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MOTION TO EXERCISE OPTION TO EXTEND TERM OF THE ASM (SMG) OPERATING AGREEMENT FOR MANAGEMENT OF EVENT VENUES
recommended action
RECOMMENDATION
It is recommended that the City Council approve a motion to:
1. Exercise a five (5)-year extension option through June 30, 2031, as permitted under the current Facilities Management Agreement with ASM Global, for management services for the Adventist Health Arena (Arena), Banner Island Ballpark (Ballpark), Bob Hope Theater, Oak Park Ice Rink and Downtown Marina (collectively, “Facilities”);
2. Authorize the City Manager, or designee, to accept and appropriate a $500,000 investment from ASM required under the current agreement to the Venues Fund; and
3. Authorize the City Manager to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
The term of the current Facilities Management Agreement (Agreement) with ASM Global (ASM) ends on June 30, 2026. Included in the Agreement are two multi-year extension options - one for five years through June 2031, and one for an additional two years through June 2033. Upon execution of the first five-year extension, ASM Global will pay the City $500,000 as an ongoing investment into the Facilities.
Current performance achievements of the local ASM Management team include signing a naming sponsor for the Arena, bringing the Stockton Lantern Festival to the Ballpark, and landing sold out concerts of Peso Pluma, Jo Koy, and many others to the Arena and Bob Hope Theater. The current trend of successful events booked in the Stockton Facilities has been instrumental in making Stockton a viable option for promoters to route artists in the region. Due to the current improvement trends and success of ASM in bringing events to Stockton, staff recommends exercising the five-year option to extend the existing Agreement to continue stability in the operation and booking of the Facilities. Additionally, the $500,000 investment will aid in needed repairs and replacements throughout the Facilities.
DISCUSSION
On January 25, 2011, the City Council approved a Facilities Management Agreement with ASM for the operation and maintenance of four downtown entertainment venues including the Adventist Health Arena, Ballpark, Bob Hope Theatre and Oak Park Ice Arena (Attachment A). In November 2015, the City and ASM mutually agreed to exercise a five-year extension option of the Agreement through February 24, 2021 (Attachment B). In March 2018, Council amended the Agreement to include the operation of the Downtown Marina, restructured the incentive bonus terms, extended the Agreement term through June 2026, and added a five-year extension option through June 2031 (Attachment C). In May 2020, the City added another option to extend the Agreement for an additional two years through June 2033 (Attachment D).
Present Situation
The current Agreement with ASM will expire on June 30, 2026 if the option to extend the Agreement is not exercised. If an extension is not exercised, preparation for a procurement process will need to commence almost immediately to allow sufficient time to draft a scope of services, post, review, interview and award a new contract, while also leaving enough time to plan a transition of management, should one be warranted.
The Facilities are operating at strong levels and continuing to improve. Specifically, annual attendance has grown to nearly the level of pre-COVID times, despite the loss of the Stockton Heat Hockey team, while gross revenue has grown 242% over the same period. ASM has made a commitment to the community with on-going staff volunteer days by serving at St. Mary’s Dining Hall and participating in the Stockton Chamber of Commerce’s Leadership Stockton program for the past three years.
The Bob Hope Theater continues to be a must stop for many Latin artists, along with comedians, and other entertainment such as the Nutcracker and Disney Dance Party, among others. The Arena benefits from ASM’s strong presence in the touring entertainment world by bringing artists such as Cody Johnson, Peso Pluma, and Lil Wayne, and comedians such as Jo Koy and Jeff Dunham. The Ballpark has soared in its use outside of the standard baseball season with the addition of the Stockton Lantern Festival, which spans nearly four months. Oak Park Ice Rink continues to be a regional gem as ASM supports hockey leagues of all ages, curling, ice skating, community free-skate, and birthday parties. The Downtown Marina is also managed under this Agreement by ASM and currently boasts a slip occupancy exceeding 90%.
The progress that has been made in the operation of the Facilities is positive and exciting. It seems prudent to continue the current trajectory by exercising the Agreement extension option and keeping ASM as the management company.
FINANCIAL SUMMARY
Extension of this Agreement does not impact expected financial requirements as the ASM management fees are included in the annual FY2024-25 Operating Budget in the Venues Fund. The $500,000 investment from ASM required with the extension will be received in the Venues Fund as part of fund balance, to be programmed through the annual, upcoming budget process. Potential capital needs include Arena and Bob Hope Theater roof repairs/replacement, concession equipment replacement, and updates to rentable areas in the Arena.
Attachment A - Resolution 11-0022
Attachment B - Contract Extension
Attachment C - Resolution 2018-03-20-1402
Attachment D - Resolution 2020-05-12-1403