mikea said:
The revenue's got nothing to do with it. They would NEVER let anybody see the books when they claimed Meigs was costing $millions to maintain. You can be sure that just like using airport improvement funds to pay the O'Hare concrete contractor to dig up Meigs, they could charge the vehicles for Midway to Meigs. They did lots of that to justify the landing fees and the fees for collecting the fees.
You know full well, Bill, that any of these contracts with big media corps to bring revenue, like the bus shelter deal, go like "Duh Man says get dese guys. Ask dem what are dey gonna pay?" If they offer $3 million, the competition might have offered $10 million. Somehow, how much REVENUE they get so the city can seek a percentage is never asked. And if the contract says the city has to spend $5 million first to build or supply services that gets lost in the fine print.
Meigs was closed because Mrs. Daley wanted it closed. End of story.
The way most of the contracts work is that the concessionaire promises to pay the city a percentage of the revenue obtained, and then has to guarantee a fixed amount. Who supplies the hardware or services is subject to negotiation.
Take the Chicago bus shelter contract. DeCaux promised to pay a certain percentage of the revenue obtained (most likely on a sliding scale), and then guaranteed a fixed amount per year - so the percentage amount only comes into play after it exceeds the guarantee. DeCaux also has to pay all the capital costs of installing the shelters. Normally, the schedule for installation is tied to the guarantee (e.g. full guarantee is not owed until all the shelters are installed) - so the city insists on a schedule, and the contractor gets a reprieve if the city drags it's feet on granting the permits or approvals for each shelter. In the end, the guarantee to the city is usually a LOT higher than the capital cost. And a "prepayment" of a portion of the guarantee is often demanded by politicians (especially during an election year).
The city may insist on a minimum percentage to start with, so the stiffest negotiation revolves around the schedule, the amount of the guarantee, and the amount of the prepayment. After the contract is signed, the games begin as the contractor usually proposes locations for the shelters, and the city drags its feet.
The same process is used for operating a theater or other venue. The contract may require that the contractor pay for all the capital improvements (with reversion to the city at the end), plus a percentage and guarantee. The shorter the contract, the greater chance of the contractor refusing to pay for the improvements (or offsetting the guarantee by the amount of the improvements).
For the contractor, it's a bunch of number crunching to minimize expense while still bidding something that should win the contract.
IIRC, the venue at the former Meigs location is a tent-like structure with portable seating or bleachers. If so, that is relatively inexpensive and bleachers can be purchased or leased. Tent-like structures are really easy, fast to put up, and cheap.
BTW, this type of contract is used for other concession services, too. Airport rental cars, on-site hotels, food/newsstands on city/airport property, etc. all use a similar process.
For a good idea on how it works, see this contract RFB from the Washington DC Airport Authority:
http://www.metwashairports.com/busi...ng_opportunities/op-pages/5-06-c001-documents
The revenue can pe pretty substantial.... and I'm betting that the airport FBO services at Meigs were handled the same way.