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“Privatization Lite” for McCormick Place?

Wednesday, Feb 24, 2010

* Mayor Daley has floated a “privatization lite” plan for McCormick Place

Mr. Daley told reporters in Washington, D.C., Tuesday afternoon that he’s not proposing to hand control of McCormick Place to a private operator under a long-term lease, as he has done with the Chicago Skyway and city parking meters in deals that reaped billions of dollars in upfront payments for the city.

Rather, he’s talking about short-term leases of individual convention halls within the complex to show operators—for the duration of a particular convention.

“You could lease it for seven days,” Mr. Daley told reporters in the nation’s capital, where the Supreme Court is hearing a case involving Chicago’s handgun law. “A lot of show places do that.”

Mr. Daley said show operators would be responsible for furnishing all services required for a convention, including labor, utilities and catering. They would have “full responsibility for all the payments inside their leased piece of property,” he said. “They’d pay for everything, not inside the building but inside the hall.”

From the Trib

The goal would be to cut expenses for exhibitors, many of whom have chafed at costs stemming from the in-house electrical service and from union work rules that prevent exhibitors from doing a lot of their own booth set-up. The city has lost two major shows that complained of high costs, and several more are on the fence.

If exhibitors can bypass the in-house electrical service and smash the choke-hold by the two contractors who control most of the price markups, then that would be worth looking into. The exhibitors would probably still use at least some of the union workers, particularly the Riggers and Decorators, because they know what they’re doing (lots of those union members are flown out to Vegas and Florida to handle shows there, which gives you an idea of their expertise). Work rules, however, would have to be loosened, especially for the electricians.

The governor is cautious

“Well, I think you’ve got to be careful here,” Quinn said Tuesday. “I think any of these privatization proposals need to be carefully analyzed to see whether or not they do indeed save money and if they do indeed improve service.”

The General Assembly is putting together a special joint committee to examine the situation

On Wednesday, the House Executive Committee is expected to consider a proposal by House Speaker Michael Madigan to create a 16-member House-Senate committee to recommend ways to improve McPier’s “operational stability and profitability.”

“It’ll be a place to channel whatever legislative recommendations people have concerning that institution,” said Steve Brown, a spokesman for Madigan.

It’s absolutely essential to get at what’s really going wrong at McCormick Place. It’s a gigantic and irreplaceable economic engine for the state. The early ideas looked mainly to my eyes like they were designed to lower some costs for the contractors, so they could buttress their bottom lines in a down market. That’s not the way to go, however.

Thoughts?

- Posted by Rich Miller        

26 Comments
  1. - George - Wednesday, Feb 24, 10 @ 11:14 am:

    While many of the shows are leaving for alternatives, some are just being canceled altogether. It is a sign of the economy where they can’t get enough attendees (which we should view as customers) to their conference.

    You need to find some alternative, revenue-generating events in the space that can let it weather this storm until the economy picks back up.

    You don’t have to get too out-of-the-box. Just think of all the great ideas you had planned for the space for the Olympics. If you could do Wrestling, Judo, etc. there, why can’t they host some MMA tournaments?

    It shouldn’t always be about booths, breakouts, and buffets.


  2. - Moving to Oklahoma - Wednesday, Feb 24, 10 @ 11:21 am:

    This McCormick Place issue is foreign to me because I am not from Chicago and know little to nothing about McCormick place. However, I see no problem with the leasing of space. If the city has lost two major shows because of high costs that can be eliminated via a lease then I say go for it. There are just too many other options around the country for major events to be held, and everyone is looking at their bottom line these days.


  3. - Niles Township - Wednesday, Feb 24, 10 @ 11:55 am:

    There two problems here: 1. Unions and 2. a fat management. Both need to be eliminated, otherwise the problem will not be solved.


  4. - Rich Miller - Wednesday, Feb 24, 10 @ 12:00 pm:

    NT, you’re not paying close enough attention.


  5. - Cook County Commoner - Wednesday, Feb 24, 10 @ 12:09 pm:

    A friend of mine worked for Quaker Oil’s marketing and looked forward to coming back to home town Chicago to set up a display at McCormick Place for Quaker. I personally saw the “unique” labor division rules mandated by the union shops. My friend cound not even plug in a desk lamp. Luckily for him and Quaker Oil, his dad was a local union steward for the carpenters, so concessions were made allowing dad to do some of the work as an “independent contractor.” No one gets it unless you see it for yourself.

    I cannot conceive of a solution for what ails McPier which does not involve totally gutting its management and labor arrangements. Unlike many of the other services offered by local government, exposition facilities have competition. The question is how to bring rates down to the levels of Las Vegas or other world class venues.

    Maybe a Blue Ribbon panel should convene, find out what competitors are doing and match or beat it. I realize government around here enjoys its captive audience, but there is no such thing at McPier’s McCormick Place. Too many alternatives with lower cost everything.


  6. - 47th Ward - Wednesday, Feb 24, 10 @ 12:18 pm:

    I’m all for privatizing McCormick Place if it’s done properly (the devil is always in the details).

    First, completely toss whatever statutory work rules that were put into place by the McPier Board or GA. Second, dump all current management and rewrite the McPier Act to give the new operator full authority to implement work rules and management structure. Finally, issue an RFP and bid this out to the team that can do the best job while maintaining debt service payments.

    The unions and others will cry foul, but unless we get this economic engine back in top form, the hotels, restaurants and everything else supported by McCormick Place are in serious jeopardy. Bring in a new operator and give them a blank slate to work with. And let the best team win.


  7. - Phineas J. Whoopee - Wednesday, Feb 24, 10 @ 12:33 pm:

    In the bizzaro world of Chicago and its politics, it is Mayor Daley, the guy who has been running McCormick Place into the ground, who is proposing potential reforms and the reformer Governor who is balking at them.

    First off, I don’t know how the media lets Daley get away with reform proposals. His lack of leadership and exploitation of McCormick Place has caused a situation that has the potential to collapse a huge service and retail economy in the heart of the City. Instead of his ideas being discussed, we should be discussing his removal from office.

    BTW, it’s too late to fix. The other cities are up and running. Their facilities are better run, more affordable, more convenient and are a more fun place to have a convention. Over priced hotels, restaurants and bars are not the draw they once were. I guess paying $16.40 for a bloody mary at O’Hare Airport while waiting for a flight to arrive or depart may seem a tad too high.

    So what do you do? I guess you try to salvage what you can and start from scratch. Quinn and Madigan are right to come up with a sound plan to move forward before Daley can screw things up anymore. Any advisory commission needs to base their ideas and suggestions on economic benefit to the City-not to their political sponsors or unions.

    Chicago slept at the wheel and is now waking up in intensive care only to find out they were in a crash.


  8. - Levois - Wednesday, Feb 24, 10 @ 12:35 pm:

    If one was to privatize McCormick Place (well for whatever that entails) are there other examples around the country to follow?


  9. - Dan Johnson-Weinberger - Wednesday, Feb 24, 10 @ 12:51 pm:

    I think a great way to make McCormick Place more attractive is much better transportation to tie the convention center into the Loop (where people want to go). McCormick Place is a little isolated. There is a train station in the convention center but it is underutilized. Much better train service should be part of the medium-term and long-term solution for a stronger McCormick Place.


  10. - Phineas J. Whoopee - Wednesday, Feb 24, 10 @ 12:55 pm:

    Dan Johnson-Weinberger, that is a great idea whose time was 10 years ago to help off-set this collapse. The problem now is McPier can’t pay for what they have now-whose going to pay for a new transportation system?


  11. - The Doc - Wednesday, Feb 24, 10 @ 12:56 pm:

    ==I’m all for privatizing McCormick Place if it’s done properly (the devil is always in the details==

    Therein lies the rub. Currently, the board is selected by the mayor and the governor. Quinn will do virtually nothing that might aggravate the unions, at least ’til November. This may explain Quinn’s reluctance to endorse Daley’s proposal.

    And the only thing Daley can be trusted to do is appoint clout-heavy cronies to do his bidding.

    And the GA enacts a commission of 16 legislators that are likewise beholden to parochial interests and party leadership, not to mention their collective abject failure at their day jobs.

    Meanwhile, what conventions that remain continue to strongly consider cities that have their acts together, relatively speaking.


  12. - Gregor - Wednesday, Feb 24, 10 @ 12:58 pm:

    Perhaps set up a fixed-price schedule for what is charged, the sub-units that getp paid, i.e. unions and other contractors, each get a fixed percentage of that rate… which means the union has to balance what they ask to charge against total revenue paid in.

    I’m a union fan, but come ON, once electrical service drop boxes are put down, charging to hook in an extension cord just gives the Brothers and Sisters a bad reputation. There has to be a reasonable middle path here, where everyone can make a decent profit and build the business back up again.


  13. - dupage dan - Wednesday, Feb 24, 10 @ 1:10 pm:

    Gregor,

    I am not only a union fan, I am a member. However, it is this kind of thing that has put off many americans to what unions stand for. Getting these powerful institutions to back off will not be easy. Power structures do not give up power willingly. It must be taken from them. Who can/will do that? PQ? Daley? Fantasy.


  14. - VanillaMan - Wednesday, Feb 24, 10 @ 1:16 pm:

    I like the idea.
    There are trade show organizations that would take advantage of this.

    Making it an option is a good idea.

    We have some huge shows that draw in big profits for trade show organizers. Every year, these organizers run the risk of dealing with the various logistical issues within each convention hall, state laws, municipal laws, unions and other issues regarding services. If these organizations can just lease out the building, and use their own staff to operate the conventions, they would end up with better control over quality issues, convenience, displays, costs and can pamper the anchor exhibitors that make or break their shows.

    Large exhibitors have convention staffers that travel year round, handling their displays and logistical issues. Trade show organizers can offer complete control at McCormick for these large exhibitors that anchor shows.

    It is an attractive option that will help Chicago break into a changing trade show market, lower costs, and empower the trade show companies.

    Chicago’s competition is doing this because it gives control to the right people at the right cost.

    Unions will not like this.

    The convention market has gone through it’s growth cycle of building bigger and better venues. Now, the cycle is demanding flexibility. This is where the action is.


  15. - Fed up - Wednesday, Feb 24, 10 @ 1:35 pm:

    the unions need to realize the jobs will disapear and never come back. The shows that go to Orlando or Vegas arent likely to return. Both of those cities have improved greatly as places for buisness and are hands down more fun and exciting. Only the highest in senority will still have jobs when the Halls are empty for months at a time.Not to mention the union jobs that will be lost at hotels.


  16. - dupage dan - Wednesday, Feb 24, 10 @ 2:34 pm:

    =the unions need to realize the jobs will disapear and never come back=

    Not gonna happen. The steel industry in this country withered and died while the powerful union sought to protect the wages/benefits of the members. Foresight into the likely decline (not entirely the fault of the unions, I might add) of the steel industry was not a union activity. Same goes for the auto industry, as well. Legacy costs for union members resulted in less flexibility and added costs to each car which had an impact on quality. Again, not entirely the fault of the unions. Don’t expect the union(s) to be the vanguard of change if it may result in members losing out on wages/benefits. Unions typcially will fight for these while members (w/low seniority) are laid off.


  17. - wordslinger - Wednesday, Feb 24, 10 @ 2:42 pm:

    Whatever changes are made, I’d caution anyone against thinking the convention business is going to come back in a big way. The industry continues to shrink.

    The 1-2 punch of the technology/dot.com bust followed by 9-11 accelerated a clear trend to smaller, fewer meetings. At the same time, the inventory of convention space has greatly increased.

    Smaller, fewer shows with a lot more choices. That Golden Goose is getting skinnier.


  18. - Niles Township - Wednesday, Feb 24, 10 @ 3:10 pm:

    NT, you’re not paying close enough attention
    ———–

    Actually, on this one I am. I would suggest what the Mayor, Governor, unions and McPier are talking about isn’t even 1/10 of the issues here. Rich, I can’t go into detail, but I have enough past knowledge on this one (and I emphasize past) to know a thing or two about the situation. I can’t imagine things have changed that much. Everyone has some blame on this one.


  19. - Downstate - Wednesday, Feb 24, 10 @ 3:18 pm:

    Daley’s on the right path. There are obviously more that’s needed, but it’s a positive start. Let’s not waste time with a commission of 16 lawmakers, of which 15 won’t know any more about the hospitality and tourism industry than which hotel chain offers the best breakfast bar.


  20. - 9970mayor - Wednesday, Feb 24, 10 @ 6:29 pm:

    the namm show used to be a great event but it moved to Nashville. Vendors couldn’t bring a guitar in without union labor. The work rules must be changed. The labor movement in IL, especially the public sector will surprise the public. Eventually IL might have to change the labor law and out law public sector bargaining. The people who approve the contracts wages and language are also the people who are receiving the big contributions. There should be NO pay to play with any state contracts, including labor contracts!!


  21. - 47th Ward - Wednesday, Feb 24, 10 @ 6:32 pm:

    ===It’s absolutely essential to get at what’s really going wrong at McCormick Place.===

    I agree Rich, and I hope that everybody takes a very close look at the Chicago Convention and Tourism Bureau as well. You can’t fix McPier and the convention industry without some serious reforms at CCTB.


  22. - wordslinger - Wednesday, Feb 24, 10 @ 6:47 pm:

    47, what do you suggest?


  23. - 47th Ward - Wednesday, Feb 24, 10 @ 7:13 pm:

    Thanks for asking Wordslinger,

    First, I’d suggest someone ask the Mayor if he’s OK with adding CCTB as one of the “cuts” he wants the Governor to make before looking at higher taxes. Of the four identified revenue streams listed on its website, three are from public sources (IL Tourism Bureau, McPier, and the special “hospitality” tax downtown). The only nonpublic source of revenue listed is “membership.” I think maybe members can pay a bit more and the state/taxpayers a bit less. So there’s one suggestion.

    Another suggestion is that we look into expenses related to the CCTB’s Board as well as its operations. I mean, who aapointed this group to oversee a budget that is predominantly publicly supported? Who are these people?

    http://www.choosechicago.com/Pages/CCTBBoardofDirectors.aspxinted

    Earlier I pointed the finger at labor and McPier management. It’s only fair to look at others who play a role in the declining convention industry in Chicago.


  24. - 47th Ward - Wednesday, Feb 24, 10 @ 7:25 pm:

    Maybe the CCTB Board list is out of date, but maybe someone could ask Mayor Daley if, since he’s thinking of privatization of McCormick Place, he could find out why this guy is still listed as a CCTB Board member?

    http://www.nytimes.com/2002/06/01/us/teamsters-leader-in-chicago-is-expelled-by-oversight-board.html?pagewanted=1

    I mean, Hogan’s convention industry experience isn’t exactly what I’d be looking for if I wanted a well-managed convention center.

    Just sayin.


  25. - wordslinger - Wednesday, Feb 24, 10 @ 9:04 pm:

    47, there’s a lot of folks on that board, some just for show.

    Hogan, however, is still big heat at McCormick Place, as are Phil Stefani, Bill Marovitz, Dennis Gannon and Ricky Simon.

    In addition to the partially publicly funded Chicago Convention and Tourism Bureau, I’d check out the fully publicly funded activities of the Chicago Office of Tourism, a division of Lois Weisberg’s Office of Cultural Affairs.

    The two groups don’t play well together, and there’s a lot of duplication of effort, including separate “official” Chicago tourism websites.

    Throw in the Illinois Bureau of Tourism, the Mayor’s Office of Special Events plus McPier’s own separate efforts for Mac Place and Navy Pier and you have a textbook FUBAR instead of an efficient and coordinated Chicago marketing effort.


  26. - charlie - Monday, Mar 8, 10 @ 8:12 pm:

    The problem here is the laziness of the union workers protected by their seniority. “Call by Name” would solve all problems! Works in other cities where union labor is. You work 8 hours and do a good job or don;t get called back the next day.


Sorry, comments for this post are now closed.


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