Bright lights, big city

Richard Brass looks back on a year of The O2, London's leading entertainment venue and an exercise in successful business turnaround

Only a year ago the great white dome on the Greenwich Peninsula in London was one of the great symbols of failure, the physical equivalent of the poll tax or getting rid of the 10p tax band.

Despite costing close to £800m, being driven by a government at the height of its popularity and power and drawing on the services of many of the leading creative minds of the time, the Millennium Dome was, in anybody's language, an embarrassing flop.

Attendances were only half of what was anticipated, most of the elaborate features showcased at the venue were slammed by critics, and the entire project was mired in disputes about cost, content and what it was all really for.

And when the millennium year ended and the venue closed, the largest domed structure in the world continued to work its magic, proving difficult to sell and costing the UK government over £1m a month just to maintain. It became something that most people who had been involved wanted to avoid looking at, and working on the Dome became a point that you might want to minimise on your CV.

But over the last few years, as the Dome's reputation as one of the great British blunders gradually increased, changes were taking place inside the building that transformed it into something completely different. In less than a year since the building reopened as The O2 last June, the great white elephant of Greenwich has become a key part of the UK's entertainment scenery, a venue at which the biggest artists in the world are happy to play and to which audiences are equally happy to come.

The list of acts that have played to full houses at the 20,000-seat O2 would be the envy of any venue on earth. After an opening night gig by Bon Jovi, the venue has hosted Prince, The Rolling Stones, Elton John, Celine Dion, Scissor Sisters, Justin Timberlake and Take That, among others. It was the site of Led Zeppelin's comeback gig and the Spice Girls' first shows in Britain for a decade. Kylie Minogue and Dolly Parton are among those booked to play later this year, and discussions with other big acts are continuing all the time.

Despite opening halfway through 2007, The O2 overtook New York's Madison Square Garden to became the world's most popular venue by the end of the year, with ticket sales of 1.4m. Meanwhile, other events such as the Tutankhamun exhibition and gigs at the smaller IndigO2 venue have also been very successful, and the venue's 25 bars and restaurants are doing a healthy trade.

The speed of the transformation in the venue's image has been remarkable, and led to The O2 being named as one of the top 10 media brands of 2007 by the influential branding publication Brand Republic. From widely derided embarrassment to internationally recognised music venue in less than a year is one of the most striking turnarounds of recent times, and the reasons behind it will be closely examined by businesses for useful tips. Setting up on the site of a such a monumental failure was in fact an advantage for the new venue, believes Mark Donnelly, managing director of The O2, because expectations were so low. 'The building had already had one failed incarnation, and you don't get too many second chances,' he says. 'That really focused the mind, because we knew that we had to get it right.

'In a way that was a huge opportunity, because people probably came initially not knowing what to expect and maybe being a little bit sceptical of what was going to be there, and when they saw it they were so knocked out that I think that increased the sense of enjoyment and positive reaction that we got.'

Donnelly is reluctant to speculate on the reasons for the failure of The O2's predecessor, except to suggest that the project was undertaken largely for political reasons rather than commercial ones, which is not the ideal way to set up a venue. 'The government is not a body that runs tourist or entertainment destinations,' he says.

But running entertainment destinations comes easily to The O2's owner, Anschutz Entertainment Group, which owns several major complexes in the US as well as sporting teams in the US, the UK and continental Europe. 'We've brought a lot of experience of running venues, so we know how to design, build and run them,' says Donnelly. 'We're also a company that's got clear ideas. If you look back to when the project started in 2001-02, having the vision and strength and single-mindedness to take something like the Dome, which was a huge disappointment and had a big negative perception around it, was a pretty brave move in the first place. You needed a company that could see it, and then push it through and create something.

'We also saw that there was the opportunity in London, which hadn't had a new music venue purpose built since the Royal Albert Hall, which is pretty poor for a city the size of London.'

But it was the flying start with some world-class gigs that he believes helped establish the venue as a huge part of the entertainment landscape. 'We could have built the best building in the world, but if no one wanted to play in it then it wouldn't have been successful. If, 12 months before we opened, someone had offered us the line-up that we got in our first six to nine months, we'd have bitten their hand off. You can't replicate what that gives you as a venue. It establishes your history and your credibility in a very short space of time.'

The difference between the old Dome and The O2 is largely about clarity, says Erika Uffindell of brand consultancy Uffindell West. The Dome failed because it never really established what it was about, whereas the purpose of The O2 has been very clear from the start.

'I don't think that the Dome ever had a clear positioning,' she says. 'It didn't have a clear purpose, it didn't have a focus that people could engage with, there wasn't a clear idea around it, and I'm not sure that people therefore thought it was relevant to them.

'When you're doing transformational change, it's really about the degree to which you can engage people in the venue or a brand. As a brand, The O2 has a set of values - it's known by a wide spectrum of people for things like innovation, relevancy, communication and being quite an edgy brand - and they have clearly linked it to that set of values.

'But people also understand that it now has a positioning. It's now very clearly positioned as an entertainment and music venue, whereas before I think there was confusion in people's minds as to what it was, what its purpose was, and what it stood for.'

The one setback in AEG's plans was the failure to secure a licence for a supercasino at the site. The government instead named Manchester as the site of a supercasino in January last year, but the defeat of the plans in the House of Lords led to the ditching of the entire plan this year.

'That was a very frustrating process,' says Mark Donnelly. 'It was a politically-led process and the goalposts kept being moved. We've very much put that behind us. We wouldn't say never, but we're certainly not holding our breath about whether a supercasino would ever come to the UK.'

Casino or not, plans for the further development of the site are well advanced. A nightclub with the capacity for more than 2,000 people is due to open in September, Donnelly says, after which further daytime attractions along the lines of Legoland, Madame Tussaud's and Chessington will be explored, plus a convention centre and a hotel.

'The great success so far is the people who have played at the venue and the reaction we've had to those people. But we'll continue to look at how we can push the business forward. We're very pleased so far.'

Richard Brass is a freelance columnist and feature writer.