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Photo by David Chapman - The facilities management memorandum of understanding signed by SMG and the City includes a provision for contract renewal that, subject to existing agreements, the company must secure a naming-rights partner for the Baseball ...
Jax Daily Record Thursday, Dec. 27, 201212:00 PM EST

City, SMG restructure facilities management agreement

by: David Chapman

A contract for SMG to operate the City's sports and entertainment venues has yet to be finalized, but the memorandum of understanding signed Saturday outlines savings the City could realize — a step one City Council member said has been needed.

"I think the mayor made the right decision and it's one that's probably long overdue," said Council member John Crescimbeni, who serves as chair of the Council Finance Committee.

Crescimbeni said Wednesday that the two bids, from SMG and Global Spectrum, to operate the City facilities were "substantially less" than the rate the City has paid SMG for about the past 20 years. He said opening the process to competition was the right step to take to save taxpayers money, even if the decision "took a little longer" than he said he would have liked.

The committee during its budget review in August could not bank potential contract savings from either bidder, because neither company was awarded the contract and Mayor Alvin Brown had yet to make his decision — and administration officials had no timetable on making a decision.

A City committee in August selected Global Spectrum as its preferred choice after a subcommittee of City Chief Financial Officer Ronnie Belton and Chief Administrative Officer Karen Bowling ranked Global Spectrum ahead of SMG. The company will maintain operations of EverBank Field, the Times-Union Center, the Osborn Center, the Arena, Ritz Theatre and Museum, the Baseball Grounds and Equestrian Center.

The decision then went to Brown, who announced Saturday that SMG was his choice.

"The decision was left up to me," Brown said during a news conference.

Ike Richman, Comcast-Spectacor vice president of public relations, issued a statement Saturday for Global Spectrum saying the company was "very disappointed" with the announcement after being selected by the committee and was informed "10 minutes before the announcement." Richman said the company is exploring its options as it relates to the announcement and awaits an explanation on the decision.

At the time of the budget hearings, Crescimbeni and other finance members criticized the lack of a decision leading to the committee being unable to factor in savings for fiscal 2012-13, which began Oct. 1.

The new contract is for three years, with the two one-year extension options held by the City based on performance reviews. For the contract to be renewed past its initial Feb. 29, 2016, period, the City's contract administrator, with the assistance of other departments, would have to render a decision, David DeCamp, Brown's spokesman said Wednesday. DeCamp said the contract administrator would be identified on or about the first of the year.

According to the agreement, part of that renewal criteria will be securing a major college football game to be played at EverBank Field, securing a naming-rights partner for the Baseball Grounds subject to existing agreements and increasing the number of tickets sold at Arena events.

The signed agreement includes a provision that SMG will rebate the City a portion of the October, November and December management fees of $196,000, which reflects the savings that would have been realized had the decision been made sooner. Per the agreement, that figure is part of a $1 million capital investment SMG will contribute to the City.

How that money — and an additional annual $4.8 million SMG has guaranteed the City from profit of concession services — will be appropriated has not been determined but likely will be included in the final contract, DeCamp said a decision on where the money will be placed will be made on or about the first of the year.

SMG will reduce its annual management fee from $934,252 to $100,000 and possible annual incentive fee from $246,081 to $100,000 as part of the deal, which Crescimbeni said are savings Council has sought.

Council will not be able to review the contract — it's not required to come before the body — but Crescimbeni said the decision is likely one his colleagues approved, based on legislation he introduced that recognized the reduced management fee from April-September, should SMG be selected. The legislation, 2012-673, had nine co-sponsors.

The Downtown Investment Authority also will not be able to weigh in on the contract, but DeCamp said the nine-member board that oversees Downtown development would likely be review the information as it pertains to Downtown. Of the seven facilities mentioned in the agreement, all but the Equestrian Center are Downtown.

The Equestrian Center also could be pulled from the contract altogether. A request for proposal to operate the venue by itself is scheduled to be released in early January, Council member Doyle Carter said Wednesday.

Should the City decide to issue a standalone contract for the Westside facility, Doug Thornton, SMG senior vice president said Saturday the company would accept the decision. If SMG were to continue running the venue, the company has some new ideas, he said.

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