The city of Atlanta’s leases with promoter Live Nation to run amphitheaters at Lakewood and Buckhead’s Chastain Park “do little to protect the city’s interests,” according to a new audit. At Chastain, the report says, the problems include a lack of revenue documentation, a failing sound monitoring system that led to a noise violation, incorrectly diverted funds, and a technical failure on a minority hiring requirement.
The city got about $4.2 million in revenue from the two venues in 2016 through 2018, according to the City Auditor’s Office report, which was finished in August and delivered Sept. 8 to the City Council and Mayor Keisha Lance Bottoms. But the auditors could not determine if that amount was fair and Live Nation declined to provide most documentation, the report says.
“We were unable to verify whether the revenue Live Nation provided to the city was accurate,” the report says.
The report recommends various contract and equipment changes, some of which already were made earlier this year in agreement with Live Nation management, and some of which remain contentious. The current pandemic-suspended concert season likely would complicate any contract negotiations, the report acknowledges.
To view the entire report on the City Council’s website, click here.
The audit began in 2018, the year that the Chastain Park amphitheatre sold naming rights to State Bank & Trust Company (now Cadence Bank) and a year after Lakewood was named for cellphone company Cellairis. The report was delayed by Live Nation’s denial of access to documents, the auditors said; a draft was circulated to management for comment in February and the final release was delayed by the pandemic shutdown.
The Chastain Park venue at 4469 Stella Drive seats 6,900 and has had Live Nation as its sole promoter since 2016, according to the report. The Chastain Park contract runs through 2026 with an extension option. The Lakewood amphitheatre in Southwest Atlanta has a capacity of 19,000 and has been operated by Live Nation since 2009.
Live Nation does all booking, promotion and related activities. According to the report, Live Nation pays a base rent plus some percentage of gross revenue under different formulas for each venue. Live Nation is also responsible for repairs, maintenance and capital improvements.
Live Nation and its partners at Chastain Park renovated the amphitheater in 2018 with $5.1 million in upgrades. At Chastain Park, the report says, Live Nation pays the city a base annual rent of $300,000, plus $8 per seat sold, 50% of naming rights revenue, and 33.33% of gross parking fees.
In 2016-2018, the city’s rent and share of revenues from the two venues was $4,236,230. Even though Chastain Park is the much smaller of the two, the report said it produced a majority of that revenue: $2,433,175.
But the accuracy of those numbers is in doubt, the report said. The Lakewood contract has no requirement for documentation of revenue, the report said. The Chastain Park contract does, but auditors could only get documents for the 2018 season, the report said. Live Nation, citing corporate policy, allowed auditors to view the documents only at its office and would not let them make photocopies or take photos, the report said.
The city Department of Parks and Recreation is required to prepare quarterly revenue reports for the Chastain Park amphitheater to deliver to the City Council, but failed to do so, the report said. The report indicated that Parks and Recreation already has started fulfilling that requirement.
Some specific elements of the contracts were especially mysterious due to lack of documentation, the report said. The city may not have received its naming-rights revenue for Lakewood in 2017, the report said, and cannot confirm if the 2018 amount was accurate. There are other oversight concerns as well. Live Nation affirmed to Parks and Recreation in 2019 that the city Law Department had vetted the Chastain Park naming-rights deal, but provided no documentation of that, nor did Parks and Recreation request any, according to the report.
The report also found that tens of thousands of dollars in revenue that should have gone into a Chastain Park Trust Fund for park improvements incorrectly went to other city coffers instead. “The city has not accurately allocated revenue to the funds as required by the Chastain contract,” the report said.
The auditors found that $24,944 that should have gone to the trust fund in 2016 instead went to the city’s Centers for Hope after-school program fund. The money has been put in the trust fund, the report said. That was on top of a total of $61,209 in Chastain Park’s 2017 and 2018 revenue that incorrectly went to the Mayor’s Youth Scholarship Program fund, an issue the City Council caught and corrected in 2019.
At Lakewood, the contract is not working for the city in other ways, the report said. Live Nation opts to pay a higher rent there rather than make capital improvements, contrary to the intent of the contract’s incentives. And Live Nation gets a $48,000 annual credit for maintenance work, which is supposed to be confirmed by the city Department of Enterprise Assets Management. But, the report says, “staff told us the department uses an honor system” and has not confirmed the work. Auditors visited Lakewood and noted such issues as kudzu growing on the building, the report said.
Both amphitheaters are in residential areas and their contracts require sound monitoring for excessive sound, the report said. But Lakewood lacks any sound monitoring equipment and there is disagreement on who should pay to install it, the report said. Live Nation says it has only had one noise complaint in Lakewood in 10 years and that was from one of its own on-site tenants, the report said.
Chastain Park does have sound monitors, the report said, “but Live Nation and its equipment vendor agree that the system is old and unreliable, resulting in malfunctions and inaccurate readings.” The report quotes a Live Nation executive as saying the confidence in the system is “very low” and that it “often behaves strangely.” The report said the company was working on installing a new system to work alongside the old one at the time that a 2020 concert season still looked possible. The amphitheater’s next scheduled show is in May 2021.
Of 131 total events at the Chastain Park amphitheater in 2016 through 2019, the report said, archived sound readings were available for review for only 67% of them. No readings from 2017 are available at all in part due to a 2018 cyber attack that locked many city computer files, the report said. Of the sound readings available for review, three events were found to have exceeded the sound limits in the contract, but two of those could not be enforced because the monitor system was restarted during the show. That left one event where the city fined Live Nation for excessive sound — a June 2019 concert by pop star Billie Eilish. The company paid the $5,000 fine while saying there may have been no violation.
Another issue raised by the report is a requirement for Live Nation to use a certain amount of minority-owned subcontractors. Live Nation has not submitted compliance reports for either venue, the report found, and “has not met the minority participation requirement for its Chastain subcontractors.” That venue did have three minority-owned subcontractors, the report said, but two were either not certified as such or had yet to complete the certification process.
The report includes a section of responses from Live Nation and city departments that indicates several of the recommendations would be completed in June and July, including some provisions for better access to documents and a system to make payments electronically.
The City Council on Sept. 8 referred the report to its Community Development/Human Services Committee for discussion, which could send it to the Finance/Executive Committee as well.