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Minutes Five Flags Civic C 1 5 05 Five Flags Commission Meeting January 5, 2005 PRESENT: ROD BAKKE, CYNTHIA FUllER, MARK NAUMAN, MIKE BRANNON, AND BRYCE PARKS STAFF PRESENT: lES CROOKS, JOE ROMANO-REGIONAL VICE-PRESIDENT, TOM LORENZ-GENERAL MANAGER PERSHING CENTER, LINCOLN NE, GIL SPENCE AND JENNIFER UPTEGRAPH PUBLIC PRESENT: TED SCHERR FROM THUNDERBIRDS, TELEGRAPH HERALD REPRESENTATIVE The Commission meeting convened at 4:30PM in the Majestic Room at Five Flags Center. Chairperson Cynthia Fuller presided. Approval of Minutes: November 2004 minutes tabled until January 17, 2005 meeting. New Business: Interim General Manager Les Crooks was introduced to the commission. He has 15 years in the business, Five with SMG. He started as a marketing manager in an SMG facility in Baton Rouge, LA. Joe Romano thanked the commission for attending the special meeting. He explained that their search for a GM is underway. All full time and part time employees (with the exception of the two collective bargaining unit employees) have been transitioned. John Snider has decided not to transition over, but will stay on board in a temporary capacity. The slots we are currently looking for are General Manager, Concession Manager, Box Office/Accounting assistant person to round out the full time staff. The commission introduced themselves and the length they have been on the commission. Mark Nauman, Rod Bakke, Cindy Fuller, Bryce Parks and Mike Brannon. Chairperson Fuller questioned exactly who would the GM be answering to - city or SMG and would the city be involved with the events coming into the center. Joe Romano explained how the management will work, and that the GM serves both of the organizations-the client and SMG. Joe Romano responded to Rod Bakke's comment about Paula choosing not to transition, and Joe stated Paula has been in contact with the press, and without quoting her, has explained her decision. SMG/Five Flags wishes her the best of luck and thanks her for her service. Chairperson Fuller opened discussion on the Basketball league. Manager Crooks handed out booklets outlining the basketball proposal. Joe gave an overview/introduction. SMG has had an inquiry from Worth Christie out of Cheyenne, Wyoming. He is putting together a basketball league the All-American Professional Basketball league. We have run some preliminary numbers. This could be a potential resident client for the Center. The league is in an expansion phase right now. We can immediately enter into contracts such as these but it needs to be brought before the commission. SMG believes this could present an opportunity for the building. Floor moves to Tom Lorenz to discuss the dealing with Worth Christie and the AII- American Professional Basketball league. Worth Christie has an extensive basketball past. He was involved initially in starting up the eBl years ago. Mr. Christie will own all of the teams. That is the key issue, the idea is not to drive the franchisers and make money right away. He will work with people that potentially will want to own teams in the future. As of now, he wants to keep control of the league, so there is a consistent league, approach. Five Flags/Dubuque is an attractive area, in the middle of a basketball savvy area. Right in the middle of a triangle of Division 1 teams, UW, Hawkeyes, Iowa State. People here are interested in the game. At this level, they will be drawn to the league. 8-10 teams in the league may go to 11 or 12. He won't want to go above that so he can retain the ownership. Most of the capitol will be there from him. He has leveled out the costs; one of the main concerns was controlling the travel costs. By keeping teams in the league within driving distances, it will keep the travel cost down considerably. The potential benefits we see at Five Flags are the floor, the bleachers-we have the resources. The potential home dates are 28. The season runs November through the spring with playoff games - could possible be 32-35 games by the time the playoffs are finished. We estimated the cost of a conversion from ice to basketball floor and back. The estimated cost is $5.500.00 per conversion. This should be a positive cash flow for us right from the beginning. The existing resident clients will always have first choice on the dates. Joe Romano stressed that this is not a joint proposal. The city, facility, and SMG are not taking a risk. The financials presented are the standard format from SMG based upon their best estimates for expenses and potential revenue from promising patrons. Ultimately through contract they will require a letter of credit, to make sure the building is not out of pocket for one year's expenses. If games are done during the week, there would only be one turnover for possibly 2 games, so that will cut down on the cost. You will keep the part time employees busier with the conversions. More working as ushers, we will get ticketing revenue, all of concession income. Mr. Christie would like to own the teams for at least a couple years before possibly selling them off. He would like to see potential owners with backgrounds in the situation. There will be season tickets available; advertising would be a pay as you go situation. There is a performance guarantee on the team's end. This would be an opportunity to consider. The was briefly touched at the last commission meeting - this is a broader view of what will need to be considered for this type of event. Chairperson Fuller questioned the period as far as signing a contract and receiving a deposit as there are other events that can be booked between the periods. The timing has to be months out, it isn't possible to put this together a few months before the season. Lincoln, Cedar Rapids, Great Falls-MT, Wichita, and Topeka have all signed contracts with this league. Typically we will negotiate a long-term lease with an organization such as this ( 2-3 years) in which it would call for them to have their schedules early to the facility. As we chase concert activity and/or larger attraction activity for the arena, we take into consideration all of the aspects. Most all events coming in want Friday/Saturdays-aren't enough of those to go around. There will be a trade off, what is it worth to FF to have a resident client guaranteeing these events? The letter of credit should carry the center for the year so if the league folds, we are covered. Chairperson Fuller brought to the attention of the commission and employees present that FFC have been spiffed by a letter of credit before - with Brian Gallagher with the Dubuque Fighting Saints. Rod Bakke is concerned for the welfare of the local basketball programs, i.e. high school, college. He suggested contacting the colleges/high school basketball programs, the public, show them what the deal consists of and get their opinionlinput. The basketball public goes to their games now, we don't want to impinge on their programs. Keep in mind this is how Dubuque is. Joe Romano reminded the commission this is NOT a done deal, this is just an idea brought forth as a way to bring additional revenue to the center. All of the centers that are signed on with the exception of Lincoln do have ice. Rod Bakke asked for comments from Ted Scherr regarding this proposal. Ted is concerned with the availability of advertising dollars. The T Birds struggle every year with collecting advertising dollars for their season. If the $$ isn't there, the Jr. program won't be there, that will trickle down, the youth program won't be here. This is really running a fine line. He sees no problem with the scheduling, it's just the revenue coming into and being taken away from each program for advertising. Tom Lorenz gave details on the Lincoln, NE teams, hockey, basketball, baseball, that are all going off of advertising dollars from the city and not at the expense of the other teams. Some of the other advertisers have been able to step up and do more at this point. Exposure for each advertiser is what is important. Income based on concessions are going on per capita of $3 per head. That is aiming low, probably more likely to see more of a 50% return on that. All income from the concessions is FFC profit. We have a potential net profit of $88,436.00. Competing teams would come from the league -the 10 teams in the league. Mr. Christie is looking at 1st and 2"" round cuts from the NBA and kids who probably are great basketball players but cannot meet the academic standards of college. We will be seeing some of these players potentially move up into the NBA. He was a president with the CBA/CBL before it was sold and splint up. Rod Bakke suggested having Worth Christie or a representative from his organization to come and speak with the commission on the January 17'h commission meeting. Joe explained that SMG was brought in to make money for the FFC - under the contractual mandate by the City. This will be done by bringing in new Revenue - new programming, new fee schedules. What we need is the feedback from the commission on whether or not to take this to the next step as far as entering into negotiations with the All-American Professional Basketball League. . It is not SMG's intent to do anything in the community that will be detrimental to other programs. The management contract. directives by the client, the charter, compels them to do whatever is in the best interest of managing the building and moving it forward. Any recommendation by the commission regarding this contract (basketball) will need to go before the City Council. Mark Nauman suggested this type of activity would bring different types of people to the building and expand the services to the city - assuming the league is successful. There are cross-promotional opportunities here with the possible All-American Professional Basketball League and HS/College teams. Rod Bakke again reiterated having Worth Christie or a rep attend the next Commission meeting. Rod Bakke motioned the following go on record: In recognition of Paula Wolfe Lammer's 3.5 years of dedication and service to the Five Flags Center and considering her contribution to the advancement of the Center and to commend Paula for her service as manager and wish her the best of success in the future. Seconded by Mike Brannon. Motion carried. Old Business: Chairperson Fuller mentioned about the reception pians for the building. GiI Spence said it would be 4-8 weeks before the drawings for the renovation are done. This discussion can continue at the January 17 commission meeting. With no further business to discuss, Mike Brannon moved to adjourn, Bryce Parks seconded. Motion carried. Meeting adjourned at 5:45p.m. R"pe;,,~ -(~., .~~. ' L- Cynth I uller, Chairperson