Thursday, March 23, 2006

"About that $3.6 million you owe us..."

Earlier this afternoon, the city of Mountain View released an updated version of its audit report of Shoreline Amphitheatre. The original audit, released last August, claimed Clear Channel and a subsidiary concealed more than $20 million in revenue over a six-year period, and owe $3.6 million in unpaid rent and other penalties.

Like any good sequel, this one is bigger and better.

Auditors now say they have identified $80+ million in hidden revenues, and say the company needs to pay $15.6 million to make amends. The bulk of the increase came from two sources -- unreported receipts from shows at the HP Pavilion and the 1998 sale of the Ampitheatre lease to SFX (later purchased by Clear Channel).

Under terms of the lease, the city is entitled to 6.75 percent of gross receipts at Shoreline. If the company wanted to promote shows at concert venues within a 35-mile radius of the Amphitheatre, it would have to pay Mountain View a similar share of its receipts from those shows.

The auditors spent nearly half a million dollars on the investigation. The update alone involved combing through SEC filings, concert industry data and 40 boxes of documents that the city obtained during the discovery phase of its lawsuit, which is set to begin April 10.

The staff report, prepared by city finance director Bob Locke, blasts the company but also lays a lot of the blame at the feet of an unnamed city auditor, saying the auditor's ethical breaches helped the company hide the fact that it was underreporting its revenue.

1 comment:

joc said...

Nice scoop, dude. Happy Birthday.