[MarkDaMan]

Courtesy: City of Hillsboro

Hillsboro Baseball: Evolution of a deal
Published: Thursday, July 12, 2012, 5:24 PM Updated: Thursday, July 12, 2012, 6:12 PM
By Sally Ho, The Oregonian

http://www.oregonlive.com/hillsboro/..._river_default

The Oregonian obtained drafts of the negotiated term sheet between the city of Hillsboro and Short Season LLC. Here is a detailed summary and analysis (in italics) of the five drafts that defined the deal for the Yakima Bears' relocation to Hillsboro next season:


Draft 1, April 6, 2012:

STADIUM COSTS: Team to contribute unspecified amount of money to the stadium build - This clause is eliminated in all subsequent drafts

RENT: $150,000 with 3 percent annual increase - It remains throughout negotiations, despite the team hitting back in an email after Draft 4

PRE-DEVELOPMENT COSTS: Team to pay all pre-approved, pre-development expenses, including consulting and legal fees - An unspecified maximum amount for this clause appears in Draft 2 but the clause is eliminated entirely in subsequent drafts

PARKING: City to keep all parking revenue - This clause is amended in drafts 2, 4 and 5, but the city eventually prevails with full control of operations and revenue

TICKETS: Team to pay a $2 per-ticket surcharge to the city - This clause is amended in drafts 3, 4 and 5, moving the city from collecting up to $3, down to just the prevailing $1

PROFIT-SHARING: After the first $250,000 in net revenue, 50-50 profit sharing for game events and 70-30 profit sharing for the city and team, respectively, for non-game team events - Profit sharing for non-game team events is eliminated in Draft 3 and the entire clause disappears in Draft 4 and 5

REPAIRS: Team to pay for 25 percent for capital repairs and maintenance beyond $200,000 - This is changed to $250,000 in Draft 2

POURING RIGHTS: Revenue from the third-party beverage distributor to be split 80-20 between city and team, respectively; Sale of alcohol is an open issue - Non-alcoholic beverages is added in Draft 2 and no mention of alcohol appears again

CONCESSIONS: If the city controls concessions by hiring a third-party operator, the operator will pay the team the net revenue from team events; If the team controls concessions, the team must pay 20 percent of the net revenue to the city – Term is amended in every draft and the city and team agree in Draft 5 to create a separate agreement for concessions


Draft 2, April 19, 2012

PARKING: Amended for city to keep either $2 per vehicle or 50 percent of all revenue (whichever is greater) for team events; Team and city to decide who will operate parking


Draft 3, April 20, 2012

RENT: Amended to a 20 percent rate increase on the 6th, 11th and 16th anniversaries - The increase is changed back to the 3 percent annual in drafts 4 and 5

TICKETS: Amended to a defined $2 surcharge, with $1 to the city and $1 to a capital expenditure fund -- controlled by the city -- for repairs; The fund will cover the team’s portion of repairs beyond $250,000; Beyond the first 100,000 tickets in a season, another $1 surcharge will be allocated to the city - The third dollar surcharge is eliminated in Draft 4; In Draft 5, the surcharge is lowered to $1 and the city-controlled fund is eliminated


Draft 4, May 7, 2012
PARKING: The clause is changed to $3 per vehicle or 50 percent of all revenue (whichever is greater) for team events; the city is to operate parking

In response to this draft, Northwest League President Bob Richmond writes in an email: “...the league members were very clear they will not approve the current revenue lines with the proposed rent increases, parking lot split and ticket surcharge.” Richmond asks if the city will consider taking a percentage of the ticket price, instead of a flat dollar amount. He also insists the team control concessions at the stadium at all times.


Draft 5, June 5, 2012 - This term sheet is approved and is the framework for the official contract. See it here.

RENT: $150,000 with 3 percent annual increase


CONCESSIONS: Team to run concessions at the stadium for the first two years, keeping all profits during game days; City and team will approve a separate agreement for concessions

PARKING: City to keep all parking revenue and operate parking

TICKETS: Team to pay a $1 ticket surcharge

Although terms were introduced, the prevailing term sheet has the team free from a financial contribution to the stadium, the pre-development costs and any profit-sharing with the city.

Full terms of the concessions and naming rights remain unseen, because the approved term sheet calls for a separately negotiated agreement for those terms. The pouring rights clause disappears but could reappear as part of the separate concessions agreement.

By The Numbers

Hillsboro stadium cost: Between $13.4 million and $15.2 million

Vancouver stadium cost: Up to $23 million

Short Season's financial contribution for Vancouver: Up to $6.9 million

Short Season's financial contribution for Hillsboro: $0

Number of negotiation drafts required: 5

Number of days from first to last negotiation draft: 60 days

Negotiated rent: $150,000 with 3 percent annual increase

Rent revenue at the end of the 20-year contract: $4,030,556.07
Annual cost to city taxpayers for bond: About $1 million