100% complete, pending ratification by the board of directors and a mandatory review by the governor’s office. Vasser said the parties agreed to a February 1, 2013 start date in order to minimize any impact on January events and to allow for transition time.
The U.S. District Court for New Jersey earlier this month ruled against SMG in its efforts to prevent the vote from taking place as scheduled noting, “…the Plaintiff has not demonstrated irreparable harm, even if the Authority selects the other bidder, because Plaintiff would continue to have its post-award remedies under the regulations.”
The court further stated that SMG “is likely to succeed on the merits of demonstrating that the mandatory arbitration clause of RFP 1.03 is inconsistent with the process required by the Authority’s regulation …”
SMG senior vice president of strategic business development Gregg Caren said in a statement that SMG intends to pursue the federal court challenge “as well as all administrative and legal actions available to remedy a clearly flawed Authority process.”
Caren also said SMG believes questions remain concerning “a process rife with conflicts on the selection committee and the clear potential for extreme business conflicts in the future …” both on the convention center and Boardwalk Hall sides of the business.
Barring any legal reversals, the contract award represents the latest volley in a virtual battle of the giants among convention center/exhibition facility managers. In recent years, Global Spectrum has won a contract from former SMG-managed Miami Beach Convention Center while SMG recently won contracts from former Global Spectrum-managed facilities at the Knight Center in Miami and the Sioux Falls Convention Center in South Dakota.
In all, SMG currently manages 70 convention centers in the U.S. with a total of 14.4 million square feet, while Global Spectrum manages 30 with 3.3 million total square feet.
“Each company has loyal clients and the competition is sometimes tough,” Russo said. “When a facility is built with tax funds, the IRS requires renewals every five years, and that’s what SMG faced,” he said. “It’s tough for them (SMG) and for us.”
Reach Frank Russo at 860-657-0630 or frusso@global-spectrum.com; Gregg Caren at (610) 729-7972 or gcaren@smgworld.com; Jeff Vasser at (609) 449-2031 or jvasser@accva.com
