Outside of Everbank Field, one six Jacksonville, Fla., venues renewed by SMG
Jacksonville, Fla., Mayor Alvin Brown has released the details of the city’s Dec. 22 contract renewal with SMG. The agreement includes a 90-percent drop in fees and $6.8 million in rent give-backs, capital investments and guarantees on future revenue as part of a five-year deal.
Jacksonville will now pay SMG $100,000 per year to manage the city’s six sports and entertainment venues — a significant drop from the $934,252 the city had paid SMG the year prior. The dramatic rent reduction was part of a last ditch effort for SMG to save one of its marque clients — which includes EverBank Field, home to the Jacksonville Jaguars of the National Football League. In August, a commission appointed by Mayor Brown recommended awarding the contract to rival Global Spectrum, the only other bidder to the city's RFP.
“Jacksonville is a very important account to SMG — we’ve been there a long time and we wanted to preserve our relationship,” said Doug Thornton, SMG’s Senior VP for Stadiums and Arenas and manager of another marquee SMG client — the Mercedes-Benz Superdome in New Orleans.
The battle for the Jacksonville contract began in early 2012 when Mayor Alvin Brown put SMG’s 20-year-old contract to manage six city properties — EverBank Field, Jacksonville Veterans Memorial Arena, Baseball Grounds of Jacksonville, Times-Union Center for Performing Arts, Prime Osborn Convention Center and the Ritz Theatre and Museum — out to a public bid. Early scoring of the offers by city CFO Ronnie Belton and Deputy Chief Administrative Officer Karen Bowling gave Global Spectrum a slight edge, leading to months of negotiations between both companies and the mayor’s office, ending with a Dec. 22 decision to renew SMG’s contract for three years with two one-year extensions.
“We find it awfully peculiar that the city would hire a company that had been overcharging them for years,” said Ike Richman, VP of Public Relations for Global Spectrum’s parent company Comcast-Spectacor. Richman said the company is exploring its options after losing out on the contract, which only requires approval from the mayor.
Several Jacksonville City Council members have introduced bills to change the city ordinance code so that future contracts would require approval from a majority of city councilmembers.
“Most members of the council agreed with his selection of SMG — we just didn’t like being suddenly told we had no voice,” said Councilman and Finance Committee Chair John Crescimbeni.
Besides the huge savings negotiated by the city, Crescimbeni said the biggest advantage for SMG in the talks was that “the Jacksonville Jaguars have a clause in their contract essentially giving them veto power over who gets chosen to run the stadium operations, and they were casting a vote for SMG,” he said. “If we picked Global Spectrum to run our other venues and had SMG just manage the stadium, we weren’t going to realize the same savings.”
While SMG has opted for a significant drop in rent, it can earn up to $246,081 in incentives on top of its base fee. SMG has agreed to give the city an open-ended grant of $800,000 and repay $196,000 in previous rent payments, both to be spent “on capital improvements or general fund payments,” said Thornton.
“And we’ve established a $500,000-event-development fund in response to the mayor's vision to make Jacksonville a sports destination city,” said Thornton, explaining that the money will act like a promoter fund, used to offset fees and cost overruns on events like international soccer or collegiate football.
SMG was also granted exclusive rights to concessions at city facilities, earning 4.5 percent of gross sales and 2.5 percent of net operating income. In return, it will guarantee $1.6 million a year in net profits from concessions to the city and will pay $100,000 to upgrade the food-service operation at the arena.
“The fee changes reflected a desire to stay in Jacksonville and we felt compelled to change the fee structure to meet the city’s needs and the vision of Mayor,” said Thorton.
Councilman Crescimbeni said the city is hoping SMG will assist the city in selling naming rights to its baseball stadium and securing a new neutral site football game.
Besides the Gator Bowl, the city “hosts the annual Florida v Georgia game,” said Crescimbeni, “and we’d like to create another annual football event that we can grow into a new Southeastern tradition.”
Interviewed for this article: Doug Thornton, (504) 587-3827; Ike Richman, (215) 389-9552; John R. Crescimbeni, (904) 630-1381