Lee says Hurwitz had showed no interest in the site until “the eleventh hour.” After Leggett rejected his proposal, Hurwitz aggressively lobbied the county council and state lawmakers. He argued that his Bethesda, Md.-based company would supply acts tailored to a local audience better than Live Nation, would pay double the monthly rent of $7,500 that Live Nation would pay, and would split naming rights royalties with Montgomery County. Alternatively, I.M.P. offered to build the music hall without a subsidy in exchange for full ownership. The county denied all Hurwitz’s advances and, ultimately, the council approved the project in October 2008. Hurwitz sued county and state officials when costs for the project rose from $8 million to $11.2 million, alleging that the bonds they issued for the Fillmore were illegal, but a judge dismissed his lawsuit in March.
Lee Development, also the general contractor for the project, turned over the completed building to Montgomery County last month. The county chipped in more money for the Fillmore by diverting funds from parks-and-rec projects that came in under budget. Live Nation covered the rest of the cost; under the terms of the lease, that money is considered pre-payment of rent. So, Live Nation may not have to pay rent again until 2017 (though the county won’t know the exact figures until October, when it has a full accounting of the company’s contributions to the project). Regardless of the rent payments, the nightclub is expected to bring the county about $200,000 and the state nearly $900,000 in annual tax revenue, Schwartz Jones says.
For his part, Lee says he’s delighted with the end result. The Fillmore is built so it could easily be connected to a new hotel and office complex, and he has about 15 years to decide just when to build such a site. The county must grant him approval for these projects—or pay him nearly $44.4 million to get out of their agreement. Lee is waiting for the real estate market to improve before he finalizes his plans, but thinks the Fillmore will be a great amenity for guests of the proposed hotel and office building. I ask him what kind of hotel he’d like to put there. His answer isn’t very rock ‘n’ roll: a Residence Inn by Marriott.
Live Nation Entertainment is premised on the notion that the music business can be tamed. Concert promotion and talent management is rampant with small-time operators that can be acquired or crushed by a savvy corporate player armed with spreadsheets, scientific management techniques, and strategic access to the capital markets. It’s artistry as algorithm: What works well in one market can be applied globally with efficiencies achieved and outsized profits earned. And Live Nation has scored impressive results with this philosophy. Since its spin-off from the radio empire Clear Channel Communications in 2005, Live Nation has grown annual revenue from $2.9 billion in 2005 to more than $5 billion last year. The company promoted more than 21,000 live music events with more than 2,300 artists in 2010. It struck multi-year business deals with Madonna, U2, and Jay-Z. It runs a talent management division with a stable of about 250 artists and has booking rights or investments in 128 venues, including the House of Blues and Fillmore chains in 17 cities. (For comparison, Anschutz Entertainment Group, the second-largest concert promoter after Live Nation, owns, operates, and consults with more than 100 venues worldwide.) In January 2010, Live Nation completed its merger with Ticketmaster, the world’s largest ticket sales and distribution company. In its most recent quarter, Live Nation reported a $13.3 million profit, ending two quarters of losses. The company beat analyst expectations partly due to better than expected revenue from its concert business, which rose 26 percent from the same quarter a year ago to $1.08 billion.
The Fillmore Silver Spring operation is a tiny cog in the Live Nation machine. The original Fillmore, which fostered the careers of the Grateful Dead, Janis Joplin, Jefferson Airplane, and others in the 1960s, came to Live Nation through a series of acquisitions after the death of its famous owner, Bill Graham, in a 1991 helicopter crash. Live Nation announced it would expand the Fillmore “brand” to more markets in 2007. It renovated Irving Plaza to create the Fillmore New York at Irving Plaza, the Theater of the Living Arts to establish the Fillmore Philadelphia, and turned Detroit’s State Theatre into the Fillmore Detroit. Each location featured chandeliers based on those at the San Francisco Fillmore and murals inspired by the original club’s trippy promotional posters.
Public reaction has been mixed. Live Nation had to restore the Fillmores in New York and Philadelphia to their old names after fans complained. But those were just bumps on the road. The Fillmore brand added a Charlotte location, the Jackie Gleason Theater in Miami, the Fillmore Auditorium in Denver, and now Silver Spring.