PhillyDeals: New Convention Center team moving in

Gregory Fox, chairman of the Convention Center's board, expects Conshohocken-based SMG to officially handle management of the facility in October.
Gregory Fox, chairman of the Convention Center's board, expects Conshohocken-based SMG to officially handle management of the facility in October. (AKIRA SUWA / Staff Photographer)
Posted: September 23, 2013

The state and city officials and business and labor union representatives who oversee the Convention Center haven't fixed the national problem of too many taxpayer-funded exhibit halls chasing too few big conventions.

Nor has the board rewritten the local labor contracts that pit unions protecting workers' hours against exhibitors who want to hook up their own stuff. The center's contracts have been extended into next year.

But the center's board is going ahead, almost on schedule, to farm out management of the Center City complex to Conshohocken-based SMG, which beat Comcast affiliate Global Spectrum to get the job.

Lawyer Greg Fox, the board's chairman, had hoped to install SMG by Oct. 1. But Gov. Corbett's budget office responded to the draft proposal with a fat file of questions, which Corbett spokesman Jay Pagni wouldn't show me because, he says, they are "pre-decisional."

Others who have seen them say they include basic points about financial controls and how SMG will ensure competitive bidding, for example.

Pagni says the Corbett administration "obviously" wants to make this deal work. Fox expects the state and board will sign off and make SMG official later in October.

Meanwhile, SMG is moving in. The firm has been meeting with the PCC's 79 remaining management staff - down from 100, thanks to unfilled vacancies - and preparing to offer many of them jobs, some in Philadelphia.

But not all.

"I expect I will go," center chief executive Ameenah Young, who has been on staff since 1987, told me. Some veterans will be eligible to retire on the state pension plan, which can enable them to nearly match their working salaries while staying home.

The Convention Center is the most expensive building the state has built, costing more than twice as much as the Phoenix prison complex rising in Montgomery County. Taxpayers are paying annual chunks of the $760 million still owed for the center's construction and expansion.

Wall Street credit-rating agencies are more nervous about Pennsylvania's failure to finance those state retiree pensions than about the Convention Center, which has mostly brought in more cash and spent less than budgeted in recent years. The city hotel-room tax more than covers the center's operating deficit.

But weak bookings for 2014-16 have hotel operators nervous. They're hoping SMG can work its national network to bring in more shows and fill vacancies.

Labor leaders, including carpenters' union chief Ed Coryell, sit on the board, putting them on both sides of contract negotiations. With SMG in charge, it is likely efforts to ease work rules will take place in private. Board members have high hopes for Bob McClintock, the SMG executive who has succeeded Gregg Caren as SMG's man in Philadelphia - after Caren's recent promotion to an executive post.

If SMG and the unions reach terms more attractive to exhibitors, will more shows come here?

The problem is there isn't a lot of business to gain, says Heywood Sanders, a University of Texas-San Antonio public-policy scholar. Citing data from the Center for Exhibition Industry Research (CEIR), he notes convention and trade show attendance totaled about 69 million in 2012, about the same as in 2000. But in that same time, convention center exhibit space has risen from 52 million square feet to 71 million square feet.

Result: "Everyone is giving space away for free," Sanders told me. CEIR predicts some centers will shut down unless operators agree to some type of "a more balanced business model."

SMG is getting in position to run that new model. Running convention centers in Chicago, Detroit, Philadelphia, and dozens more cities, SMG should be in a position to set industry standards for labor and exhibitors, cut deals with hotel groups, and help direct shows to places that cooperate.


Contact Joseph N. DiStefano at 215-854-5194 or jdistefano@phillynews.com.

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