(Crain's) ? A new agreement between the Chicago Park District and concert organizer C3 Presents will keep Lollapalooza in Chicago through at least 2021, and require C3 to pay millions in amusement and liquor taxes for the first time. It also will increase the ticket prices to concertgoers, according to Charlie Jones, co-owner of the Austin, Texas-based concert promoter.
Keeping Lollapalooza in Grant Park will bring in an extra $1 billion in economic impact over the course of the deal, according to Chicago Park District officials.
The city, Cook County and state will also see immediate revenue jumps as C3 begins paying taxes from which it was previously exempt. Under the new deal, local governments stand to receive at least $4.05 million this year and at least $5.4 million annually by 2012. Last year, under the previous agreement, total tax revenue was $2.7 million.
(See related story: "Lollapalooza vies with Chicago's top conventions in spending impact.")
C3's annual percentage of net ticket sales to the park district will increase this year to 11 percent from 10.25 percent, escalating annually until it reaches 15 percent in 2021. C3's guaranteed minimum payment to the park district will jump to $1.5 million this year versus $1.1 million under the previous agreement.
As for the size of the price bump, ?we haven't determined it yet,? said Mr. Jones. ?Obviously there's going to be additional expenses to produce the show this year that make an increase necessary.?
The new deal is the result of tougher negotiations by the Chicago Park District as Lollapalooza has become increasingly profitable. Attendance has steadily increased over the years, hitting a record 270,000 over three days last summer.
The original agreement, negotiated in 2005, was designed as a fundraising partnership with Parkways Foundation, the non-profit group that supported the Chicago Park District and provided resources to improve park district opportunities for residents. Since that time, C3 has contributed almost $11 million to the Parkways Foundation.
?The scale of Lollapalooza is so much larger in capacity, in the size of its footprint and the pressure it puts on the city, we felt it was time to restructure the deal,? said Mr. Jones, who said he volunteered to renegotiate with the park district months ago.
Still, ?the park district was pretty hard on us in negotiations this time around and sometimes you might feel unappreciated,? he said, hinting that he had looked at moving the concert to another city where the cost of producing a music festival is much lower.
?There are going to be some growing pains,? Mr. Jones added. ?It's a significant jump in expenses?But I'm happy that we are in a position with the city to keep Lollapalooza in Chicago for a long time.?
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