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HomeMy WebLinkAboutAD07-153 - Original - Thunderbird Hockey Enterprises, LLC - Term Sheet for Proposed Licensing Agreement at Kent Events Center Lease - 03/06/2007 Records Man5`g` erneht,,' KENT Document WAS H I N ITO4 CONTRACT COVER SHEET This is to be completed by the Contract Manager prior to submission to City Clerks Office. All portions are to be completed, if you have questions, please contact Mary Simmons, City Clerks Office. Vendor Name: Lam, Contract Number: ADC) ?— This is assigned by Mary Simmons Vendor Number: Project Name: Wat Contract Effective Date: Contract Termination Date: Contract Renewal Notice (Days): Number of days required notice for termination or renewal or amendment Contract Manager: W(y! Department: Abstract: I,/ffi � ADCL7832 07102 L Term Sheet for proposed license agreement between the City of Kent and Thunderbird Hockey Enterprises, LLC. Thunderbird Hockey Enterprises, LLC (Team) operates a licensed Western Hockey League team, currently based out of Seattle and Kirkland, Washington The City of Kent, a Washington municipal corporation (City) plans to construct an approximately 6500 seat events center that will be a multi-purpose facility but specifically will serve as the home base for the Team The parties have entered into negotiations to finalize a License agreement that will establish each party's rights and liabilities pertaining to the use and operation of the proposed events center Although the parties have not yet finalized the license agreement, the City and the Team agree in principle to the terms and provisions established in this Term Sheet, however, this Term Sheet does not constitute a legally binding contract and is subject to final and mutual reconciliation of specific, detailed terms still to be finalized in the license agreement, many of which are referenced below. Term, 30 year term with the option to reopen the lease in no less than five years based on a revenue performance standard to be determined jointly by the City and the Team Exclusivity- The City grants the Team exclusivity for all Hockey events in the Kent Events Center. League Exclusivity Team will secure from the Western Hockey League (WHL) a Franchise Area Agreement that excludes another WHL team in the Seattle Metro market within the territory prescribed by WHL franchise regulations unless approved by both the Team and the City License Fee- Team will pay the City 10% of the Net Ticket Proceeds and will share the cost of staffing hockey games 50/50 equally with the Operator See section below on Center Personnel for hockey game staffing Facility Fee The Team agrees the City may impose a Facility Fee of$1 00 for each ticket sold for League Games, including single-game Club Seats, which shall be in addition to the Team's established ticket price and the 5% general ticket tax All proceeds from the Facility Fee shall belong to the City and are not part of the Net Ticket Proceeds The exception is that the Facility Fee shall be $ 50 for each ticket sold for the following packaged tickets 1)season tickets and ticket packages that include at least 14 regular season games, 2) tickets sold as group sales of 20 tickets or more to league games, and 3) playoff game ticket packages that include all potential home playoff games for a playoff series Proposed License Agreement Term Sheet—Page 1 of 7 L Box Office- Team to provide their own Box Office as part of the team store City to provide use of facility box office windows on game nights or as needed for large volume ticketing events Concessions- The City and the Team agree to a split the Net Concession Sales on a 50/50 basis Net to be the total remaining amount after the concessionaire has received their share, providing the team has full participation in negotiating the final deal with the concessionaire after the process detailed in the Arena Design & Development Agreement has been utilized to select the concessionaire Hocks Advertising, City agrees to allow Team to sell all Hockey Advertising and keep 100% of revenue Hockey Advertising is defined as advertising in and on the ice arena such as the ice surface and dasher boards It also includes temporary signage in the concourse and bowl on game nights Team is responsible for install and dismantle of all temporary signs or banners, City can do dashers and Ice. Center Advertising: The City agrees to allow Team to have the sole and exclusive right to sell all fixed Center Advertising The City and Team shall tour and agree on placement for all available advertising points and jointly set prices for all available properties once design is complete Team to share in 25% of net after any sales commissions (15%) City will receive the remaining 75 % In any year that the Team fails to meet a mutually agreed-upon performance standard based on the total projected revenue net commission for that year, less commission that is no more than 15% maximum, the City would have the right to take over the responsibility to sell all Center advertising If the City exercised this option it must hold itself or the agent contracted to sell it on it's behalf to the same standard, at the same commission rate, as the Team be held too Fixed scoreboard and LCD Ribbon display advertising are excluded from this agreement to make it available to pay for acquiring a scoreboard Naming rights Dealt with separately from all other advertising The Team shall have the right to sell the naming rights to the Center for the Term of no less than 5 years, provided that the sale of the naming rights, and the actual name proposed for use shall be subject to the prior approval of the City, which approval shall not be unreasonably withheld and provided that the naming rights shall terminate upon the end of the Term. The revenues from the sale of the naming rights for the Center shall be divided as follows 1) The first $300,000 of revenue, each year, will go to the Center (less commission of 15%), 2) All revenue above $300,000 will be split 50/50 after commission of 15% All amounts would escalate for subsequent agreements. Scheduling See Exhibit 1. Training Camp: City will allow the Team to use the Center for a training camp for no extra charge provided the Team provides at least 4 months notice on the proposed dates of the Training Camp Training Camp shall commence no earlier than August 15th of each year and shall be 10 hours per day from 8 OOam to 6 OOpm Proposed License Agreement Term Sheet—Page 2 of 7 for a period not to exceed 14 days and may include weekends The City reserves the right to relocate the Team to the Community Ice Center if there is the possibility of booking another event during camp, but only if the City's request is reasonable, the City gives advance notice to Team, the Community Ice Center is available, and the costs of relocation and practice ice rental will be the responsibility of the Center Hockey School. The City agrees to allow the Team to hold a Hockey School at the Center at a flat rate of $4,000 plus cost of required staffing Practice Time City agrees to provide free practice time to the Team and Visiting Teams, but City reserves the right to relocate the team or visiting team to the Community Ice Sheet if the Center can book another event The City and Team will meet jointly with the Kent Valley Ice Center to negotiate the availability and rental rate for all needed practice times These costs will be split 50/50 between the Team and the Center Operator The parties agree that practice ice times will be preliminarily established at the time of the completion of the League Schedule Team shall provide City with as much advance notice as possible of any requests for changes to practice ice time, it being understood that any changes may be subject to the availability of the Center. The City agrees that a preliminarily established practice ice time will not be cancelled in favor of another booking unless the Community Ice Sheet is available for the Team's use. Center Personnel City agrees that Center management will employ and provide adequate personnel to operate the Center during Hockey Events in accordance with the terms of this Agreement, including. i Arena engineers, custodial and security personnel and personnel for ticket taking and ushering, an audio/visual technician, equipment and lighting technicians, employees to resurface and maintain the ice and staff to manage and operate parking lots at the Center (including the presence and participation of the personnel as necessary, to control flow to and from the Center before and after a Hockey Event) The number of such personnel shall be in accordance with any standards imposed and enforced on all teams by the League and by the mutual agreement of City and Team, which agreement will not be unreasonably withheld by either party, Personnel for a first aid facility for the general public at each Hockey Event; and Persons, equipment and supplies for the purposes of installing under ice signage (including advertising, the Team logo and the League logo) by applying paint directly on the ice located below the skating surface, provided that the Team has provided the design and template for such signage Proposed License Agreement Term Sheet—Page 3 of 7 1 Y City shall not be responsible for providing or performing any maintenance, repair or servicing of any of Team's equipment or personal property. The City and the Team agree that the cost for ticket taking, security, , and ushers during Hockey Events ("Hockey Game Personnel") will be split 50/50 between the Center Operator and the Team All other Center personnel listed above will be provided at the cost and expense of the Center Game Night Personnel staffing levels will be set after joint evaluation and discussion by the Center Operator and the Team The City and the Team agree to continue to research the potential cost and deployment of traffic police needed for hockey events and work toward agreement on how this event staffing cost will be allocated Merchandise The City agrees the Team will have the right to all revenue from team merchandise. Team Facilities- City will provide Team with administrative office and Team facilities as part of the license fee described above City and Team will come to agreement on the size and finish of the Team Facilities as part of the design and scope process as described in the Design and Development agreement Suite Sales. City grants the Team the right to market and sell all Suites These suites will be supported by a lounge, VIP entrance, Suite Level restrooms, and premium reserved parking for all events All revenue realized from Suites (including Suite Licenses) shall be allocated between the City and the Team as follows 70% to the City, and 30 % to Team. Team and City shall set the terms and price at which suites are offered, however, these terms and prices shall be comparable to the terms and prices at which suites in other comparable arenas in the League are offered City and Team agree to establish performance criteria for the sale of suites each year If the Team does not meet the performance criteria, the City will have the right to contract with another party to sell the suites Club Seats The City agrees to initially provide up to 500 Club Seats for all league Hockey Games and provide an additional 300 seats that came be easily converted to Club seats when the City and the Team agree there is a market for the additional Club Seats These seats will be supported by a lounge, VIP entrance, Suite Level restrooms, and premium reserved parking for all events The Team will control the sale of Club Seats for all Hockey events The City will control the sale of Club Seats for all other events, however the City will allow Club Seat holders for Hockey events the right to buy seats for non hockey events at full face value for a period in advance of tickets going on sale for non hockey events The first $100 of revenue from each club seat sold will go to the City and the balance shall be split as if the seats were normal hockey seats 30% to City for league games and rack rate for non-league games The City and Team understand and agree that no Facility Fee will be charged on package or season ticket Club Seats In the event the City charges for parking at the facility, the City will drop its right to the first $100 and this amount will revert back to the base of revenue against which the split is based on Proposed License Agreement Term Sheet—Page 4 of 7 Premium Reserved Parking. The City agrees to designate an area in the Center Parking Lot, with the agreement of the Team on the location, for Premium Reserved Parking that will be available as part of the package of premium benefits provided Suite Holders, Club Seat Holders and Packaged Ticket Holders Suite Holders will be assigned 2 parking stalls per suite Club Seat Holders will be assigned 1 parking stall per two seats. Packaged Ticket Holders will be assigned 1 parking stall per _seats (to be determined Arena Design and Development Agreement. The parties agree that unless expressly revised in this term sheet, all procedures and provisions of the Arena Design and Development Agreement will remain in place and be included in the definitive License Agreement City Council Approval- This Term Sheet, the proposed license agreement to be negotiated, and funding for and construction of the proposed events center are all subject to final approval and authorization by the Kent City Council before any of them can take effect THE CITY OF KENT THUNDERBIRD HOCKEY ENTERPRISES, LLC Y BY Its Its. Date 4 7 Date: 3- - © 7• Proposed License Agreement Term Sheet—Page 5 of 7 EXHIBIT 1 To Term Sheet for Proposed Licensing Agreement SCHEDULING ARTICLE 1. USE OF CENTER BY TEAM — GENERAL 1.1 Scheduling — Regular Season Games (a) The number of Regular Season Games will be determined by the League for each Season The exact number of Regular Season Games for each Season will be finalized as soon as possible following the date of the Scheduling Meeting (b) Subject to Section (d): (i) except as provided for in Section (d)(ii), prior to the Scheduling Meeting and the finalization of the scheduling of Regular Season Games, City agrees that City shall not allow any Non-Hockey Event to be booked in the Center on any Friday, Saturday or Sunday night or on any three (3) or more consecutive week days during the Regular Season, (ii) prior to Scheduling Meeting, for the period City shall be entitled to book Non-Hockey Events in the Center (a) on one weekend per month during the Regular Season, plus during the Regular Season one (1) additional weekend (in total for the Regular Season) and (b) on the Thanksgiving, Christmas and the weekend immediately preceding Christmas Day City shall immediately notify Team of the dates on which a Non-Hockey Event has been booked or may be booked pursuant to this Section (b)(u). Any weekend without a Definite Booking by City under Section (b)(ii) shall be subject to being scheduled by Team for a Hockey Event under Section (c) hereof As used herein, "Definite Booking" means an event which the City reasonably believes will in fact occur on the specified weekend, and (iu) After the earlier of (a) the date when the League's schedule is established, or (b) August 20, any dates not scheduled for a Hockey Event by Team may be booked by City for Non-Hockey Events as provided in this Agreement, but subject to the use of the Game Day Facilities by Team as provided for in this Agreement (c) Team shall present the dates required for Exhibition Games and Regular Season Games to be played in the Center for the upcoming Season to City not later than August 20th of each year The dates selected by Team will comprise the schedule for the use of the Center and the Game Day Facilities for the playing of Exhibition Game and Regular Games during the upcoming Season City acknowledges that Regular Season Games will be played in the Center on at least twenty (20) Saturday nights and twenty (20) Friday or Sunday nights during the Season, of which at least 50% of each of the Saturday night dates and 50% of the Proposed License Agreement Term Sheet—Page 6 of 7 w s Friday and Sunday night dates will occur after December 25th, unless the League schedules dates in a manner different than indicated in this sub-section (d) Notwithstanding the foregoing, if Team becomes aware of any dates for which Team will not require availability in the Center, Team will advise City of such dates as soon as is practicable (e) For scheduling non-Hockey Events, the City will ensure that all Non- Hockey Events booked or held in the Center will not interfere with or impair Team's use of the Arena, Team Facilities and Game Day Facilities for Hockey Events. 1.2 Scheduling — Playoff Games City shall ensure that the following dates are available to allow Team to use the Center and the Game Day Facilities for Playoff Games (a) for the period from March 15th to May 15th following the end of each Regular Season, City shall ensure that the Center is available for use by Team for Playoff Games on two of Friday night, Saturday night or Sunday night on each weekend, provided that on at least three (3) of such weekends during each month during the period, the Saturday night must be available, (b) for the period from March 15 to May 15 following the end of each Regular Season, City shall ensure that the Center is available for use by Team for Playoff Games a minimum of two consecutive weekdays between Tuesday and Thursday (i e , Tuesday-Wednesday or Wednesday-Thursday) each week (c) for the period April 30th until the end of the playoffs, City must ensure that the Center is available for use by Team for Playoff Games every second Saturday night (d) At the end of the second Regular Season following the Occupancy Date, the parties will re-examine the methodology of resolving dates for League Games If the parties, acting reasonably, are unable to agree on any changes to the methodology, the processes included in this Agreement will remain unchanged. Proposed License Agreement Term Sheet—Page 7 of 7