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HomeMy WebLinkAbout17- City Administrator's office CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Fred Wilson, City Administrator Subject: Resolution authorizing the execution of an agreement with Big Red Dept: City Administrator's Office Apple for the marketing and management of Date: January 29, 2000 O R I u r i JAL the San Bernardino Stadium Synopsis of Previous Council Action: December 22, 1998 - Council approves a one-year agreement with Big Red Apple for marketing and management of the San Bernardino Stadium Recommended motion: 1. Adopt resolution 2. Authorize the Director of Finance to amend the FY 1999-2000 Budget as indicated in the attached staff report. k4 Signature Contact person: Fred Wilson/Lori Sassoon Phone: 384-5122 Supporting data attached: Staff report Ward: 3 FUNDING REQUIREMENTS: Amount: See staff report Source: (Acct.No.)Stadium Fund; see staff report (Acct.Description)Stadium Fund Finance: Council Notes: Agenda Item No. 2,11/000 STAFF REPORT Subject: Resolution authorizing the execution of an agreement with Big Red Apple for the marketing and management of the San Bernardino Stadium Backeround• During the summer and fall months of 1998, the Ways and Means Committee and the Mayor and Council had a number of meetings to evaluate the benefits and costs of a stadium management contractor, and the most appropriate mechanism to promote the use of the facility and provide additional revenue to the Stadium Fund. On June 1, 1998, the Mayor and Council approved the recommendation of the Ways and Means Committee to issue a Request for Qualifications for a stadium marketing and/or facility operations manager. The RFQ stated that the City was seeking to contract with an experienced facility manager to develop and implement a marketing plan. On June 15, 1998, the RFQ was sent out to nine (9) individuals and firms, including respondents to the previous RFQ. Four (4) responses were received by the due date. A committee was formed with representatives from the Mayor's Office, City Administrator's Office, Finance, and Parks, Recreation, and Community Services. As a result of this process, on October 5, 1998, the Mayor and Council directed staff to negotiate with Big Red Apple. In December of 1998, the Mayor and Common Council approved an agreement with Big Red Apple to market and manage the San Bernardino Stadium. The approved agreement was for a term of one year, with two one-year extensions upon the approval of both parties. Big Red Apple was paid $5,000 per month ($60,000 annually), plus 20% of gross rent and other income. Big Red Apple assumed responsibility for marketing the stadium and facilitating special events, while Parks, Recreation, and Community Services has continued to handle maintenance and grounds-keeping. At the recommendation of the Ways and Means Committee,the agreement required that Big Red Apple guarantee to generate at lease $60,000 in gross revenue over the term of the Agreement, excluding revenue paid to the City by the Stampede and any events already scheduled at the time of execution of the agreement. The City also provided funding of up to $15,000 for the development of a marketing plan for the Stadium. With the Agreement about to expire in December, on November 17, 1999 staff recommended to the Ways and Means Committee that negotiations begin concerning a new agreement with Big Red Apple. It was recommended that the new agreement lower the monthly payment, increase the commission percentage, and preserve the revenue guarantee, thereby creating a more commissioned-based agreement. After some discussion, the Committee requested additional information concerning the cost involved with events held at the Stadium during 1999. Additional information was presented to the Committee on December 8. The matter was continued to December 15 to allow the Committee to consider other options, such as a 1 partnership with the Convention and Visitors Bureau or the Stampede. The matter was discussed again on January 12, January 19, and January 27. On January 27, the Committee voted to recommend approval of the proposed Agreement. Status of Stadium Marketing/Management: Big Red Apple has been able to generate over$97,600 in stadium and parking lot rental revenues through December 31, 1999. This exceeds the $60,000 in minimum revenue required under the terms of the agreement. Big Red Apple also completed the required marketing plan, and has worked closely with June Durr of the Mayor's Office to implement the plan. As a result of the firm's efforts, the number of events in the Stadium and parking lot has been significantly increased over previous years. Big Red Apple estimates that 51,000 people attended events at the stadium that were booked by the firm. In accordance with the terms of the agreement, in the first year Big Red Apple will have been compensated as follows: Base payments (draws): $60,000 Commission: $20,020 Total estimated compensation: $80,020 It should be noted that the City will receive additional revenue resulting from the efforts of the firm that is not included in the estimated rental revenue given above. Since the City's share of concession profits is paid each January by the Stampede, this additional amount is unknown at this time. (The pending audit of the Stampede may also help provide more detailed information.) However, without including that additional revenue, it is estimated that the net revenue to the Stadium Fund as a result of the agreement will equal approximately $14,680: Total estimated revenues during term: $97,600 Total estimated compensation: ($80,020) Net benefit to the Stadium Fund: $17,580 For the past several years, Parks, Recreation, and Community Services has been responsible for oversight and maintenance of the Stadium. Throughout the year, department staff has worked closely with Bob Lewis of Big Red Apple to approve events and coordinate logistical details. Director Annie Ramos has only positive comments concerning Mr. Lewis' work and the progress that the firm has made in bringing events into the Stadium. Terms of the New Agreement Based on the progress made during the previous agreement, it is recommended that the Mayor and Council approve an additional one year agreement with Big Red Apple. The proposed agreement includes the following key terms: • Lowers the monthly "draw"payment. The $5,000 per month fee was appropriate during the first year, when there was a lag time between the start of work and the receipt of revenues upon which commissions are based. However, the number of events are increasing and Big 2 Red Apple can expect to see more commission payments as a result. Accordingly, the new agreement lowers the monthly fee from$5,000 to $3,500. • Raise the commission percentage. As an offset to the reduced monthly draws, it is proposed that the commission rate be raised from 20%to 25%. • Preserve the minimum revenue guarantee. The minimum revenue guarantee will remain $60,000. Related provisions remain in the agreement concerning ramifications if the minimum is not met. Section 6 of the agreement states that the term is for one year. Negotiations concerning a successor agreement must begin 60 days prior to the expiration date. The agreement also allows for up to 3 extensions of one month each, upon mutual consent, if additional time is needed to prepare a new agreement or explore other alternatives. Big Red Apple projects that if the agreement is approved, the firm will be able to generate $178,000 in revenue over the term of the contract. Financial Impact: The contractual cost for the fiscal year is estimated as follows: Monthly payments: $14,000 (four months of payments) Incentive payments: 18,500 Total payments: 32,500 The estimate above assumes that Big Red Apple generates anticipated revenues of$74,200 for the remainder of the fiscal year. Over the one-year term of the Agreement, the contract cost is as follows: Monthly payments: $42,000 Incentive payments: 44,500 Total payments: 86,500 This estimate assumes that Big Red Apple is able to generate its projected revenue of$178,000 during the term of the agreement. In addition to the contract costs, funds for marketing of the Stadium will be necessary so that advertising can be placed in trade publications. Under the previous agreement, Big Red Apple was to be reimbursed for up to $15,000 in marketing costs. Rather than include this as an Agreement provision, marketing funds will be included in the Stadium budget, and Big Red Apple will recommend expenditures of these funds. An additional $4,000 for the remainder of the fiscal year is recommended for this purpose. As stated earlier, Big Red Apple's contract generated approximately $97,600 in revenue during 1999, resulting in approximately $20,000 in additional incentive payments due to the firm. Because the contract was a new endeavor for the Stadium, in the FY 1999-2000 budget Finance estimated and included only $25,000 in additional revenue to be received, and only $5,000 in corresponding incentive payments. 3 A budget amendment is now needed to reflect both the increased revenue generated by Big Red Apple under the original Agreement, and the corresponding incentive payments to the firm through December 1999. This same budget amendment will also reflect the revenue and expenditures anticipated from January 2000 through June 2000 as a result of the new Agreement. Outlined below are the adjustments necessary to align the FY 1999-2000 Adopted Stadium Budget with the activity related to the contract with Big Red Apple: Budget Amendment: Revenue Increase Expenditure Increase (7/1/99— 12/31/99) 133-000-4520 $ 50,000 133-461-5505 $15,000 (1/1/00—6/30/00) 133-000-4520 74.20 133-461-5505 $36,500 Total: $124,200 $51,500 Recommendation: It is recommended that the Mayor and Common Council adopt the resolution. 4 COPY 1 RESOLUTION NO. 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY 3 OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE A SERVICE AGREEMENT WITH BIG RED APPLE, REGARDING THE MARKETING AND 4 MANAGEMENT OF THE SAN BERNARDINO STADIUM. 5 BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE 6 CITY OF SAN BERNARDINO AS FOLLOWS: 7 SECITON 1. The Mayor of the City of San Bernardino is hereby authorized and 8 directed to execute on behalf of said City a Service Agreement with Big Red Apple, regarding 9 the Marketing and Management of the San Bernardino Stadium, a copy of which is attached 10 hereto, marked Exhibit "A" and incorporated herein by reference as fully as though set forth at 11 length. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Aq , //e" 1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE A SERVICE 2 AGREEMENT WITH BIG RED APPLE, REGARDING THE MARKETING AND 3 MANAGEMENT OF THE SAN BERNARDINO STADIUM, 4 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor 5 6 and Common Council of the City of San Bernardino at a meeting thereof, held on the 7 _day of 2000, by the following vote, to wit: 8 Council Members: AYES NAYS ABSTAIN ABSENT 9 ESTRADA 10 LIEN 11 MC GINNIS 12 SCHNETZ 13 14 SUAREZ 15 ANDERSON 16 MILLER 17 18 19 City Clerk 20 The foregoing ordinance is hereby approved this day of 2000. 21 22 23 Judith Valles,Mayor 24 City of San Bernardino Approved as to 25 Form and legal content: 26 JAMES F. PENMAN, 27 City ttomey By: 28 SERVICES AGREEMENT THIS AGREEMENT is entered into this day of February 2000, by and between BIG RED APPLE, A California corporation ("CONTRACTOR") and the CITY OF SAN BERNARDINO ("CITY',). WITNESSETH: WHEREAS, CITY desires to promote and maximize the use and availability of the San Bernardino Stadium (the "Stadium") as a focal point for community events which will be financially self-sustaining and which will have the potential of providing a revenue source for the CITY and maximizing the enjoyment of the Stadium for all San Bernardino residents; and WHEREAS, CONTRACTOR has the professional skill, experience and ability to provide management,booking and marketing of the San Bernardino Stadium; NOW,THEREFORE, the parties hereto agree as follows: 1. During the term of this Agreement, and any extension thereof pursuant to Sections 5 and 6 herein, CONTRACTOR shall furnish professional management, booking and marketing services to the CITY, and CITY shall furnish maintenance review, office space, and facilities, consistent with the Scope of Work which is attached hereto as Exhibit "A" and incorporated herein in full by this reference (the "Scope of Work"). 2. CONTRACTOR shall be paid monthly for such services in the amounts and as set forth in this Agreement. 3. In addition, CONTRACTOR shall provide the City Administrator's Office with invoices, cost projections, and receipts evidencing actual and anticipated revenues and expenditures consistent with the Scope of Work. No expenditures made by CONTRACTOR shall be reimbursed by CITY without the prior written approval of the City Administrator or his/her designee. 4. CONTRACTOR shall be paid $42,000 for the term of the Agreement, and for any extensions thereof as provided in Section 6 herein, payable in twelve (12) monthly installments of$3,500. CONTRACTOR shall also be paid a performance incentive payment of 25% of all gross rental income and income from other sources generated through the efforts of CONTRACTOR resulting in events held at the Stadium. Gross income included in the basis of calculation of the incentive payment shall not include revenues paid to CITY by the San Bernardino Stampede in accordance with the terms of the Stadium lease; or fees paid to CITY for skybox rentals. Incentive payments shall be made by the CITY on a monthly basis after payment has been made to the CITY by the facility users for these events. 5. CONTRACTOR hereby guarantees that the CITY shall receive a minimum of $60,000 in gross revenue generated over the term of this Agreement, excluding revenues paid to CITY by the San Bernardino Stampede in accordance with the terms of the Stadium lease and fees paid to CITY for skybox rentals. This minimum revenue shall not include events already scheduled for the Stadium prior to the execution of this Agreement. If the guaranteed amount of gross revenue has not been received by CITY at the end of the first year as provided for herein, then CONTRACTOR shall continue to provide marketing and management services for the Stadium at no cost to CITY, but at a monthly value deemed to be $3,500, until the amount of revenue received by CITY from such gross revenue and services provided totals $60,000; or, if CONTRACTOR refuse to provide such services under such conditions or if this provision is challenged by anyone other than CITY and is deemed unenforceable in a court of law, then CONTRACTOR shall pay to CITY the difference between the amount of gross revenue generated during the first year of this Agreement and $60,000. For the purposes of determining whether or not CONTRACTOR has met the guaranteed amount of revenue in accordance with 2 this section, the CITY will take into account any booked events scheduled for the six months following the termination date. 6. , The term of this Agreement shall be for one (1) year from the date above. The CONTRACTOR and CITY agree to begin negotiations no later than 60 days before the expiration of this Agreement concerning the terms of any subsequent Agreement. If this negotiating process cannot be concluded prior to the expiration of this Agreement, this Agreement may be continued for up to three (3) months on a month-to-month basis upon mutual written consent of CONTRACTOR and CITY. This Agreement may be terminated at any time by thirty (30) days written notice by either party. If the Agreement is terminated, CONTRACTOR shall be entitled to receive performance incentive payments for future events that have been booked by CONTRACTOR prior to termination of the Agreement, in accordance with Section 4 herein. These incentive payments shall be made by the CITY after payment has been made to the CITY by the facility users for these events. If this Agreement is terminated by CITY pursuant hereto, CONTRACTOR shall be relieved of further performance or repayment obligations set forth in Section 5 herein. If at any time during the term of this Agreement CONTRACTOR dies, becomes disabled, or for any reason outside CONTRACTOR'S control becomes unable to perform the services required under this Agreement, CONTRACTOR'S obligations shall be terminated without further obligation of CITY or CONTRACTOR. 7. CONTRACTOR shall indemnify, defend and hold harmless the CITY, its officers, employees and agents (including, without limitation, reasonable costs of defense and reasonable attorneys' fees) arising out of or related to CONTRACTOR's performance of this Agreement, except that such duty to indemnify, defend and hold harmless shall not apply where injury to person or property is caused by CITY s willful misconduct or negligence, CITY shall indemnify, defend and hold harmless the CONTRACTOR, its officers, employees and agents 3 (including, without limitation, reasonable costs of defense and reasonable attomey's fees) arising out of or related to CONTRACTOR's performance of this Agreement, except that such duty to indemnify, defend and hold harmless shall not apply where injury to person or property is caused by CONTRACTOR's willful misconduct or negligence. The costs, salary and expenses of the City Attorney and members of his office in enforcing this Agreement on behalf of CITY shall be considered as"attorneys' fees" for the purposes of this paragraph. 8. While not restricting or limiting the foregoing, during the term of this Agreement, CONTRACTOR shall maintain in effect policies of comprehensive public, general and automobile liability insurance, in the amount of $1,000,000.00 combined single limit, and statutory Worker's compensation coverage, and shall file copies of said policies with the CITY's Risk Manager prior to undertaking any work under this Agreement. CITY shall be set forth as an additional named insured in each policy of insurance provided hereunder. The Certificate of Insurance finnished to the City shall require the insurer to notify CITY of any change or termination in the policy. 9. CONTRACTOR shall perform work tasks provided by this Agreement; but for all intents and purposes CONTRACTOR shall be an independent contractor and not an agent or employee of the CITY. 10. CONTRACTOR shall be permitted to produce, promote, co-produce, or co- promote events at the Stadium as an independent agent, and not as the representative of the CITY, only upon the express written consent of the CITY for each such event. Big Red Apple shall pay the established rental rate and all other costs that would normally apply to any other renter for such events at the Stadium. Any financial risk assumed by CONTRACTOR as a producer, promoter, co-producer, or co-promoter of events at the Stadium shall be the sole responsibility of Big Red Apple and not the CITY. 4 11. In the performance of this Agreement and in the hiring and recruitment of employees and independent contractors, CONTRACTOR shall comply with all State and federal tax laws, shall not discriminate on the basis of race, religion, color, ethnic group identification, sex, age, physical or mental disability, and shall not discriminate unlawfully against any employee or independent contractor for employment because of race, religion, color, ethnic group identification, sex, age,physical or mental disability. 12. In the performance of this Agreement, all payments made by CONTRACTOR to the City of San Bernardino shall be by check, cashier's check or money order. In the performance of this Agreement, all payments made to CONTRACTOR (except parking fees paid by individual car drivers) shall be by check, cashier's check or money order. In the performance of this Agreement, all payments made by CONTRACTOR to its employees, independent E^ contractors, and other so due and owing money from CONTRACTOR shall be by check, V cashier's check or money order. 13. Any notice to be given pursuant to this Agreement shall be deposited with the United Postal Services, postage prepaid and addressed as follows: TO THE CITY: City Administrator's Office 300 North "D" street San Bernardino, CA 92418 Facsimile (909) 384-5138 TO THE CONTRACTOR: Big Red Apple P.O. Box 5742 San Bernardino, CA 92412-5742 Facsimile(909) 885-6064 Notice may also be given by facsimile ("fax") during regular business hours to the numbers listed above, and such notice shall be deemed given upon receipt as reflected in a transmission verification. Nothing in this paragraph shall be construed to prevent the giving of notice by personal service. E 5 IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and date first above written. Date: February 2000 BIG RED APPLE, a California corporation By: Date: CITY OF SAN BERNARDINO By: Judith Valles, Mayor ATTEST: Rachel Clark, City Clerk APPROVED AS TO FORM AND LEGAL CONTENT: James F. Penman, City Attorney By: �e 6 EXHIBIT "A" SCOPE OF WORK Management of the San Bernardino Stadium Scope of Work and Work Program To provide professional management booking and marketing of the San Bernardino Stadium. Big Red Apple ("BRA") shall be responsible for: 1. Supervising all aspects of non-baseball Stadium event operations, including: a. Recruiting and scheduling events (other than baseball) into the Stadium, parking lots and any other ancillary facilities which are available for such use. b. Supervising Stadium operation at all performances or use of the facility (other than baseball). Supervision shall include all aspects of the operation, including ticket sales, concessions, merchandise, stagehands and related personnel, including, but not limited to ushers, security and other production services. BRA will be physically present at all events. c. BRA will not be responsible for supervising City events, or events for which fees have been waived. 2. Reporting monthly to the City Administrator's Office regarding work in progress, prior year activity and projected marketing,booking and use of the Stadium. 3. Directing the marketing plan for the Stadium and place advertising in order to receive long-lasting exposure in reaching the specific segments of the live entertainment and amusement industries that utilize facilities similar to the Stadium, and/or which have previous positive experience in the Inland Empire. Marketing will concentrate on attracting promoters, producers personal managers, booking agents, performers, associations and organizations that produce trade shows, film locations and other events. The marketing plan shall be implemented in consideration with all other city marketing plans and in coordination with the City's Marketing and Public Affairs Officer. 4. Reporting income to City in the form required by City Administrator on a monthly basis, and depositing funds in City account(s) as required by City procedures. 5. Assisting the City in renegotiating the Stadium lease, upon written request and authorization of the City. 7 6. Making recommendations to the City for facilities modifications to enhance and expand the capabilities of the Stadium for parking lot, concert, and other events compatible with the facility. City shall be responsible for: 1. Maintaining the premises as required by Building Codes. 2. Reviewing and/or approving show offers on 48-hour notice. 3. Maintaining and providing for major capital facility improvements, utilities and landscaping. 4. Providing BRA with one office, secretarial space, shared conference room facilities, and telephone and fax service lines. BRA shall pay all costs associated with telephone usage. 5. The City Administrator or his designee shall review with BRA and approve a marketing plan for the Stadium within forty-five days after submission of the plan by BRA. 6. No marketing expenditures made by BRA shall be reimbursed without the prior written approval of the Director of Parks, Recreation, and Community Services or his/her designee. 7. Developing a policy concerning the waiver of rental fees for non-profit organizations. The policy shall balance the desire to make the facility available for community events with the need to have the maximum number of days available to book fee-paying events into the Stadium. 8