I-X Center boss nixes closure talk

By JAY MILLER
July 04, 2005 6:01AM

The I-X Center lives. And its operator and users aren't going to abandon it quietly to ease the way for a new downtown convention center.

Asked if he would relinquish his lease if a new, large convention center were built downtown, Ray Park, whose Park Corp. leases the mammoth I-X Center from the city of Cleveland, was brief and clear: "Absolutely not, under no circumstances," Mr. Park said. "The I-X Center is a going concern."

The Convention Facilities Authority (CFA), the quasi-public agency created last year to make decisions about how to improve Cleveland's convention facilities, has been grappling with options for a new convention center on the site of the 45-year-old Cleveland Convention Center on the Mall.

PricewaterhouseCoopers, which recently completed a study of the local convention and trade show market for the CFA, recommended the community build a center with a 300,000-square-foot exhibit hall, slightly bigger than the current hall, which offers 278,000 square feet of space. That would bring a new center's occupancy rate up to an acceptable level and maximize the impact on downtown. Last Friday, the CFA's planning committee voted to recommend that the CFA set a goal of building a 300,000-square-foot center. However, it also recommended that the CFA not disturb the I-X Center lease, which runs until 2014.

The PwC study cautioned that the success of the downtown center "would be hindered if the I-X Center remains open and occupancy and attendance at the new Center suffers as a result of this local competition."

The study estimated that about 15 events annually would shift from the I-X Center to the new downtown convention hall, doubling convention attendance downtown to about 650,000 annually. The shows at the I-X Center tend to attract large numbers of people, in part because the venue hosts some popular consumer shows.

If the I-X Center remains open, the PwC study found, a 200,000-square-foot center should be considered, though it would not likely achieve as high an occupancy level as the larger center.

Option play

But closing the I-X Center may not be easy.

"Our lease goes until 2014, and they act as though they can close it. Well, the only way they can close it is by eminent domain," Mr. Park said. "They don't have the option (to buy out the lease). We have the option, but they don't."
And, as Mr. Park said, he has no intention of walking away from what has been a profitable business and he suggested he would like to continue operation beyond his current lease.

According to the 1999 lease, "Tenant shall have the right to terminate this Lease, which right may be exercised by Tenant any time after the date on which the (new) Convention Center is opened to the public."

William Reidy, chairman of the CFA, said his group has not talked to Mr. Park and the group's initial legal opinion differs from Mr. Park's, but he said Mr. Park "has contractual rights that need to be respected."

If Park Corp. were to terminate the lease it would be entitled to a payment to reimburse it for a portion of its investment in the I-X Center. If the lease were terminated in January 2009, for example, the city of Cleveland would pay Park Corp. about $14 million. The amount declines as time passes.

Bigger is better

A more complicated - and perhaps more costly - formula would apply if the city were to seek the property through eminent domain.

Aligning themselves with Mr. Park are the operators of several of the largest shows that use the I-X Center. They would be expected to move downtown, but they wouldn't go happily.

"I'm not opposed to building something downtown," said Gary Adams, president of the Greater Cleveland Automobile Dealers Association, which puts on a 10-day auto show at the I-X Center every winter. "But (it should be) something that complements the I-X Center”

Mr. Adams and Chris Fassnacht, president of Expositions Inc., which puts on the Cleveland Home & Garden Show and the Cleveland Sport, Travel & Outdoor Show annually at the I-X Center, think their shows would diminish significantly if they had to cram them into a 300,000-square-foot space - half the space of the I-X Center.

"I know Cleveland city leaders want everything downtown," Mr. Fassnacht said. "But I think they are being shortsighted."

Mr. Adams added that moving downtown and shrinking the floor space available for displaying the latest offerings from automakers would drop his show from the first rank of auto shows- from, as he put it, an "A" to a "C" show.

In addition to the loss of prestige, public show promoters would take a financial hit if they had to move downtown. Less space means less revenue.

"To go from 600,000 square feet to 300,000 square feet, it doesn't take much math to know we're going to take a hit," Mr. Adams said.

Room to grow

Mr. Park also argued that, because of its size, the I-X Center brings to Northeast Ohio shows that would not consider a 300,000-square-foot center downtown.

For example, the Wire Association International Inc. is moving it Interwire trade exposition to the I-X Center for 2007, from the Georgia World Conference Center in Atlanta, where it has been for more than 20 years. That shows needs 450,000 square feet, according to Steven Fetteroll, the Charlotte, N.C.-based group's executive director.

Similarly, the Materials Handling Industry Association moved its biannual show from Chicago in 2004 and will be back in 2006.

F. Hal Vandiver, vice president for business development of MHIA, said the I-X Center and its management are keeping the show here.

"An environment prevails that is a true entrepreneurial approach to a relationship" that doesn't exist at publicly owned facilities, he said. "The I-X Center provides a wonderful opportunity to grow."