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9:30 Club sues state of Maryland over Live Nation deal

on June 25, 2010, 11:15am

The 9:30 Club exists as yet another landmark in D.C. Its history is encyclopedic, its sound-system is pristine, its aesthetic cutting-edge, and its cupcakes delectable. However, the seminal rock club now finds itself involved in two separate lawsuits loosely involving Live Nation/Ticketmaster.

Live Nation struck a deal with Montgomery County in 2007 in order to build a 2,000 capacity rock club in Silver Spring, a suburb of D.C. The deal was subsidized with $4 million from Silver Spring’s Montgomery County and a matching $4 million grant from the State of Maryland. Since then, the deal has been swarming with controversies, and on June 16th, 9:30 Club owner  Seth Hurwitz filed suit against the State of Maryland claiming that Montgomery County did not meet the criteria to be proffered grant money from the state.

Until 2007, the location for the venue was slated to become a dinner theater operation in conjunction with Birchmere Music Hall in Alexandria, VA. That deal fell through, and at that time, the 9:30 Club tried to get in contact with the County Executive Office, who were controlling the deal, to express interest in bidding. The 9:30 Club’s calls were not returned. Two days later, it was announced that the Silver Spring venue would be a Live Nation venue.

Live Nation’s bid was $3 a square foot, plus a monthly rent check of $7,500. The 9:30 Club later offered a bid of $6 per square foot and offered to buy the building outright from the county. Their bid was denied.

Hurwtiz’s parent company, I.M.P., Inc., insists this suit against the State of Maryland has nothing to do with Live Nation. Audrey Schaefer, a representative for I.M.P. spoke with CoS regarding the fundamentals of the lawsuit.

“If the criteria for the funding isn’t met in accordance to the law, it’s illegal to release the money.” Schaefer said. “It’s that simple.”

The criteria in question was given from the county to the state in the form off a feasibility statement and cost information. It was approved April 14th, effectively awarding the Live Nation venue an additional $4 million. It is in this criteria that Hurwitz’s suit hopes to uncover error, faulty findings, low estimates, and misinformation.

“I think if the public knew how every step of this thing has been back-roomed and steam-rolled, they would be properly outraged,” Hurwitz said in a statement. “We are going to begin the process of uncovering these layers.”

There is a storied history of poor budget planning for new arts venues in Montgomery County. The $100 million Music Center at Strathmore was $50 million over projections, the bulk of which was paid for by the public. There were also overruns at the American Film Institute and the Round House Theatre, both in Silver Spring.

Schaefer expressed her concern about the subsidizing, saying, that in the current economic crisis, building a music venue shouldn’t be so high on the county’s list of priorities.

“What we’re saying is, in a time when the county is laying off teachers and making budget cuts, and is still going to invest $8 million dollars in a rock club, at least follow the letter of the law,” Schaefer said.  “If the requirements are not met, the funding should not occur.”

Montgomery County Councilwoman Valerie Ervin expressed her views on the lawsuit to the Mo.Co. Gazette Online. Ervin claims that Hurwitz is merely lashing out against perceived competition and has little legal precedence to stop the Fillmore.

The Washington Business Journal reports that because of the lawsuit, the state cannot currently release funds for the project. No court date has been set for the lawsuit, but pending the lawsuit, the county plans to start construction on the 2,000 capacity venue this September, to be completed September of 2011.

This lawsuit and Hurwitz’s antitrust lawsuit against Live Nation will all come to rest in the coming year, and we will continue this report once they are settled.

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