CHICAGO — Lollapalooza organizers and the Chicago Park District reached a stalemate Thursday night in crafting a new contract to keep Chicago’s largest music festival in Grant Park for years to come.
Sources with knowledge of the negotiations said the impasse is centered on the city amusement tax. The festival — which draws 100,000 attendees for each of the four days — is subject to the tax, which increased from 5% to 9% for large-scale events over the course of the existing 10-year Lollapalooza contract. Festival organizers want safeguards against the city raising the amusement tax over the life of a new agreement.
The news of the standoff came hours after Lollapalooza cofounder Perry Farrell announced in a news interview that organizers had reached a 10-year deal with the city. Representatives for Texas-based C3 Presents, which puts on the festival, were quick to say that negotiations were still ongoing.
A city official declined to comment Thursday, referring questions to C3. A Park District spokesperson could not be reached.
Lollapalooza’s current agreement, signed in 2012, was set to expire after last year’s festival, but the parties agreed to execute a one-year extension. This year’s festival opened Thursday in Grant Park and runs through Sunday.
Once a traveling festival that found a home in Grant Park in 2005, Lollapalooza is said to generate millions in local economic impact and revenue. When the Lollapalooza contract was announced in 2012, after months of private negotiations, it was heralded as a “big win” for Chicago’s taxpayers, hotels, restaurants, cultural community and parks.
The contract includes a provision that festival organizers are on the hook for sales, liquor, leasehold and amusement taxes. The deal was executed just months after the city Office of the Inspector General noted that Lollapalooza organizers were not paying the 5% amusement tax, even though other music festivals were required to pay. At the time, in 2011, Lollapalooza organizers were giving 10.25% of the profits to a foundation that raised private funds for the Chicago Park District.
The amusement tax hike to 9% for large performances was part of then-Mayor Rahm Emanuel’s 2018 budget. Lollapalooza organizers also pay a 1.5% county amusement tax, one source said, after receiving a break on that tax for years. The source warned that an additional tax hike would be passed on to ticket buyers.
Recent contract negotiations have sparked criticism over the lack of transparency from the Park District, while neighboring aldermen have complained about the noise and other nuisances. The one-year extension inked in 2021 was done behind closed doors, without any public discussion or vote. Neither was the decision to extend the festival from three days to four starting in 2016.
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(Tribune’s Gregory Pratt contributed.)
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