The city of Savannah, Ga., has contracted Oak View Group to manage the new Savannah Arena, shown here in a rendering. (Courtesy Perkins + Will)

Firm will manage new arena, working with Live Nation, Delaware North

Oak View Group has won the contract to manage Savannah Arena in Georgia. The $160 million multipurpose facility is scheduled to open in the fall of 2021.

“The last pieces of the design puzzle are being worked now and we wanted to get our operator onboard early so they could have some input on that,” Savannah City Manager Rob Hernandez said. “We thought it was very important to have the group responsible for the profitability and success of the venue involved ahead of the game.”

Three companies — OVG, SMG and Spectra — responded to the request for proposals put out by the city and Jones Lang LaSalle, the firm hired by the city last year to shepherd the project forward.

The City Council voted Thursday in OVG’s favor, despite protests from SMG lawyers contesting the application process.

OVG packaged itself with promoter Live Nation and concessionaire Delaware North, which Hernandez said was an attractive package.

The deal calls for OVG to take on the risks associated with arena ownership and be responsible for all operational expenses and operational losses, Hernandez said. OVG will pay the city $200,000 in annual rent over the life of the contract and will keep the first $1.5 million in profits. All profits after that are to be split 50/50 between the management firm and the city of Savannah.

OVG has also pledged a $2.5 million capital contribution for the first five years of the contract, he said. The city opting to extend the deal would trigger another $2.5 million.

Still undecided is the number of seats that will be in the arena. “It will be 9,000 to 10,000, but we’re waiting on input from OVG on the exact number,” Hernandez said.

“What differentiated OVG from the others was their unbelievably strong commitment to local minority businesses, specifically emerging businesses,” Hernandez said. “That was important to us. We want to make sure local businesses profit from the city’s investment. OVG assured us that money will go back into the local economy.”

OVG has pledged that it will contract 75 percent of its contractors to local minority businesses, said Peter Luukko, chairman of Oak View Group Facilities, the company’s venue management division. (VenuesNow is part of OVG Media & Conferences, another division.)

Doug Higgons, senior vice president of OVG Facilities, who worked on the RFP for the group, said a local joint agreement with African American-owned Pat Mathis Construction was key in winning the bid.

The firm’s president and CEO, Patricia Mathis, “was part of the package from the start and she will assist with facility operations and maintenance and coordinate our local minority outreach,” Higgons said. “We looked at the makeup of Savannah and wanted to make sure the people we did business with were representative of the community.”

Luukko said that working with Live Nation and Delaware North was a winning strategy.

“It’s a case-by case basis, but the more we do together, the stronger we get as a group,” he said.

OVG and Live Nation have a booking agreement at Rupp Arena in Lexington, Ky., and along with Delaware North have a deal with the city of Seattle to rebuild Seattle Center Arena.

For the Savannah proposal, Luukko said, the ball started rolling with a discussion with Live Nation’s president of arenas, Mike Evans.

“First, Live Nation came on board, and then Delaware North came on board, and we all decided to go in as a trio,” Luukko said. “I think we can optimize the revenue potential of the venue from a management, food, premium seating and content standpoint. We believe in the potential of Savannah, Ga., and that’s why we offered them the most upfront money.”

Jeff Chermely, project manager at architect Perkins + Will, came on board the project in June. “The design documents will be complete near the end of 2019,” he said.

Construction will start in September. AECOM Hunt was hired as the contractor before OVG’s involvement in the project.

Although there is no tenant team attached to the building, the designs will include locker rooms.

“This is a great market and there’s a tremendous amount of interest from minor leagues, collegiate leagues and semipro leagues that love Savannah as a destination and are interested in making a home here,” Hernandez said.

“Savannah is a beautiful resort city,” Chermely said. “This is a once-in-a-lifetime opportunity.”

The arena will be located alongside a canal in what will be a new canal district.

“Savannah’s weather is incredible and we’re designing in lots of special outside areas like a terrace on the concourse level, and the plaza landscaping will be really spectacular,” Chermely said. “This will be the crown jewel of a whole new district.”