Sands Loses MAGIC

Judge asked to rule on contract dispute between manager and venue

By Heidi Genoist -- Tradeshow Week, 4/12/2004

LAS VEGAS—MAGIC Intl. has announced it is consolidating its top-10 tradeshow MAGIC Marketplace under one roof at the Las Vegas Convention Center starting with the next show Aug. 30-Sept. 2. But whether this means the Sands Expo & Convention Center – where the Women's Wear Daily-sponsored portion of the show, WWDMAGIC, is held – will remain empty during those dates may eventually be decided by a Nevada federal court judge.

On March 30, about a week after two lawsuits were filed asking the U.S. District Court of Nevada to intervene in a contract dispute between the show operator and the Sands, MAGIC announced it was moving WWDMAGIC to the LVCC in order to consolidate it with the rest of the Marketplace, including men's, kids' and alternative trends sections. Laura McConnell, MAGIC general manager and vice president, said her customers have asked that the show be located under one roof.

"The market's been changing," she explained. "More than 60 percent of our buyers are crossover buyers, meaning that exhibitors share buyers between men's, women's and kids. That number is climbing, and our attendees and retailers have time poverty, so this is a way for us to give back to them."

The semiannual show, which regularly places in the top 10 of the Tradeshow Week 200, peaked in August 2000 at 3,200 exhibiting companies occupying 1,042,650 net square feet and drawing an estimated 100,000 attendees (including exhibitors). By August 2003, show statistics had dropped to 2,858 exhibitors, 818,706 net sq. ft. and 87,000 estimated attendees.

Despite the move toward consolidation, McConnell insisted the show is on the upswing. She said the most recent event, held Feb. 23-26, saw a 5-percent growth in exhibit space, with a total of 865,000 net sq. ft., and a 14-percent jump in attendance, with some 90,000 attendees.

Nevertheless, she added that MAGIC does not anticipate moving the women's division back to the Sands.

This could be because the Sands doesn't want MAGIC's business anymore. The two lawsuits filed at the Las Vegas federal court within a week of each other indicate a contentious situation has been brewing between the venue and its client since last summer.

The first suit – filed March 19 by the Men's Apparel Guild in California against Sands owner, the Interface Group – asks the court to decide both parties' rights and responsibilities, including MAGIC's right to "determine which, if any, elements of MAGIC Marketplace may be held at the Sands Expo."

This request is explained in the more lengthy complaint filed five days later by Interface against MAGIC, which is owned by Advanstar Communications. This suit alleges that Advanstar CEO and President Joe Loggia in March wrote a letter to Interface saying MAGIC would honor its contract with the Sands for the August 2004 and February and August 2005 shows, provided that the halls used by WWDMAGIC at the Sands either be left vacant or leased to an event that doesn't compete with MAGIC Marketplace. A couple days later, the complaint alleges, an attorney for Interface wrote to Advanstar acknowledging cancellation of the August '04 show and stating the Sands' right to seek payment of fees.

Sheldon G. Adelson, chairman of the board of Las Vegas Sands, the parent company of the Venetian, described Advanstar's actions as "highly unethical" and Loggia's attitude as "a power play." "He's practicing restraint of trade by not releasing the space, which he wants to prevent us from renting to a competitor. He signed the contract that he's going to occupy the hall, and he's not going to occupy it," Adelson said.

According to Interface's complaint, the suit follows several months of MAGIC's waffling between holding the women's show at the Sands as planned in '04 and '05 – and possibly even adding 2006-2008 dates to the contract – holding another event at the Sands during the booked dates, and pulling out altogether.

Interface also claims that it stands to lose both rental fees and revenues from ancillary services such as utilities, telecommunications and maintenance if the Sands is not allowed to fill MAGIC's vacated dates with other events. By Interface's estimate, fees for the August '04 show alone total $612,500, and services have brought in an average $1 million per show since 1998, when WWD moved from the Las Vegas Hilton to the Sands.