DEPARTMENT: Convention & Sports Facilities
DEPARTMENT HEAD: Michael J. Sawaya
COUNCIL DISTRICTS IMPACTED: City Wide
SUBJECT:
Extension Agreement and Fifth Amendment to the Ticketing Services Agreement with Ticketmaster, L.L.C.
SUMMARY:
This ordinance authorizes an Extension Agreement and Fifth Amendment to the Ticketing Services Agreement ("Agreement") with Ticketmaster, L.L.C. ("Ticketmaster") to provide exclusive event ticketing services for the Convention & Sports Facilities ("CSF") Department, exercising the available five-year renewal option from July 1, 2014, through June 30, 2019, adjusting customer fees and increasing City revenue share, and incorporating various administrative amendments to terms and conditions, with estimated City revenue of $4,950,037 during the extension period.
BACKGROUND INFORMATION:
Ordinance No. 2009-06-25-0590, dated June 25, 2009, authorized the original Agreement with Ticketmaster for CSF events at the Henry B. Gonzales Convention Center (including Lila Cockrell Theatre), Alamodome (including the Illusions Theater), and the Carver Community Cultural Center (including the Jo Long Theatre and Little Carver Civic Center). Ticketmaster was selected after a Request for Proposal (RFP) process in April 2009.
The initial term of the Agreement was for a five-year period, July 1, 2009, through June 30, 2014, with a five-year renewal option, subject to City Council approval.
Ticketmaster provides the City the following under the Agreement:
· A full-service ticketing system to sell tickets for attractions at CSF facilities, including services, equipment, technical system support, and on-site equipment maintenance as needed.
· Hardware and online access to the software for ticket sales.
· Outlet sales services, as well as internet and telephone sales services.
· Marketing and advertising services.
The Agreement has previously been amended in August and December 2011, and January and September 2013.
Key terms of this Extension Agreement and Fifth Amendment include:
· Exercises five-year renewal option from July 1, 2014, through June 30, 2019.
· Adjusts Ticketmaster Convenience Charges and Order Processing Fees, and limits proposed future increases. Under the current terms of the Agreement, Convenience Charges were slated to increase $0.25 every year of the five-year renewal option. With this Extension and Fifth Amendment, Convenience Charges will only increase $0.25 every two years. Also, Convenience Charges on tickets priced between $40.00-$60.00 for Concerts and Professional Sports and tickets priced under $10.00 for All Other Attractions will decrease.
· Establishes new Ticketmaster Mail Fee per customer order to defray increased postage costs (City receives no share).
· Eliminates tiered 40%/50% City revenue share (i.e. "royalty") based on number of tickets sold annually, and increases the City's royalty on most Ticketmaster fees to 55% on all tickets sold annually.
· Reduces the City's TM Messenger system subscription fee from $10,500.00 to $5,500.00 annually. TM Messenger is an email marketing tool the City utilizes to maintain a database of event customer information to email them specific event information and offers.
· Updates ticket resale system provisions to incorporate Ticketmaster's TM+ ticket resale system. Includes provision that the City's royalty from resale of tickets from TM+ must not be less than any other Ticketmaster facility.
· Adds customized mobile application for the Alamodome for a reduced subscription fee of $5,000.00 annually. The application, which will be available for download from iTunes and Google Play, includes functionality for ticket sales, social networking, audio and video streaming and downloads, promotions and advertising, and polling.
ISSUE:
The initial term of the Agreement with Ticketmaster is set to expire June 30, 2014, and has a five-year renewal option. Both parties desire to exercise the renewal option and have negotiated more suitable terms and conditions that reflect the City's increased event business.
ALTERNATIVES:
Alternatives include not authorizing the Extension Agreement and Fifth Amendment with Ticketmaster, and/or directing staff to revise the terms and conditions of the Extension Agreement and Fifth Amendment.
The original term of the Agreement with Ticketmaster expires June 30, 2014. Minimally, it's critical the City extend the Agreement with Ticketmaster to ensure CSF facilities have ticketing services beyond July 1, 2014. If the City does not extend the Agreement with Ticketmaster, the City would have to find alternative solutions to provide these services, including (1) finding another contractor, or (2) assuming the responsibility for ticket sales and distribution, requiring significant startup and recurring costs, and time, to implement.
FISCAL IMPACT:
If approved, this action is expected to generate approximately $952,677 in City revenue in the first year, and approximately $4,950,037 over the renewal term, based on current events and attendance. This represents an increase of approximately $256,485 in the first year and $1,224,953 over the renewal period, as compared to the current terms for the extension period. These estimates don't include revenue associated with the resale of tickets, as there is no historical basis.
This revenue is budgeted in the FY 2014 Adopted Budget for the Community and Visitor Facilities Fund.
Facility/Revenue |
Year 1 |
5 Years |
Alamodome |
$828,828 |
$4,308,777 |
Lila Cockrell Theatre |
92,690 |
482,523 |
Carver Community Cultural Center |
11,659 |
61.237 |
Advertising Allowance |
19,500 |
97,500 |
TOTAL |
$952,677 |
$4,950,037 |
RECOMMENDATION:
Staff recommends approval of the Extension Agreement and Fifth Amendment to the Ticketing Services Agreement with Ticketmaster, L.L.C.