Kodak Theatre's magic act in getting Cirque du Soleil to Hollywood

This might come as a shock to some, but you actually can get things done in L.A. without resorting to massive, mega-billion dollar developments. Case in point is the unlikely arrival of "Iris," Cirque du Soleil's ode to moviemaking. For anyone who hasn't checked out the show, there's plenty of time. It will be running at the Kodak for at least 10 years, an economic infusion that is probably without equal in Hollywood. As I explain in the October issue of Los Angeles magazine (the one with Maria Shriver on the cover), persuading Cirque to invest in L.A. was no easy matter. All cities want a Cirque show. What it came down to were two guys: Shaul Kuba, whose real estate company, CIM Group, owns the Kodak and Hollywood & Highland, and Gary Shafner, a friend of Kuba's who first came up with the idea.

For Kuba the biggest challenge in landing Cirque may have been setting up the first meeting. It took over a year. "I didn't encourage him. I didn't want to waste his time," says Daniel Lamarre, Cirque du Soleil's chief executive. The company was in the process of opening several permanent shows in Japan, Macau, and Las Vegas, and he wasn't looking for more. But Kuba called so many times ("It became sort of a joke," says Shafner) that Lamarre finally agreed to squeeze a half hour in between two meetings in Las Vegas. As Kuba and Shafner made their pitch, Lamarre became intrigued, remembering that Cirque had brought down the house during a four-minute bit at the 2002 Academy Awards. He and Laliberté arranged a second meeting, this time at the Kodak. "It was really Guy who sat in the theater, looked at the sight lines, and saw the possibility of it," says Shafner.
Unlike Vegas, with its almost constant visitor churn, L.A. is not an obvious Cirque target. No show has been permanently based here (Phantom of the Opera had the longest run, at four-and-a-half years). Also, Cirque shows are pricey to mount, requiring a complement of sophisticated lifts, platform stages, and set pieces. The Kodak's limited backstage would need to be significantly revamped in order for Cirque to match its production standards in Vegas, which any Hollywood show would inevitably be compared with. "So we said [to Kuba], 'You work on the backstage part, and we'll invest in the show itself,'‚ÄČ" Lamarre told me, sipping a double espresso at the Beverly Hills Hotel. (Shafner says he doesn't have a stake in the deal.) The cost of the project was $103 million--$51 million from CIM and $52 million from Cirque (shows that require the construction of a theater can run twice that). With eight performances a week, excluding six weeks to prepare for the Academy Awards, Lamarre figured he could sell 700,000 tickets each year.

Later on came the involvement of another friend, City Councilman Eric Garcetti.

Over the years city agencies have given nearly $100 million worth of loans and subsidies to CIM. With the Cirque deal in the balance, Garcetti's office came upon a little-used loan guarantee program overseen by the U.S. Department of Housing and Urban Development. The program, known as Section 108, is aimed at perking up low-income communities in cities that receive federally funded Community Development Block Grants (the average household income in the area near the Kodak is less than $35,000 a year). As part of the plan, the city would borrow $30 million and pass it on to CIM. Los Angeles collects $450,000 as a finder's fee. Having the city serve as an intermediary between HUD and a private entity was permissible but unusual. So was the size of the loan, which ranked as Section 108's largest in 2010.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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