UCCF 11/13/14: Kemper Golf Contracts

2014-881: Authorizing the County Manager to enter into contracts with Kemper Sports Management for Golf Management Services and Concessionaire for the Pro Shop and all Food and Beverage sales for a period of 60 Months (5 years), commencing on November 17, 2014 and ending on November 16, 2019 to provide the necessary golf course management services in the total amount not to exceed $509,724.00; and a concession fee to the County of Union of seven (7%) each year of the gross revenue from the Pro Shop and all of food and beverage sales.
2014-882: Approving the operational budget for golf course operations for Kemper Sports Management, for the period of November 17, 2014 through December 31, 2015 in the amount of $4,528,207.
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Contracts to have Kemper Sports Management, Inc. (Kemper) run golf operations (GOLF) for the county and food/beverage/catering operations (CONCESSIONS) for themselves are dated today, November 17, 2014.  Highlights from these contracts:

Kemper sets fees with county having no say on Concessions (GOLF – page 9)

(d) For the 2015 fiscal year only, the Company shall develop and submit to the County, for its review and approval, on or before December 15, 2014 a business plan for the Golf Course Facilities (the “Business Plan”), which shall include (i) proposed marketing, sales, promotion, golf development programs, advertising, sponsorship and public relations concepts for the Golf Course Facilities, (ii) a schedule of proposed fees, charges and an operating budget, and (iii) a description of the assumptions upon which the Business Plan is based. The County, shall give its comments and/or approval within thirty (30) days after receiving the Business Plan from the Company. The County shall neither approve nor disapprove fees, charges or operational approaches associated with the Concessionaire Facilities, which shall be determined by Kemper Sports Golf Group, LLC (“KSG”) as set forth in a separate agreement between the County and KSG (the “Concessionaire Agreement”). In the event of disapproval of any Business Plan (or any portion thereof), the Company shall continue to provide Services pursuant to the terms of this Agreement until such time as the County and the Company agree upon a replacement Business Plan. The Company shall propose, in conjunction with the Proposed Annual Operating Budget, a Business Plan for each remaining year of the Term of this Agreement.

Kemper gets an expense account too (GOLF – page 19)

4.3.1. Out-of-Pocket Expenses. In addition to all other fees and expenses recited herein payable to the Company, and subject to County’s approval of same in the Budgets, it is agreed that County shall reimburse the Company within thirty (30) days of invoice for all actual out-of-pocket expenses incurred by the Company in the performance of this Agreement. Out-of-pocket expenses shall include, but shall not be limited to, reasonable travel (but airfare in excess of $1,000 must receive prior written approval of County), air express, courier service, costs of recruitment but only if prior approval of County (including applicable agent’s fees), and other incidental expenses. Reimbursement for such out-of-pocket expenses will be made at actual cost and may be made directly from the Operating Expense Account. Other than with respect to out of state travel costs, if an out-of-pocket expense is not reflected in the approved Operating Budget and will exceed $1,000.00, Company shall obtain approval from County before the expense is incurred. All out of state travel shall require the pre- approval of the County

Monthly Payments to Kemper (GOLF – Exhibit B)

2. Annual Contract Payment. As proposed by the Company, and agreed to by the County, the Company shall be paid an Annual Contract Payment pro rated on a monthly basis as follows:

Total Fee for the first Contract Year is $ 96,000 to be paid in monthly installments of $8,000
Total Fee for the second Contract Year is $98,880 to be paid in monthly installments of $8,240
Total Fee for the third Contract Year is $101,845 to be paid in monthly installments of $8,487
Total Fee for the fourth Contract Year is $ 105,000 to be paid in monthly installments of $8,750
Total Fee for the fifth Contract Year is $ 108,000 to be paid in monthly installments of $9,000

UCIA cut (GOLF – Exhibit B)

3. Project Development Costs. Within seven (7) days of the Effective Date of this Agreement, the Company shall make a one-time payment to the Authority of $25,000, which payment represents the Project Development Costs associated with the administration and development of the RFP.

Kemper Incentive Payments (GOLF – Exhibit B)

4. Annual Incentive Payment. As proposed by the Company, and agreed to by the County, the Company shall be paid an Annual Incentive Payment for each Contract Year, payable within 30 days of completion of the annual financial statements by the County upon which such payment is based. Commencing January 1, 2015, the Annual Incentive Payment shall be based upon the financial statements for each fiscal year of the County (which is a calendar year). The relevant financial results for the “stub” portion of the Contract Years in 2014 and 2019 shall be equitably prorated and apportioned in order to calculate the Annual Incentive Payment for those periods. The amount of the Annual Incentive Payment shall be as follows:
First stub Fiscal Year (November 17, 2014 to December 31, 2015) 5% of Gross Revenue in excess of agreed upon Annual Operating Budget Gross Revenue Projection
Second Fiscal Year (January 1, 2016 to December 31, 2016) 5% of Gross Revenue in excess of agreed upon Annual Operating Budget Gross Revenue Projection
Third Fiscal Year (January 1, 2017 to December 31, 2017) 5% of Gross Revenue in excess of agreed upon Annual Operating Budget Gross Revenue Projection
Fourth Fiscal Year (January 1, 2018 to December 31, 2018) 5% of Gross Revenue in excess of agreed upon Annual Operating Budget Gross Revenue Projection
Fifth stub Fiscal Year (January 1, 2019 to November 16, 2019) 5% of Gross Revenue in excess of agreed upon Annual Operating Budget Gross Revenue Projection
IN NO EVENT SHALL THE ANNUAL INCENTIVE PAYMENT EVER EXCEED 20% OF THE COMPANY’S COMPENSATION IN ANY GIVEN YEAR OF THE TERM OF THIS AGREEMENT.

What Kemper will get to make profits off of using county facilities including the $15+ million catering hall at Galloping Hill that the county kindly built for them (CONCESSIONS – page4)

“Concessionaire Facilities” means (1) the pro shop and food and beverage outlets at the Clubhouse at Galloping Hill, (2) the snack bar and pro shop at the Ashbrook Golf Course, (3) the snack bar and pro shop at the Learning Center at Galloping Hill (the “Learning Center”), (4) the beverage carts and halfway houses at both golf courses, and (5) certain other food and beverage Ancillary Facilities all owned by the County and to be contracted as the concessionaire by Kemper Sports Management, Inc. under this Agreement. Each of the above pro shops, including but not limited to the pro shop at the Learning Center, shall collectively be referred to in this Agreement as the “Pro Shop”.

Minimum that Kemper has to bring from concessions not to be in default (CONCESSIONS – page 23) though amended down to $1 million

(b) The Company fails to achieve annual Gross Revenue in any Contract Year in the amount of $1,500,000 with respect to the operations of the Concessionaire Facilities,, and provided that any such failure is not due to a Force Majeure Event or any breach of this Agreement by the County.

What the county will get (CONCESSIONS – Exhibit B)

2. Guaranteed Concession Fee. As proposed by the Company, and agreed to by the County, the Company shall pay to the County, on an annual basis, on or before December 15th of each year, an Annual Total Guaranteed Concession Fee for each immediately preceding Contract Year. The Concession Fee is as follows:
Percentage of Gross Revenue from Concessionaire Facilities:
First Contract Year: 7% of Gross Revenue
Second Contract Year: 7% of Gross Revenue
Third Contract Year: 7% of Gross Revenue
Fourth Contract Year: 7% of Gross Revenue
Fifth Contract Year: 7% of Gross Revenue

Other Relevant Costs:

Director of Golf Operations: Salary $112,200 for a part-time job?

Property taxes: $117,363

UCIA expenses: $290,379

 

One response to this post.

  1. Posted by Lowell Schmidt on November 17, 2014 at 11:30 pm

    If kemper sports is running the golf and restaurant
    why does the county need a director of golf operations?Isn’t that what kemper is being paid to do?
    Also it seems the county should receive 10% with what
    the liquor and food charges in the restaurant.

    Reply

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