Sunset Strip Board Struggles Over Whether to Shut Down the Organization

The board of directors and some members of the financially troubled Sunset Strip Business Association (SSBA) struggled yesterday with whether to put the association and its music festival into bankruptcy or continue to explore options for resuscitating it.

The organization is burdened with $1.7 million in debt, which includes a loan of $250,000 made by its chairman, Mikeal Maglieri, and $150,000 from the Nederlander Group, an event promotion firm that managed last year’s Sunset Strip Music Festival. The Nederlander loan payment is due next Tuesday, however, the SSMF at the end of May had only $375 in its bank account. Maglieri is owner of Whisky A Go Go, the famous rock club, and the Rainbow Bar & Grill. In addition to that debt, the SSBA and the Sunset Strip Music Festival LLC (SSMF), a separation organization that it owns, jointly owe Nederlander another $619,000 to cover its share of the loss in last year’s annual music festival.

Todd Steadman, executive director of the Sunset Strip Business Association
Todd Steadman, executive director of the Sunset Strip Business Association

Data supplied by Nederlander to the SSBA shows the festival generated $490,000, mostly from ticket sales, and had expenses of $1.1 million. Under its contract with Nederlander, the SSBA has to pay for the losses by allocating at least 25 percent of the revenue it gets from sources other than assessments on businesses, which are required under law to pay those assessments because the SSBA is a city-sanctioned business improvement district. But currently the only significant source of such revenue is the $408,000 that Jack Daniels pays to advertise on banners on city-owned street light poles on Sunset Boulevard. Under questioning, Todd Steadman, the SSBA’s executive director, disclosed yesterday that $15,000 of that revenue goes to him as a commission for making the sale.

The board and various SSBA members discussed the situation at a meeting yesterday, with some suggesting the SSBA shut down and others pressing for time to consider more options. The SSBA has tried unsuccessfully to sell the music festival and is exploring ideas for generating revenue such as selling Sunset Strip-branded merchandise and advertising on its website.

Lee Maen of Innovation Dining Group, owner of restaurants such as Katana and BOA Steakhouse on Sunset Boulevard, said the SSBA should close. “Instead of making the Sunset Strip better we’re spending a lot of time cleaning up this mess,” he said. Maen was the author of a letter to West Hollywood City Manager Paul Arevalo in May asking that the City Council not authorize the continuance of the SSBA until major changes were made. His letter was signed by the owners or managers of other prominent Sunset Strip businesses including the Andaz, Grafton, Mondrian and Sunset Marquis hotels; bars and nightclubs such as Bootsy Bellows, the Den, the Pearl, Rock and Reilly’s and the Viper Room, and restaurants such as Pink Taco and Rivabella. In a sign of the members’ discontent, four have resigned from the SSBA board of directors.

Norbert Relecker, general manager of the Mondrian, expressed concern yesterday about the SSBA’s ability to promote local businesses, noting the SSMF and the summer Farmer’s Market have both been unsuccessful. “You don’t have any buyers, any takers,” said Lin Schatz general manager of the Andaz, referring to efforts to sell the festival. “I think we just have to say we’re done.”

Maen and other frustrated SSBA members also have pressed the organization to reduce the assessments levied on its members. Several proposals offered by Todd Steadman would reduce the assessments for its members. For example, under one proposal nightclubs and bars with an occupancy of 500 or more would have their annual assessment reduced from $35,000 to $8,750. Hotels with up to 119 rooms would see their assessment reduced from $2,500 a year to $1,000.

Maglieri said he found himself going back and forth on whether the SSBA should continue. While he would lose his $250,000 loan if it closed, he said he also wouldn’t have to pay a $35,000 annual assessment. Maglieri said his business doesn’t need the marketing services of the SSBA

“We’re in a state of limbo between disgruntled City Council mebers, part of our members that are disgruntled, and rightfully so, and members who got threatening letters from the city,” he said, citing letters sent to SSBA members who haven’t paid their asssessments.

If the SSBA were to close, Maglieri said, “it would take years to start a new BID (business improvement district) over again… It’s not going to happen.”

Steadman has presented various options for moving ahead, all of which focus the SSBA on spending to provide security on the Strip, albeit less than it currently provides. For example, the SSBA would not pay for security patrols on Mondays and Tuesdays and would reduce the number of security officers on Sundays from four to three.

Because the subject wasn’t on its official agenda, the board was unable to vote yesterday on whether to close the SSBA or put the SSMF into bankruptcy. It has scheduled a special meeting in two weeks to consider those issues.

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jules
jules
5 years ago

The Sunset Strip is so famous for it’s music history, BUT honestly, NO ONE cares about the Music Festival. That much is obvious since that’s what put SSBA in such debt. Cancel the festival and find some other way to increase revenue. But the Farmers Market is valuable — there is nothing like it in the area and it is truly missed.

Jon Kolbeck
Jon Kolbeck
5 years ago

As a resident above Sunset Strip, the only tangible benefit I have seen from the SSSBD is the morning trash removal. I certainly hope this isn’t going away as it is needed desperately. Sunset needs a serious beautification effort. The last one wasn’t very well planned (changing out trees that have half the year without leaves and/or have died already and median plants that have for the most part died). Residents should be brought into this discussion more fully.

Steve Martin
Steve Martin
5 years ago

Good points Mr. Block. As the Sunset Strip is such a key part of West Hollywood’s financial success, perhaps we should consider other funding sources rather than assessments to business owners. We divert a portion of our Transient Occupancy Tax (Hotel Tax) to the West Hollywood Business and Convention Bureau, which does a great job. Perhaps a the SSSBD should be funded in a similar manner given the vital contribution the Strip makes toward our municipal budget. The current model is broken and we need to re-think the whole concept of business improvement districts. Too often City Hall wants to… Read more »

Larry Block
Larry Block
5 years ago

Here Ye, Here Ye, — to all those who cried about why we could not form a Boystown business improvement district and the struggles with getting 51% of the merchants to approve. And then have city council members publicly declare… ‘get your act together’ or to ‘if you had a BID you could use that money to make sure the crosswalks in the area are patrolled. I’ve been advocating for a city sponsored Merchants Association with local business owners and interested community participants to create unity and collaborate on all the issues that we face. The BID’s budget is eaten… Read more »

Don Azars
Don Azars
5 years ago

I’ve never thought the Sunset Blvd group needs an organization let alone the music festival. First of all they have NO allegiance to the City of West Hollywood..it is an inconvenience to them to have to deal with a local city when they want to increase their businesses. They have not contributed or participated in the annual events that don’t occur on “their street”, PRIDE ETC. AND it’s obvious they don’t need a “Music Festival”. Their clubs are full of profit making music performances. Putting it on the street doesn’t enhance business, recall the “ole days of the 60s” or… Read more »