Memorandum

City of Lawrence

Parks & Recreation Department

 

DATE:

Tuesday, April 1, 2014 – Revised 04/07/14

 

 

TO:

Dave Corliss, City Manager,

 

Cynthia Wagner, Assistant City Manager

 

Diane Stoddard, Assistant City Manager

 

 

FROM:

Ernie Shaw, Director Parks & Recreation

 

 

RE:

Title/Presenting Sponsorship Viability for Recreation Center at Rock Chalk Park

 

Background

In November 2013, a contract was issued to Premier Sports Management to provide a feasibility study and audit of possible naming rights, sponsorships and advertising opportunities at the new recreation center at Rock Chalk Park. This included:

·         the valuation of name rights, sponsorships and advertising opportunities using their secondary market research and understanding of the market and media valuation;

·          developing a contract strategy to minimize the issue of all partnerships coming due for renewal at the same time;

·         development of an overall tiered approach based upon level of investment;

·         development of targeted categories and brands;

·         and delivery of a final plan with associated recommendations, objectives, strategies and proposed tactics.

 

Premier’s audit indicated title/presenting sponsorships would bring in a substantial amount of money to offset the amount of operational fees we would have to charge for using the facility, i.e., community rentals, department program fees, as well as alleviating lost revenue potential to the City since we have chosen to not charge the public for memberships for general usage of the facility.

 

The overall sponsorship revenue goal would be a minimum of $225,000 to a maximum of $350,000 per year, which would include one title sponsor and two to three presenting sponsors.  Based on previous projects which have similar scope, Premier stated a title sponsorship could generate a minimum of $95,000 per year to a maximum of $125,000 over 7 years to 10 years and represents 50 percent of the sponsorship revenue.  They’ve indicated the title sponsorship is a key component in achieving revenue maximization for the new recreation center at Rock Chalk Park.

 

Premier worked with Gould Evans to identify the signage locations throughout the facility and grounds for presenting sponsor revenue, which they are preliminarily projecting at $40,000-75,000 per year for a 3 to 5 year term.

 

The City would have to deduct the cost of signage creation and installation (and maintenance) from the gross revenue generated from sponsorships, plus a 20 percent commission on all title/presenting sponsorship sales made for the recreation center at Rock Chalk Park on behalf of the City of Lawrence by Premier Sports Management. The 20 percent commission would also be applied should the City of Lawrence continue to work with Premier in a sales role once the renewal period for the initial agreements come due. Premier provided (added 04/04/14) a table with general revenue and expense projections for sponsorships at the facility.

 

Recommendation

Staff recommends to continue to work with Premier on Phase III of RFP No.1315, which would assist the City with the identification and development of:

·       an overall sales strategy, development of a targeted prospect list,

·       development of contracts, along with a term-of-agreement strategy, in order to ensure longevity and consistency of revenue;

·       and sales outreach to targeted prospects and contract negotiations upon approval of naming rights, sponsorships and/or advertising proposal.    

 

The City will have approval of any title/presenting sponsors throughout the sales process. Staff discussed, at length, that the City will not consider sponsorship of the facility unless the corporate entity and its products align with Parks and Recreation and the City’s goals of health, recreation and wellness. Premier’s Sponsorship Program allows for an approval process of prospects before contact is made.

 

Staff discussed that some members of the public would be concerned that a City recreation center, with title/presenting sponsorships, is too commercial. As mentioned previously, staff feels that sponsorships are necessary to generate revenue that would otherwise have to be provided via memberships and other general use charges.

 

Action Request

Authorize payment in the amount of $17,500 to Premier Sports Management for Phase III of RFP No. 1315. This will also include a 20 percent commission on all title/presenting sponsorship sales made for the recreation center at Rock Chalk Park.