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April 22, 2005

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Publication Date: Friday, April 22, 2005

City demands Shoreline audit City demands Shoreline audit (April 22, 2005)

By Jon Wiener

Facing declining revenues and an ongoing legal battle with a deep-pocketed tenant, city officials concerned about the operation of Shoreline Amphitheater took another step forward last week in their push to force media giant Clear Channel to pay up or get out.

City finance director Bob Locke sent an April 14 letter to representatives of Bill Graham Presents, now owned by Texas-based Clear Channel, demanding the right to conduct a full-scale audit of the amphitheater's finances dating back as far 1999.

Last year a judge ordered the company to open up its books, but the city still has not been able to complete its annual reviews of the lease.

"They're dragging their feet and refusing to give us information," said city attorney Michael Martello.

The company has been at odds with the city ever since it took over the lease at the amphitheater in 2000 and sued to stop annual audits of the concert venue's finances. The city responded by accusing the company of racketeering and theft of public funds, pointing to unreported revenue from sponsorship agreements and a "parking fee" charged to each ticket.

Officials at Bill Graham Presents and Clear Channel did not return repeated phone calls requesting them to comment on this story.

Under the lease, Clear Channel pays a percentage of its revenue - excluding parking - to the city's general fund every year, in addition to several hundred thousand of dollars in property taxes. But in recent years, the number of acts coming to Mountain View has declined and the total amount paid to the city has fallen.

According to finance director Locke, the city's take from the amphitheater reached a high of more than $1.5 million several years ago. Now he estimates the city will receive less than half of that - approximately $725,000 - an all-time low for the venue even without adjusting for inflation.

"We don't know if we're receiving all the money that we're supposed to. It appears to us that we're not," said Locke.

Last year, Clear Channel sent the city an unsolicited $11,000 check after conducting an internal review, mystifying city officials. Earlier this month, they sent another - this one for $222,000 - under a previously unenforced profit-sharing provision in the lease.

"About $450,000 has fallen out of the sky," said Martello. But the city suspects much more than that has been illegally withheld.

Locke said that the city had similar arguments with promoters in the past, but the battle with Clear Channel is more difficult to resolve because of the multinational company's accounting methods. He added that if Clear Channel had not first sued the city, officials might never have discovered what they believe is enough proof of deceit to file a countersuit.

As the lawsuit moves forward - a trial date has been set for Feb. 6 of next year - the relationship between the city and the company continues to be strained. The company cancelled the popular Afribbean and New Orleans Jazz festivals several years ago. And Mountain View residents are increasingly staying away from the city-subsidized Fourth of July concert and fireworks show, where last year promoters did away with the miniature American flags and the 1812 Overture that once characterized the event in favor of Hillary Duff movie buttons and Disney songs.

"The taxpayers of Mountain View are entitled to know if a major lessee is on the up and up," said Mike Kasperzak, who expressed confidence that another promoter would step in to operate the amphitheater in the event a jury found Clear Channel to be in breach of its lease.

During a discussion last December of the free VIP tickets valued at nearly $9,000 that each council member receives as part of the lease agreement, then-Council member Rosemary Stasek put it even more bluntly. Clear Channel, she said, "has been robbing us blind for years."
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