In 2019, SM Entertainment began construction in LA, planning to build an entertainment venue called ‘SMTown LA’ to cement their presence in the international market. LA K-pop fans were excited for the new developments, and the city of LA even went as far as to name the intersection of 6th Street and S Oxford Avenue in Koreatown “SM Entertainment Square”.

However, it has recently been revealed that SM’s plans for the SMT LA building never came to fruition. The company is now involved in controversy, and construction has been paused as SM is responsible for what may be hundreds of thousands of dollars in unpaid construction costs. As a result, the main construction company involved, Pub Construction, is filing a lawsuit against SM. The architectural design firm, contractors, and other companies involved in the construction of SMT LA have also confirmed that they never received payment from SM. It is expected that they may join Pub Construction in taking legal action against SM Entertainment.

A representative for the architectural design firm stated, “This project underwent five changes due to SM Entertainment’s repeated demands, and we were responsible for designing the third and fifth versions. We are owed tens of thousands of dollars, and I know several other companies involved in the project are also owed significant amounts.”

The unpaid construction costs are not the first controversy SM has become involved in while attempting to build SMTown LA. There have also been significant construction delays due to SM lacking the required permits, and safety risks to pedestrians due to construction conditions.

It’s likely that SM’s recent changes in management contributed to the problems with SMT LA.

Pub Construction CEO Chris Yi stated, “The SMT LA project was virtually halted during the management transition to Kakao, and we are still awaiting a response from SM to resolve the construction cost issue. SM’s conduct has been exploitative and detrimental, as they continue to transfer their problems to other companies. We plan to file a formal complaint with the Korean government in the hope that Korean companies will not suffer further losses due to SM’s inaction.”

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