In an unusual meeting Tuesday, Irvine city officials began to publicly hash out a brewing contract dispute with PSQ Productions, the vendor responsible for a multimillion-dollar deal to build and operate Great Park Live, the city’s temporary 5,000-seat amphitheater.
PSQ Productions has a long relationship with the city of Irvine, having produced more than 300 events at the Great Park over the last decade, CEO Mark Etner said.
But insofar as Great Park Live operations go, Etner says Irvine owes his company more than $1.6 million in outstanding expenses.
Irvine is committed to paying up after an internal audit of those expenses raised some “red flags that warranted a further review,” City Manager Oliver Chi said, but added there were “no financial irregularities that would rise to the level of malfeasance.”
Chi also recommended the city extend its contract with PSQ Productions for an additional year through 2027 because it will take the city at least until 2028 to build a permanent music venue in the park.
The council narrowly approved authorizing staff to engage in negotiations to do just that.
In February, the city entered into a three-year contract not to exceed $6.6 million with PSQ Productions, an Irvine-based company, to set up and manage the 5,000-seat temporary amphitheater that will serve at least through 2026, and possibly beyond then. It has been hosting tribute and commercial acts since opening in June and is the summer home for the Pacific Symphony.
The city is losing between $2 million and $3 million annually to operate the venue, Chi said, by subsidizing the symphony performances and due to capital costs, but city leaders see the establishment of a popular music venue in Irvine as a long-term investment in the city’s brand.
City officials approved the idea of a temporary venue after the abrupt closure of FivePoint Amphitheater last fall and as Irvine works to build a permanent music venue at the Great Park by 2028.
Great Park Live’s first season started in June with cover bands, but wrapped up earlier this month with a performance by three-time Grammy-winner Ludacris, highlighting the city’s ambition to attract artists of a certain caliber to the fledgling venue.
“Throughout this season, PSQ has delivered high-quality programming at Great Park Live, including 30 concerts, community events and city events,” Mayor Farrah Khan wrote in a memo to Chi in which she called for the special meeting before the Thanksgiving holiday to ask why the vendor had not been paid on time and to discuss how to rectify that situation. She said an email from PSQ Productions sent directly to councilmembers earlier this month triggered her concern.
During the hourlong meeting, Chi tried to explain the city’s concerns with PSQ’s accounting without divulging specific details of what could escalate into a bigger dispute with the company. However, that scenario seems highly unlikely as the two sides agreed in principle to continue to work together moving forward.
Chi promised a more thorough public review of city costs related to Great Park Live at a council meeting in January, while also expressing the city’s desire to re-up its contract with PSQ through 2027.
“I don’t want to come across as if we’re disparaging PSQ,” Chi said. “I really do believe they’ve worked in earnest to try to work with city staff. I absolutely believe, though, there were a series of issues that we encountered with PSQ’s submittal for reimbursement that triggered some red flags internally.”
Etner said his company has been complying with all the city’s requests for information.
“Since April, we have been providing documentation to the city,” he said. “They’ve had a shared link to all of the budget and all the costs. In addition to that, starting in July, the P&L (profit and loss statement) was shared with the city team,” he said.
“The reason why we’re in the situation we’re in is that the funding approved by the council in February ran out in August,” he said.
Chi disagreed with that assessment.
Etner contended that operating costs for the first season were higher than the roughly $2.2 million Irvine expected — ending up around $2.5 million this year. He said that in August the city ran out of budgeted funding to pay his company.
Chi said the city has earmarked and approved all funding necessary to pay PSQ through the duration of the contract and will not require additional approval from the council to pay its bills.
“After all expenses were accounted for, we’re still on track, roughly,” Chi said, referring to keeping costs under $6.6 million over three years.
“If we’re going to continue operating in future years,” Chi said, referring to the possibility of renewing the deal for 2027, “there will be an additional allocation of funding that the council would have to authorize.”
Councilmember Mike Carroll called what he was hearing from Chi “doublespeak.”
“I’m hearing everything’s great, but everything’s not great,” he said. “I’m hearing there are issues, but there aren’t issues.”
But Carroll later voted to approve negotiations for PSQ’s contract extension.
One issue that Chi eventually disclosed when pressed by the council related to PSQ Productions having contracts with a promoter and ticketing service that it did not disclose during the bidding process with Irvine. The city contends it should have.
Etner said that in the music performance industry, those sorts of contracts are typically not shared with a venue owner — in this case Irvine — “because they have nothing to do with the venue.”
“There’s no financial impact whatsoever to the venue,” Etner said.
Chi disagreed before Khan suggested that city staff and PSQ try to work that out in private.
Another issue not directly associated with the accounting, but that does impact the city’s administration of the venue, relates to a 10% management fee the city agreed to in its February contract.
Per the contract, the city is paying PSQ a 10% premium to handle equipment rentals.
An ongoing financial analysis by the city, according to Chi, suggests that Irvine can save up to $1.5 million per year by purchasing its own equipment, assuming it continues to operate Great Park Live through 2027.
Doing so, Chi implied, would keep Irvine’s annual operating costs well below the $2.2 million per year budgeted in the PSQ contract.
Ultimately, the council voted 3-2 to reaffirm its commitment to PSQ on condition of seeing the costs report in January. The council provided direction to staff to pay outstanding invoices and to extend the production company’s contract through the 2027 season while guaranteeing that annual operating costs will “in no instance be more than $3 million.”
Councilmembers Tammy Kim and Kathleen Treseder voted no on that direction due to concerns that $3 million per year is significantly higher than the original $2.2 million annual average.
“But we want that buffer zone just so we’re not in the same position again,” Khan argued.
Chi assured the council that he does not anticipate annual costs to approach anywhere near that new upper limit.
