Travis County Commssioners Court
April 22, 2003
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Item 16
16, consider option to license agreement with hma enterprises doing business as the Austin rockers for use of the Travis County exposition center for indoor football and take appropriate action.
>> this was not on consent?
>> no, I actually had a question on that one.
>> the Austin rockers are a new arena football team. That's the Austin rockers, and they are at Travis County exhibition center. And they have new owners. They used to be known as the terminators. A new owner, h.m.a. Enterprises. You have before you on page 2 right after the memorandum some of the terms of this particular agreement. The license. And I'm going to turn it over to scott Davis, who is the director at the expo center to go ahead and go over the terms.
>> alicia, don't we have a formal introduction to the court of our new exposition center director.
>> and I will introduce him, although for some people no introduction is necessary. Most of you know judge scott Davis. He served the county for, what, 13 --
>> 14.
>> 14 years as j.p. In precinct 3. He applied for the job and was chosen. Had a great interview, and we look forward to a very prosperous time with judge Davis.
>> great. Welcome.
>> welcome. Again. Welcome back.
>> I appreciate it. Glad to be here. The rockers is a -- they are an indoor football team, arena football, with a national indoor football league. They had their first home game of the season last Saturday, and they were successful, they won. They evened their record now to 2 and 2. We had the backup material which gives a brief description of the terms of the agreement that we've entered into, and I think it will be a good relation with the county, the team. I hope that they will be more successful financially than the group we had in last year, and I believe they will be.
>> and that was actually one question that I had, since we did have some issues with the terminators when they were using there in terms of they did not meet the contract terms, how are we protected that the county gets the services and the dollars that they are entitled to? Because it was not pleasant trying to deal with getting our money long after the fact. How do we protect ourselves?
>> fortunately this contract calls for the payment of the rent to come out of the proceeds from the concessions. So when people buy products, we get our split, and that's where we collect our money are out of the concessions. That comes from the concessionaire. So it makes it a little easier for to us get our money because we're not getting it directly from the rockers but from the concessionaire.
>> which is basically similar to the situation we have with the ice bats, in terms there's not a lag. That was my question. Are there any other questions?
>> move approval.
>> second.
>> I have some questions.
>> Commissioner Daugherty.
>> why wouldn't we ask for these people to pay the $3,900 per week? Why wouldn't we ask -- I mean, because always have the opportunity to really get money out of are the concessions.
>> correct. They've already paid some moneys up front.
>> 20%, I understand they've paid. So they've paid 5 grand out of about a 27,300. So they've paid about $5,500, somewhere in that.
>> 5470, I believe.
>> okay. Why wouldn't we ask that, scott? Why wouldn't we ask -- because I understand they are going to charge for parking and that they are obviously going to have gate proceeds from this. Do you know what -- do you know how many people they've been playing before? What are the economics that -- get me comfortable with the fact that is not just one of these things that there is some people that can't let loose of this [indiscernible] at thitime of year and you have the people that want to come out, and if they are going to do that, I'm not so sure we shouldn't be getting our $300 a week versus, you know, waiting to get it -- $3,900 a week.
>> fortunately or unfortunately, I didn't participate in the writing of this contract. The owners and the county attorney's office are the ones who drew up the terms of the contract. All I would say is I went to their first home game this Saturday, and I think they've got a heck of a product. The question is marketing the product and doing it in this economy. The economy is down. And we've seen that attendance to certain events is down. Folks aren't spending quite as much money as they did last year. There's not much we can do about that. The new owners are committed to the team. I think they have the financial resources to meet their obligations, and I think that by doing the -- taking the money out of concessions, that we probably ensure ourselves a better opportunity to collect the money than we might have otherwise just a straight up they owe us this much money every month or every week. There are some other folks that payment history hasn't been quite so good, but we've resolved that issue also. So I have a pretty good comfort level with these folks. They work with us. The owners are committed. I think that's probably the big thing. Of course, we have a contract that we can enforce if they don't do what they are supposed to do.
>> well, but if you have an entity that goes bankrupt, you can't get blood out of a turnip.
>> there are no guarantees.
>> that's the deal that you really -- what is the hard -- I mean if nothing was going on in this building, what is the cost of the county owning that building on a daily basis? What I'm looking for is that, you know, joe, you were talking about $3,900 a game, and that's kind of what we -- what we want is the $3,900. I mean, plus some eventual dollars in addition that -- with the concessions. Is there an amount there, scott, that you say here's what it -- here's what it costs to -- here's what it costs for that building just to sit out there if we didn't have anything going on? What expense do we have for allowing this event to take place in our facility that we normally wouldn't have to spend money on? We've got to turn lights on, we got juice --
>> electricity, gas for the hvac system. Then there's the personnel to clean the facility after the games. So we --
>> do we pay for that?
>> yes, sir.
>> I mean, that got past me. So out of our $300, we've got to pay -- $3,900, we've got to pay for --
>> we maintain the facility and clean the facility quor virtually -- other than the rodeo, I believe virtually all events.
>> what would it cost us to clean -- what would your cleaning bill be after an evening of that?
>> may I answer?
>> please, if you know.
>> the cleaning depends on the event, Commissioner. Some events are very, you know, there's a lot of cleaning we have to do after that.
>> right.
>> for instance, you know, [indiscernible] we ask the vendor -- I mean the [indiscernible] to pay for the cleanings because it's out of the ordinary. On the ordinary cleaning, we have an in-house custodial, about 145 -- I mean $1.45 per square foot. And this is how we, you know, figure out, you know, the dollars amount to pay our staff. And that's built into our -- you know, the rent fee we get for every vendor we call them or every client we deal with. So there's also a factor for maintenance. Again, as -- about like a dollar or so a square foot. And all of that is figured out into the fees. Because that facility is based on revenue rather than on [indiscernible] so we need to account for every penny what we pay our folks and also the [indiscernible] for our operation and maintenance, and then we blend all of that into our fees. And those fees we present to the court and the court approved those back in September for the latest. So everything rule I -- [indiscernible].
>> well, I mean, can somebody give me a number, then, if we have an event at that place, we have to have people go in and clean it.
>> uh-huh.
>> I mean, because we don't have anybody clean the place if there is not a event. But if you have an event, how many dollars does it take to clean that place for that one day's activities?
>> like roger was saying, if there is a tremendous turnout, obviously it's going to take more work. But if the turnout is modest, it doesn't take quite as much work because there's not as much to clean up. It's about $150, basically. Four people, four hours, $9 an hour, which is $144.
>> so you clean that place for $150? I mean, given -- everybody has their -- if somebody has an 8 dollars ticket, somebody has a $4 ticket. You got a guy sitting there, one guy sitting there, the whole place has to get cleaned up.
>> typically it doesn't. At least last week it wasn't that way. They are clustered. You would normally say it's the 50-yard line, but it's the 25-yard line. It's not in bad shape. It doesn't take a lot of work. If there's a large crowd, say 3,000, 4,000 people, it's going to take more work. It's not -- it can be, but it wasn't that bad this last weekend, i'll say that. They spent about four or five hours in there cleaning it up.
>> well, I just think that --
>> four people.
>> it's what?
>> it's four people. Approximately four-plus hours. At $9 an hour.
>> I think ultimately, I mean probably our biggest liability here is that somebody just can't pay, then you are going to go after somebody that may ultimately just say you know what, we're defunct. We can't pay you your -- you know, the dollars that we had. I mean, it helps to get some, you know, out of your concessions on a weekly basis, but I mean, generally in these kind of things you need some sort of a guarantee. Be it a bond or I mean if all else fails and we've got to come after you, we have -- we have this opportunity to go here and dip into this 22,000 or whatever -- obviously you are going to get some dollars out of it. And you are not hanging out too much because this is not a tremendous amount of dollars. That's the reason I wanted to know what it really costs for the place just to sit. But, you know, this is not a great contract for the county to be in because we don't really have the real teeth to get our -- but we're doing it on the come, and hopefully -- but we've watched these things, these sports, I mean the-"i mean, this is just one of them, that before you know it, you don't have the viewership. And if you don't have the audience, then you don't have the concessions. And, you know, all of a sudden Travis County is in the deal where they've said, okay, well, this is --
>> they are ventures, you are right. And one of the ways I think that we can leverage or minimize our risk and leverage -- try to leverage the levers, I guess, that we have to minimize the risk is to do it like this to where we get all the concessions until the amount is paid. The 27,039. We ask them for the 20% deposit also. So this is just one mechanism where we thought about what you are saying and say how do we minimize the risk. One of the ways is just take the concession money before it goes to the particular entity, and we fully realize that these are, indeed, venturers that are fraught with risk. And we always look to minimize our side of that.
>> but we're going to monitor them and make sure they do work out for us. If they don't, I'm sure we can take another action.
>> if they fold and they don't play, if they don't play, then there's no cost to the county. So it's not like that we're going to -- we would lose anticipated revenues, obviously, if they didn't play. But it's not like it would be a good going expense. There wouldn't be an ongoing expense because they would cease using the facilities and there wouldn't be any air conditioning or cleanup associated with their use or non-use.
>> the point here is that you are definitely going to go out there and buy a ticket to get in. And you are going to park. So the two revenue guarantees that you really have out there are your entrance and your parking. We don't participate in any of that. We don't participate until somebody gets thirsty or hungry.
>> they get thirsty. [multiple voices]
>> claire one thing, this contract -- clarify one thing. The terms of the contract were negotiated by facilities and by the expo center then director in recognition of the problems that we had encountered in the past in terms of receiving, obtaining those revenues and covering our costs. And these terms were specifically negotiated with that in mind. Of course, our office did put those terms into the contract, but they were negotiated based on previous experience.
>> I wanted to go ahead and clarify that, that we negotiate the terms of the contracts for the motion part and the county attorney just puts it in form. And we bring them to the court, and we have a subcommittee also made up of the judge and Commissioner Davis that we discuss, and I really would like, Commissioner Daugherty, because of your experience to participate also in some of this -- these contracting issues. This is an existing contract, and really what we're doing is changing the name of the owners. But like I said, one of the ways we minimized our risk was just to take the money from the concessions. And a lot of times we make more money on concessions than you do on the gate.
>> well, I think that you ought to be able to get your concession money percentage. I just think that you ought to be able to get your basic out of this. Help getting it out of the door. I mean, generally whenever you get somebody -- when somebody comes and does something at your place, the guarantee that you really want is you want part of the -- you want part of the gate, you want part of the door, because that's --
>> and on every other we take our money -- on most of the other events we take our money up front t ice bats, the football team, and the only time that you see a formal contract is where we have numerous events. So there leaves a little more room for negotiation. Most of the other events, the single booking or even some of our multiple bookings like the mexican wrestling event that we have out there, they pay for the facility up front.
>> scott, cow give us some perspective, you were at the game this last weekend, what was the share, if you know, of the concessions that would have gone to the team, but because of this contract it comes into the county? Do you have a sense of how much we already made off the concessions to help satisfy --
>> well, that's a difficult -- you know, there are folks that do nothing but take a crowd and say this crowd is going to spend x number of dollars per person on concessions. And if you use that type of multiplier, you know, they would have spent probably $5,000 or $6,000 in concessions. If that's the case. Beer is $5. So if -- you know, each person bought one beer, that's $4,500, let's say. Well, then they are going to have a hot dog, and I you bought popcorn and cokes. I dropped more than that myself. So -- but getting back to the rent issue, if they were to collect the money at the gate for the tickets, then we have to go to them to try to get them to pay rent out of that money. And trust me, i've only been out there a little over two months, it's sometimes rather difficult to get the folks to pay their rent when it comes from ticket sales, so to speak. And this is a third party paying us the moneys they receive for the concessions, and I think that this is -- at least from what i've seen, a better way to do it than what we've done in the past with some other people.
>> well, how do we know what the concessions -- I mean -- do you have that compilations?
>> they break it down.
>> and do you have that now? [multiple voices] do you have that now?
>> no, sir.
>> so no one has given you that since the game?
>> no, sir. Austex on a monthly basis will pay us mental illness and it will come from ice bat games, it will come from the rockers, and they will break that down and tell us how much money was generated concessions for the rocker game that was this last Saturday, the ice bat games that were held -- I guess that will be -- there were two games so far -- two games this month. And in the million dollar -- in the light of the 17th day of may, they are required to give us the moneys and a breakdown. They typically do it a week early on the 10th of the month.
>> is that a net or gross?
>> which one?
>> concessions.
>> it's gross.
>> but you don't really -- we don't have a mechanism of knowing -- [multiple voices] do we know that somebody tells us that they sold $14,000 worth of concessions, but we had estimated -- at any time we can inspect their books.
>> we have a right to audit and look at their books any time.
>> well, i'll be interested in coming out there and looking at -- I mean, there's some things that make me real nervous about the contract. Namely because I think we ought to get our money on a weekly basis on this kind of venture. Really what we're doing is we are financing, if you will, on a weekly basis, and they are getting a lot larger chunk -- I will tell you that they are taking a lot more out of this thing than the 3900 or whatever it is that --
>> I hope they make a profit.
>> you want them to make a profit. My point is that you need to pay -- you need to pay as you go. And if you were dealing with the cowboys, that had 44 years of history and all this kind of stuff, it would be one thing. These entities are not known for long-term strength of financialability and all this kind of stuff. So it -- I know you are out there saying hey, I want something going on Tuesdays and Wednesday. But we don't want to get into a spot where it's just because, hey, we got to have something, you know, going on out there if we're not getting our fair share and if we don't have the ability -- because it'sing us a lot more money than we probably think to open the doors to an entity. Let's face it, you can't have one of these operations going out and building their own and they will be upside down before you can even get out of the blocks. So what we have is a multi-million dollar facility out there and we are allowing some folks to come in, and I don't have a problem, I'm a free enterprise guy, but pay asbestos you go so we know we're going to bet what we deserve.
>> I think this?r contract is designed to ensure that we do receive our moneys, and coming from the third party, I think we're having better -- greater likelihood of us receiving moneys if the venture were to start failing rather than going to them and trying to get them to pay us based on the ticket sales they receive. You are going to get more in concessions than you are in ticket sales. So far. Hopefully at some point --
>> maybe. Maybe.
>> [inaudible] tickets.
>> I'm ready to vote on this item.
>> I moved approval.
>> we do have a motion and second. But I want to make sure Commissioner Daugherty has asked all the questions that he wants.
>> yes.
>> okay. For me, my own comfort level is this is different from what we had with the terminators and it's specifically rewritten to address the idea we couldn't get the blood from the turnip and to get it from concessions is the place to graibt and get our moneys there. Commissioner Davis had the motion. Commissioner Gomez had the second. Is there any further discussion by any member of the court?
>> I would like to thank you, scott.
>> thank you.
>> appreciate all your work, alee sha.
>> all in favor? Commissioner Gomez, Sonleitner and Davis voting yes. In opposition?
>> I'm going to abstain.
>> abstention by Commissioner Daugherty. Thanks you all.
>> thank you.
Last Modified: Wednesday, April 23, 2003 5:52 PM