Arena Management, the company which runs the Sydney Entertainment Centre, has been placed in receivership after struggling with the downturn and failing to sell the lease on the venue.
Arena Management is chaired by well-known showbiz industry figure Kevin Jacobsen. In a statement issued late on Friday, he blamed the “sharp and unexpected market downturn” in the market for the company’s situation.
“Ultimately this is a loss for the Sydney public,” Jacobsen said. “The venue’s staff and management are highly regarded.”
Jacobsen has been trying to sell or assign the lease on the SEC for around two years.
One interested party was AEG Ogden, which operates 15 venues across the Asia-Pacific region, include Sydney’s Acer Arena. Earlier this year it signed a heads of agreement with Arena Magament to take on the SEC lease, but later withdrew from the deal after indentifying “significant problems with the operation of the venue under the current arrangements”.
Jacobsen has accused the owner of the venue, the NSW Government’s Harbour Foreshore Authority, of being unwilling to adjust the SEC’s rent in the current economic environment.
According to a report on News.com.au, the Government charges Arena Management $2.5 million per annum in rent, plus 25% of pre-tax revenue earned from staging concerts and other events
“It’s a real pity the venue’s owner could not find a way clear to adjust the lease conditions to reflect the sharp and unexpected market downturn,” Jacobsen said.
Arena Management is now in the hands of receivers Andrew Wily and David Hurst from Sydney insolvency firm Armstrong Wily.
They will continue to trade as usual for the time being, meaning concerts scheduled for later this month – including a performance by veteran shock rocker Alice Cooper on 24 August – can go ahead.
A concert by legendary diva Liza Minnelli on 2 November will also go ahead.
Arena Management owes $1.7 million to a company associated with Jacobsen, but Hurst says the size of the company’s other debts are unknown at present.
“We’re just collating that information, it’s still very early days. We were appointed around lunchtime on Friday so my guys are down there today.”
Options to restructure the business include finding another party to take over the lease or renegotiating the lease the Harbour Foreshore Authority.
“We expect that we’ll be having a meeting with them later week,” Hurst says.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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