Mayor Alvin Brown announced Saturday his selection of SMG to operate the City’s sports and entertainment venues, calling it the best deal for taxpayers.
SMG has operated the facilities for more than 20 years, but Brown put the contract out to bid in March to find savings. The facilities comprise EverBank Field, The Florida Times-Union Center for Performing Arts, the Osborn Center, Jacksonville Veterans Memorial Arena, the Ritz Theater and Museum, the Baseball Grounds of Jacksonville and the Equestrian Center.
SMG and Philadelphia-based Global Spectrum were the only two companies that responded to City requests for proposals.
The City Professional Services Evaluation Committee, which reviewed the bids, chose Global Spectrum in August as its recommended candidate and submitted it to the mayor. A two-person subcommittee consisting of City Chief Financial Officer Ronnie Belton and City Chief Administrative Officer Karen Bowling scored Global Spectrum higher, which factored into the recommendation.
“The decision was left up to me,” Brown said Saturday, joined by Jacksonville Jaguars owner Shad Khan and SMG Senior Vice President Doug Thornton for an afternoon news conference.
The Jaguars have previously voiced their support for SMG to maintain the contract and held the power to veto changes.
Brown said the outcome respects taxpayers, and a memorandum of understanding for a three-year contract with two one-year extension City options was signed Saturday. The deal is effective from Oct. 1 of this year, but the management agreement commences Jan. 1.
As part of the deal, SMG will:
- Provide the City with a capital contribution of $1 million. Of that, $196,000 will be a portion of the management fees from October, November and December of this year, which was paid under the old contract. The City will use these funds for “any purpose deemed appropriate.”
- Establish a $500,000 event development fund to help attract and promote new events at City facilities. This fund will be jointly managed by the City and SMG and can be used to self-promote an event, jointly promote an event, provide marketing or other financial support to promote an event or serve as seed capital to develop an event.
- Reduce its annual management fee from$934,252 to $100,000 and reduce its annual incentive fee from $246,081 to $100,000. The management fee is subject to annual adjustment in accordance with the Consumer Price Index. The incentive fee is based on a five-part performance scale consisting of customer satisfaction, cooperative marketing with prime tenants, achievement of Jacksonville Small and Emerging Business goals, overall financial results and facilities maintenance and repairs. Each carries a maximum weight of 20 percent. If not met, the fee is proportionately reduced based on the percentages.
- Establish clear benchmarks with the City to govern the company’s performance of its management responsibilities, which will determine whether the City exercises its extension clause.
Under a section of the memorandum concerning concessions, SMG will have exclusive rights to provide food, beverage and merchandise sales at the facilities, subject to existing deals at EverBank Field and the Baseball Grounds. The company is entitled to retain a management fee equal to 4.5 percent of all gross sales revenue and 2.5 percent of all net operating income drive from concession services, and guarantees the City a cumulative net profit of $4.8 million.
The company also will invest $100,000 to upgrade food service operations at the Arena.
Thornton said the deal, with its lower base fees and incentives, represents a market change from the past contract and the company was aggressive in its pursuit.
“This is a new day,” he said.
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