Cobo authority negotiating 7-figure naming deal
Detroit — The authority that oversees Cobo Center is in the "negotiation stage" of a seven-figure deal over the sale of the center's naming rights.
Cobo Center general manager Claude Molinari told The Detroit News on Thursday that there was no timeline for the renaming and declined to offer information on those interested.
"We're down to the nitty-gritty of just finalizing the deal, and I'm hopeful that we'll have something to say in the future," Molinari said following a board meeting of the Detroit Regional Convention Facility Authority.
"We're moving forward," he said. "We think we're going to come to a very positive finale on this when we eventually get there."
The authority hired firms in August 2017 to search for clients to buy the rights to name the center. It's a move that's similar to Rock Ventures and Quicken Loans Chairman and founder Dan Gilbert buying naming rights to the QLine.
Built by the city and opened in 1960, the convention center, then dubbed Cobo Hall, was named after former Mayor Albert E. Cobo.
Detroit Mayor Mike Duggan raised the prospect of the name change during a speech at the Mackinac Policy Conference last year. Duggan, a Democrat, has said that the tenure of Cobo, a Republican, was about "government by exclusion."
Calls to purge Cobo’s name from the facility arose as cities across the country began debating the fate of controversial statues in public places. At the same time, the convention center’s board said it had been exploring the option of marketing naming rights for nearly a year before Duggan raised the idea.
Molinari said the authority has been operating in the black. The 2017 fiscal year ended with the authority running a profit of $120,000 and it anticipates finishing the 2018 fiscal year with $400,000, not counting its state subsidy.
That's a departure from the one-time drain on the city's finances of $21 million annually.
The authority took over operations of the struggling venue from the city at the end of 2009. It has undergone a $279 million renovation since then.
The authority board, during its Thursday meeting, approved a three-year extension of its management agreement with Pennsylvania-based SMG, which has managed the facility since 2010.
The company's existing deal expires Sept. 30, 2019. It now will extend into 2022 and also will have the potential for another three-year extension that would run through 2025, Molinari said.
Under the contract, SMG will earn $400,000 per year.
The firm has managed Cobo since 2010 and, in that time, attendance has gone from about 1.1 million in the 2011 fiscal year with 309 event days and 176 events to an attendance of 1.3 million with 497 event days and 283 events in the 2017 fiscal year, according to data provided Thursday.
"The biggest thing is the impression of Cobo Center in the industry has done a complete 180," Molinari said.
In the next two years, the authority is expected to host a number of new shows including the National Society of Black Engineers, Midwest Anesthesia Residents Conference, Fasten Fair USA, Society of Manufacturing Engineers RAPID, American Gear Manufacturers, ASM Heat Treating Society Conference & Expo and A3 Automotive.
The authority board on Thursday also discussed the impact of the upcoming shift of the Detroit auto show to June beginning in 2020.
The move is part of an effort to give carmakers a chance to move exhibits and activities outside Cobo and to locations around the city and beyond, organizers have said.
The change, Molinari said, could pose a challenge to accommodating clients that often book the center during the summer months. The auto show accounts for more than 40 percent of the center's annual revenues.
"We're going to face some challenges there," he said. "Over the last several years, June has been one of our best months."
Larry Alexander, the board's chairman, said the show's move will "create some issues" with other customers who already are on the books and looking for specific dates in the summer.
"Some people will be happy, some people will not be happy and some people are going to raise holy hell, probably," Alexander said. "Looking at the schedule, the team has done everything they can to appease as much as possible. But, unfortunately, there will be some no's that will have to be extended to some of these clients who have been with us for a while. We just don't have the space available."
Even so, Alexander said, the increased interest in hosting events at the center is "a good problem to have."