Regular 4.
Regular City Council Meeting
- Meeting Date:
- 12/19/2016
- TITLE
- Postpone Action to Feb. 13, 2017, on Dehler Park Facility Management, Operation and Use Agreement with Mustangs Baseball, LLC
- PRESENTED BY:
- Tina Volek
- Department:
- City Hall Administration
Presentation:
PROBLEM/ISSUE STATEMENT
At its Dec. 12, 2016, meeting, the City Council provided staff with revisions to the attached City of Billings Facility Management, Operation and Use Agreement, and postponed action on this item to Dec. 19, 2016. Additions to the amended document are underlined, and deletions are struck through.
Billings City Council first approved a Ballpark Management, Operation & Use Agreement with the Billings Pioneer Baseball Club, doing business as the Billings Mustangs, in 2008, as what became Dehler Park was preparing to open. The contract remains in place, and is due to expire on Dec. 31, 2017, with options for the Ball Club to extend it for additional 10-year periods. However, the Mustangs organization was purchased in 2014 by Main Street Baseball, LLC., and the new owners asked to renegotiate the contract in late 2015, leading to extensive contract negotiations. The resulting contract was edited slightly by the Billings Parks, Recreation and Cemetery Board on Nov. 16, 2016, and recommended by a 4-1 vote to the City Council for approval.
The proposed agreement differs from the in the following, significant ways:
1) Gives Main Street Baseball the opportunity to sell naming rights to the field. They may also sell scoreboard advertising and ballpark naming right when the current agreements expire. The City of Billings Ballpark Permanent Fund will receive 50% of the net revenue from the sales to enhance or replace the score board in the case of the scoreboard revenue, and to provide major maintenance to the ball park in the case of the field and park naming rights.
2) Increases the ball club's fixed rental payment from $30,000 to $60,000 annually. The rent will be deposited in the City of Billings Ballpark Permanent Fund to offset capital repairs of more than $25,000 that will be needed at the ball park as it ages. Expenditures from the permanent fund will continue to be approved by the City Council upon the recommendation of a Facility Review Committee, currently consisting of one representative each from the City Parks Department, the Parks Board and the Ball Club.
3) Creates a $30,000, City-funded maintenance account, combined with a $5,000 Ball Club account, to handle non-capital repairs. The agreement authorizes the City Administrator or the Administrator's designee to authorize such repairs in keeping with the City's Purchasing Policies and Procedures.
4) Authorizes the Ball Club, at its own expense, to make improvements including an enclosed, glass Great Room; a children's play area with zip line; seating, service and concession area upgrades; and additional improvements recommended by the Facility Review Committee and approved by the City Council.
5) Adds two members to the Facility Review Committee to be appointed by the City Council.
6) Ensures the Ball Club will play in Dehler Park for the duration of the contract, as long as the park meets Minor League Baseball Facility Standards, and that the City will not attempt to sell Dehler Park during the term of the contract.
7) Provides both the City and the Ball Club with the opportunity to schedule events at the park, with each receiving revenue from their own events.
8) Provides a dispute resolution process.
Eliminated from the prior contract are provisions that give the City the opportunity to review all Mustangs contracts with other business entities, that require the City to review Mustangs' finances annually (an alternative process is provided), and that require a baseball camp.
Dave Heller, president of the organization that owns the Mustangs, has indicated that he will not agree to a 50% split on naming rights and other revenue unless the City increases its $30,000 contribution to routine maintenance by another $25,000. Mr. Heller is being sent a copy of this agenda item, and has been encouraged by the staff to provide comments in writing to the Council. He has indicated his willingness to come to Billings in late January to discuss the contract directly with the Council or a small subcommittee.
Billings City Council first approved a Ballpark Management, Operation & Use Agreement with the Billings Pioneer Baseball Club, doing business as the Billings Mustangs, in 2008, as what became Dehler Park was preparing to open. The contract remains in place, and is due to expire on Dec. 31, 2017, with options for the Ball Club to extend it for additional 10-year periods. However, the Mustangs organization was purchased in 2014 by Main Street Baseball, LLC., and the new owners asked to renegotiate the contract in late 2015, leading to extensive contract negotiations. The resulting contract was edited slightly by the Billings Parks, Recreation and Cemetery Board on Nov. 16, 2016, and recommended by a 4-1 vote to the City Council for approval.
The proposed agreement differs from the in the following, significant ways:
1) Gives Main Street Baseball the opportunity to sell naming rights to the field. They may also sell scoreboard advertising and ballpark naming right when the current agreements expire. The City of Billings Ballpark Permanent Fund will receive 50% of the net revenue from the sales to enhance or replace the score board in the case of the scoreboard revenue, and to provide major maintenance to the ball park in the case of the field and park naming rights.
2) Increases the ball club's fixed rental payment from $30,000 to $60,000 annually. The rent will be deposited in the City of Billings Ballpark Permanent Fund to offset capital repairs of more than $25,000 that will be needed at the ball park as it ages. Expenditures from the permanent fund will continue to be approved by the City Council upon the recommendation of a Facility Review Committee, currently consisting of one representative each from the City Parks Department, the Parks Board and the Ball Club.
3) Creates a $30,000, City-funded maintenance account, combined with a $5,000 Ball Club account, to handle non-capital repairs. The agreement authorizes the City Administrator or the Administrator's designee to authorize such repairs in keeping with the City's Purchasing Policies and Procedures.
4) Authorizes the Ball Club, at its own expense, to make improvements including an enclosed, glass Great Room; a children's play area with zip line; seating, service and concession area upgrades; and additional improvements recommended by the Facility Review Committee and approved by the City Council.
5) Adds two members to the Facility Review Committee to be appointed by the City Council.
6) Ensures the Ball Club will play in Dehler Park for the duration of the contract, as long as the park meets Minor League Baseball Facility Standards, and that the City will not attempt to sell Dehler Park during the term of the contract.
7) Provides both the City and the Ball Club with the opportunity to schedule events at the park, with each receiving revenue from their own events.
8) Provides a dispute resolution process.
Eliminated from the prior contract are provisions that give the City the opportunity to review all Mustangs contracts with other business entities, that require the City to review Mustangs' finances annually (an alternative process is provided), and that require a baseball camp.
Dave Heller, president of the organization that owns the Mustangs, has indicated that he will not agree to a 50% split on naming rights and other revenue unless the City increases its $30,000 contribution to routine maintenance by another $25,000. Mr. Heller is being sent a copy of this agenda item, and has been encouraged by the staff to provide comments in writing to the Council. He has indicated his willingness to come to Billings in late January to discuss the contract directly with the Council or a small subcommittee.
ALTERNATIVES ANALYZED
City Council may:
- Approve the agreement as presented,
- Disapprove the agreement, which would require new negotiations at some point before December 2017;
- Modify the agreement to meet the request of the Mustangs owner and approve it; or
- Continue the agreement to the Feb. 13 Business Session, and invite Mr. Heller to meet in February with the Council or a subcommittee of the Council, to revise the agreement language.
FINANCIAL IMPACT
If the agreement is approved, the City would need to budget $30,000 annually in the Parks and Recreation Fund for repairs. Such a clause was included in the Cobb Field agreements, but not paid for many years, contributing to the decline of the old stadium. The additional cost would be offset by a $30,000 increase in the Mustangs' rent, although that money will go into the City of Billings Ballpark Permanent Fund, offsetting contributions that otherwise might have been necessary in the future.
The exact amount of revenue that would come to the Permanent Fund from the sale of naming rights is unknown. Using the Dehler Park naming rights as an example, the $1 million donation would have added $150,000 to the Permanent Fund account. However, Mr. Heller believes the Ball Club can raise more revenue than in the past from such naming rights.
The exact amount of revenue that would come to the Permanent Fund from the sale of naming rights is unknown. Using the Dehler Park naming rights as an example, the $1 million donation would have added $150,000 to the Permanent Fund account. However, Mr. Heller believes the Ball Club can raise more revenue than in the past from such naming rights.
RECOMMENDATION
Staff recommends continuing the agreement to the Feb. 13, 2017, Business Session, and scheduling a meeting with Mr. Heller to discuss the City Council's concerns about the agreement.