UTILITY FACT #1 – CONCESSIONS AGREEMENT
In an effort to inform Chiefs fans as to what the Ballclub and County are talking about with regard to utilities – we thought that it would be very informative to everyone involved to put the facts on the table, or in this case our blog.
The first piece of incorrect information that has been circulated by county government is that the Chiefs owe $150,000 for each year from 2004-2006 for their share of utilities at Alliance Bank Stadium.
Under the Management agreement the manager of the Facility is responsible for all utilities at Alliance Bank Stadium. During the first three seasons, 1997-1999, the Chiefs paid 100% of all utility charges at the stadium. In January of 2000 County Executive Nick Pirro terminated the management agreement and the County took over the management of the facilty, which included the utility bill. Under the current Lease Agreement, no where does it spell out that the Chiefs pay a nickel for utilities. It does make reference to the Chiefs $5-million dollar payment to the County in 1997 as pre-paid rent, which in almost every tennant-owner contract includes utilities. The Chiefs however in good faith negoitated a $42,500 payment to the County for years 2000-2004 for what was called "their share". Now on to the County fuzzy math…….
The county identified the lofty sum of $150,000 as broken down this way -$90,000 for Chiefs usage and $60,000 that they identified used by the Stadium concessionaire, Centerplate. This information was provided to the Chiefs in March of 2006, some two years prior to the 2004 season.
Going back to 1995 the Chiefs were asked by the County to enter into an agreement with a concession company to provide service to the newly proposed stadium. The Chiefs negotiated an agreement that was approved by the County to allow Volume Services to provide service for 15-years. That agreement included a $1.4 million dollar initial investment that included the total build out of concession stands at the Stadium. In exchange for that investment the Concessionaire requested a lesser percentage of commission on the gross sales over a 15-year period and that their utilities be included in the deal – a standard practice in all Concession-Team lease arrangements. The concessionaire ultimately put $1.8 million dollars into the stadium and the Team lost another 1 percent.
Now 10 years into the lease the County has forgotten about the deal the Chiefs were requested to make that saved them $1.8 million dollars back in 1997. In addition, the County used the $1.8 million dollars of concessionaire investment as a match for the $16-million dollars of state money that was made available for the project. Without that match the county would have only received $14.2 million dollars from the state and would have had to provide the difference.
Therefore the County’s claim concerning the concessionaire usage is not arguable. The Concessionaire was out $1.8 million dollars before they sold their first hot dog, and the Chiefs over the past 10-years lost close to $900,000 by taking a lesser percentage of concession revenue.
To add insult to injury, since 2000 the ballclub has provided the County with $180,000 of concession revenue from extra events held at the stadium. If you follow this correctly our county government wants to charge the two organizations who saved them almost two-million dollars in buildout in 1997 – $60,000 a year midway through the deal and wants the concessionaire to continue to give them profits off extra events at the stadium. Sounds like "Double Dipping" to me.
In an effort to make sure the stadium was built the ballclub accepted the lost revenue in exchange for the investment. The county on the other hand seems to have a short memory.
Therefore the $150,000 claim by the county is not accurate. It’s not even close. Tomorrow we will discuss and independent report performed by Carrier in 2001 that was paid for by the County that details how the County could have saved $100,000 a year in utility cost at Alliance Bank Stadium since then.