Dubuque Ice & Recreation Center_Non Compete with SMGTHE CITY OF Dubuque
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Masterpiece on the Mississippi ~~
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Proposed Amended Non Compete Clause with SMG
DATE: September 30, 2009
Leisure Services Manager Gil Spence is recommending approval of a request from
Platinum Hospitality to continue the non-compete clause for the Five Flags Civic Center
Management contract with SMG related to national political events, but to allow
competition in all other areas.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Gil Spence, Leisure Services Manager
THE CITY OF ~ Dubuque
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~T T~ ~ AN-AmedcaCl~y
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Masterpiece on the Mississippi
2007
TO: Michael C. Van Milligen, City Manager
FROM: Gil D. Spence, Leisure Services Manager
SUBJECT: Amendment to the SMG Management Agreement
for the Five Flags Center
DATE: September 30, 2009
INTRODUCTION
The purpose of this memorandum is to request City Council approval of an amendment
to the SMG Management Agreement for the Five Flags Center.
DISCUSSION
With the opening of the new ice arena and elimination of ice at the Five Flags Center, I
am recommending an amendment to the SMG Management Agreement allowing them
to compete for the same type of events that can be held at the Grand River Center.
When the Grand River Center opened in October 2003 the City agreed that the Five
Flags Center would not compete for events that could be held there for afive-year
period.
The SMG Agreement, Section 2.6(b) (the last two sentences) states, "Notwithstanding
anything to the contrary contained herein, the parties acknowledge that the Facility (Five
Flags) shall not compete for the same type of events that can be held at the Grand
River Center in Dubuque, Iowa, unless the event comes through the Grand River
Center. Those events include, but are not limited to: conferences/conventions,
dinners/banquets, meetings, receptions, and flat floor events."
The amendment would change these two sentences to: "Notwithstanding anything to
the contrary contained herein, the parties acknowledge that the Facility (Five Flags)
shall not compete for national political events.
This change will allow SMG to secure additional events to offset the revenue loss of
having no ice in the building. It will take a few years to build an event load of these
types of events because many of them are scheduled several years in advance.
continued
SMG Agreement amendment
page two
When looking at just the operating budget, SMG projects a net revenue loss of $68,000
with all ice activities eliminated. They figure the first year they can offset this, to some
degree, with an increase of other events because of the number of dates freed up from
no ice events. This could reduce the net revenue loss to $14,000 the first year and by
the third year it could be revenue neutral, or making money. SMT will need to be
creative with the events they try to generate and they are already developing a plan for
how they will approach this.
If the capital improvement budget is included in this discussion, things look even better.
If all the capital costs associated with ice are budgeted on an annual basis, I estimate
that amount would be $40,000 per year. This capital money would then be freed up for
other projects.
Revenue generated from the same type of events held at the Grand River Center will
not be real great because these types of events do not generate a lot of revenue, unless
you prepare the food. They will create good traffic for the building and provide some
additional revenue.
remind you that any impact will not occur until the Fiscal Year 2011 budget year.
Also, we will need assistance from the Convention and Visitors Bureau to market Five
Flags to regional and state groups to help create this new business.
ACTION STEP
The action requested is that the City Council adopt the attached resolution amending
the SMG Management Agreement for the Five Flags Center.
GDS:et
attachment
Preparers Gil D. Spence Address: 2200 Bunker Hill Rd Phone: X563) 589-4263
RESOLUTION NO. 392-09
A RESOLUTION APPROVING THE SECOND AMENDMENT TO THE MANAGMENT
AGREEMENT BETWEEN THE CITY OF DUBUQUE, IOWA AND SMG.
Whereas, the City of Dubuque has identified the need for private management of
the Five Flags Center; and
Whereas, the City of Dubuque (City) and SMG entered into a Management
Agreement on June 21, 2004; and
Whereas, City and SMG now desire to amend the Management Agreement by changing
the following language in Section 2.6(b) FROM ..." Notwithstanding anything to the
contrary contained herein, the parties acknowledge that the Facility (Five Flags) shall not
compete for the same type of events that can be held at the Grand River Center in
Dubuque, Iowa, unless the event comes through the Grand River Center. Those events
include, but are not limited to: conferences/conventions, dinners/banquets, meetings,
receptions, and flat floor events" TO ... "Notwithstanding anything to the contrary contained
herein, the parties acknowledge that the Facility (Five Flags) shall not compete for national
political events.
NOW, THEREFORE, BE IT RESOLVED, BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
Section 1. That the Second Amendment to the Management Agreement between
the City of Dubuque, Iowa and SMG be approved.
Passed, approved and adopted this 5th
day of octob~r 2009.
;~~ Roy D. Buol, Mayor
Attest:
~ ~ /
~.~eanne F. Schneider, City Clerk
GRAND RIVER CENTER
TO: Michael C. Van Milligen, City Manager
FROM: Mitzi M. Yordy, General Manager Grand River Center
SUBJECT: Proposed Amended Non Compete Clause with SMG
DATE: September 25, 2009
In response to your recent letter, I am requesting the proposed amended clause to the
SMG/Five Flags contract regarding the non compete clause with the Grand River Center
have one exception in regards to Political Events.
The Grand River Center has had the privilege of hosting multiple Presidential, Vice
Presidential and numerous presidential hopeful visits as well as the Democratic Caucus. On
behalf of the Grand River Center, I would like to continue the tradition of showcasing
Dubuque with our political guests and the community.
The recent purchase and installation of the state of the art video system in the Exhibit Hall
was added due to the demand from such political events.
C-ver the past six years we have been able to build relationships with the organizers of
political events and advance teams including White House Communications and Secret
Service. My sales team and staff members have gained an expertise in handling their
particular needs.
Thank you for your time and consideration of this matter.
Mitzi M. Yordy
cc: Jim Rix, CEO Platinum Hospitality
500 Bell Street, Dubuque, IA 52001 * The Port Of Dubuque
Tel: (563) 690-4500 * Fax: (563) 690-1350
Managed by Platinum Hospitality Group, LLC