SMG and Global Spectrum last week submitted proposals for the City’s facilities management contract that would reduce the annual fees for managing EverBank Field, Jacksonville Veterans Memorial Arena, the Baseball Grounds of Jacksonville, the Times-Union Center for the Performing Arts, the Equestrian Center, the Ritz Theatre and the Osborn Center.
SMG received $1,134,934 in fees in 2011 under the current contract to manage those facilities, but both companies’ proposed fee structures would sharply cut that.
The lengthy documents (373 pages from SMG and 197 from Global Spectrum) both tout the companies’ record of achievement with testimonials from clients.
In SMG’s case, the proposal includes letters of recommendations from a number of Jacksonville businesses and organizations, since SMG has been running the City’s facilities since 1993.
Philadelphia-based Global Spectrum’s proposal argues that it’s time for a change.
“Often ‘change’ breathes new life, enthusiasm, and very positive results into projects that have not been performing up to expectations,” it said.
SMG, headquartered in the Philadelphia suburb of West Conshohocken, argues that it has done a good job and is also looking to the future.
SMG has “focused intently on growing and enhancing revenue opportunities for the City” and “is finding innovative ways to develop self-sustaining budgets for Jacksonville’s facilities,” it said.
SMG proposed two different fee structures and Global Spectrum proposed one. Below is a quick look at each fee proposal.
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Global Spectrum
Term: 4 years and 9 months, with the City’s right to terminate after 2 years and 9 months. There are two renewal options for 3 and 2 years.
Base fee: $300,000 a year, with annual CPI adjustments of up to 3 percent.
Incentive fee: Maximum equal to the base fee, based on meeting certain criteria.
Other financial provisions: Proposes to invest $1.5 million for revenue-generating improvements to the facilities.
SMG (alternative 1)
Term: 5 years, with renewal options for 3 and 2 years.
Base fee: $150,000 a year, subject to CPI adjustments.
Incentive fee: Up to 20 percent of total compensation, based on meeting certain criteria.
Other financial provisions: Proposes a guaranteed reduction of $5 million in the city’s operating subsidy for the facilities over the term of the contract. Also proposes to contribute $500,000 to an event development fund.
SMG (alternative 2)
Term: 3 years, with a 2-year renewal option.
Base fee: $150,000 a year, subject to CPI adjustments.
Incentive fee: Maximum equal to the base fee, based on meeting certain criteria.
Other financial provisions: Proposes to rebate the fees it receives from the City in the current fiscal year, about $1 million.
Proposes to guarantee a cumulative net profit of at least $8.5 million to the City for the operation of food services in all venues except EverBank Field and the Baseball Grounds of Jacksonville. SMG would receive a management fee of 3 percent of gross sales from the food service.
Also proposes a guaranteed $2.5 million reduction in the City’s operating subsidy and to contribute $500,000 to an event development fund.