SMG, the sports and entertainment giant that has operated the Oakland Coliseum for 13 years, stands to lose its contract to the Anschutz Entertainment Group.
The Coliseum Joint Powers Authority, which governs the municipally owned and operated Coliseum complex, has refused to disclose the details of the bids submitted by SMG, AEG and a third competitor, Global Spectrum.
But a selection subcommittee made up of Commissioners Ignacio De La Fuente and Scott Haggerty, as well as several administrative members of the Coliseum authority, plan to recommend AEG for the five-year contract at Friday's regular JPA meeting before the full board.
The choice shocked SMG General Manager Ron Little.
"But we expected a full-blown attack from AEG," Little said, "and we got it."
AEG is dominant in the world of sports and entertainment, with the spending power of a small country. The Los Angeles-based company is owned by Philip Anschutz, who Forbes reported has a net worth of $7 billion.
Anschutz owns and operates 100 facilities around the world, including the Staples Center and the sprawling L.A. Live entertainment district in Los Angeles, on which Oakland based its plans for a Coliseum City entertainment and sports development that would replace the aging Coliseum complex.
In addition, AEG owns the Los Angeles Kings hockey team and the Los Angeles Galaxy and Houston Dynamo soccer teams, and Anschutz has a stake in the L.A. Lakers.
AEG even owns the Bay to Breakers race in San Francisco.
The bottom line
"The city can make a lot of money if we were here -- bottom line," AEG Executive Vice President Kevin McDowell said during a Wednesday luncheon with local media at the Marriott Hotel in downtown Oakland. "We want the opportunity to make it happen."
AEG already promotes shows at the Coliseum.
For months McDowell and other AEG executives have been wooing community groups, business associations, religious leaders and journalists in its effort to solidify its footprint in the Bay Area.
"Oakland is a good fit for AEG's business model," AEG facilities manager Chris Wright said during the media luncheon.
The city is "prime real estate" in a good market that presents an opportunity -- one that has not been fully exploited, said Wright, who worked for SMG for six years.
He was referring to the plummet in ticket sales at the Oracle Arena as ranked by the concert trade publication Pollstar.
Just two years ago the arena was ranked No. 21. It is no longer on Pollstar's top 50 list.
In contrast, HP Pavilion at San Jose came in sixth as of March 31. That is up from No. 48 in 2010.
Wright said he knew sales were down at the Oracle Arena. "But I never expected (the arena) to drop off the top 50."
Comparisons can be tricky because of the nature of the notoriously unpredictable business -- HP Pavilion was at No. 42 in 2011 and 48 the year before.
In addition, Anschutz suffered a public embarrassment in July 2011 when The Associated Press reported how contractors hit AEG's development subsidiary, Olympic and Georgia Partners LLC, with at least $7.4 million in mechanics' liens for unpaid plumbing, flooring and countertop installation work.
The work was done on condominiums that are part of the L.A. Live development that sold poorly. But AEG spokesman Michael Roth said the outstanding bills had since been settled and were frivolous in the first place.
Anschutz also has been unable to convince an NFL team to play in the Farmers Field stadium he plans to build in Los Angeles.
Anschutz and Chief Executive Officer Tim Leiweke have made overtures to multiple football teams, including the Oakland Raiders. So far they have had no takers. But their intent to acquire a football team for the planned stadium fueled fears that they would maneuver the Raiders to Los Angeles.
The JPA did not address that possibility in its request for proposals issued in September 2011.
The board did, however, require bidders to submit a plan to avoid conflicts of interest in booking competing venues because the HP Pavilion and Oracle Arena vie for business.
The JPA board could still select AEG or opt for the other competitor in the race, Global Spectrum. The Pennsylvania-based company is an offshoot of Comcast-Spectacor, whose sports clients include hockey, basketball, football, baseball, soccer and lacrosse teams, and claims to generate more than $4.5 billion in annual gross revenue. Global Spectrum operates numerous arenas and manages the University of Phoenix Stadium where the Arizona Cardinals play. Like AEG, they also have had the experience of operating two facilities in the same complex and the mammoth task of converting a football field into a baseball-ready ballpark. But they would have to juggle the sometimes conflicting demands of three litigious pro teams -- the Raiders, Warriors and A's, which is actively trying to leave Oakland.
"Disruption, delay and inconsistency will sometimes cause harm," warned SMG Vice President Doug Thornton during a July 2011 JPA meeting, when commissioners decided to open the Coliseum management contract to competition. His presence in Oakland noticeably increased about that time.
A 'scary thought'
"Sometimes the unknown is a pretty scary thought," he told authority commissioners.
SMG had until then eased through numerous contract renewals during the nearly 14 years since the company was hired to make the deficit-ridden Coliseum pay for itself by booking more shows and cutting operating costs, which otherwise came out of the pockets of city and county taxpayers. The county and city still subsidize the Coliseum -- about $20 million annually for the past decade or so.
"It's easy to shoot at the track record of the incumbent," Thornton said in a March interview, defending his company's performance shortly before presentations to the JPA subcommittee. "Can we do more? We're going to absolutely try."
The question is whether they will have the chance.