REPORT TO COUNCIL
SUBJECT
Title
Action on an Agreement with Oak View Group Global Partnerships, LLC for Naming Rights and Sponsorships for the Santa Clara Convention Center and Related Budget Amendment
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
Enhance Community Engagement and Transparency
Promote Sustainability and Environmental Protection
EXECUTIVE SUMMARY
The City conducted a Request for Proposal (RFP) procurement process to solicit proposals from qualified firms to identify, value, sell, negotiate, and implement naming rights and sponsorship opportunities at the Santa Clara Convention Center (SCCC). Following an evaluation process, staff is recommending the City enter into a naming rights and sponsorships agreement with Oak View Group Global Partnerships, LLC (OVGGP) for the Santa Clara Convention Center. An initial three-year term from July 22, 2024 through July 21, 2027 is proposed with two one-year options to renew.
BACKGROUND
The City owns the Santa Clara Convention Center and has contracted with OVG360 (formerly Spectra) since 2019 for the management and operations of the Center. The SCCC was originally built in 1986, expanded in 2009, and due to limited funding sources, historically has received little capital investment for much-needed repair, restoration and replacement of existing systems and infrastructure. With a joint investment from the City and OVG360 in FY 2019/20 and additional investment dollars from Levy - the SCCC’s food and beverage provider - the SCCC has completed smaller capital improvement projects such as the installation of new carpet, the re-polishing of flooring, the repainting of the SCCC’s interior, and enhancements to the shared spaces in the SCCC. It is anticipated that in-progress capital improvement projects, such as the indoor digital signage project and updates to the kitchens, will be completed in FY 2024/25 with the use of carryover capital improvement program (CIP) funds.
As approved as part of the Adopted FY 2024/25 and FY 2025/26 Biennial Capital Improvement Program Budget, funding was appropriated to replace the airwall system in the Grand Ballroom and to fund aesthetic updates to the restroom facilities; however, there continues to be insufficient funding available to meet the other aging front of the house/aesthetics, systems, equipment, and infrastructure needs of the SCCC. Over the five-year CIP cycle, there were $15.8 million of unfunded projects identified and finding resources to support capital costs continue to be a challenge. Increasingly, staff is looking for new ways to attract financial resources - including the opportunities which can arise from naming rights and sponsorships. The SCCC is in critical need of capital investment funds, and revenue generated from naming rights and sponsorships is a viable opportunity to create a funding stream to support capital improvement projects at the SCCC.
DISCUSSION
On March 15, 2024, the City released a RFP for Naming Rights and Sponsorships for the Santa Clara Convention Center. The RFP solicitated proposals from qualified firms to identify, value, sell, negotiate, and implement naming rights and sponsorship opportunities with the desired goal of completing phased work prior to December 31, 2025, in preparation for Super Bowl LX (SBLX) in February 2026 and FIFA World Cup 2026 (FWC26) in June - July 2026. It is the intent to garner heightened attention and leverage the national attention Santa Clara will receive as host to SBLX and FWC26.
Procurement Process
The City published the RFP using Periscope, the City’s e-procurement tool, and outreached directly to firms that provide professional naming rights and sponsorships services. A total of 21 companies viewed the RFP.
Two proposals were received by the April 8, 2024 deadline:
• Oak View Group Global Partnerships, LLC (Philadelphia, PA)
• The Superlative Group (Cleveland, OH)
Proposal Evaluation Process: The written proposals were evaluated and scored against the criteria and weights demonstrated in Table 1 below.
Table 1
|
Evaluation Criteria |
Weight |
|
Proposal Responsiveness / Minimum Qualifications / Firm Profile |
10% |
|
Firm Experience & Qualifications |
40% |
|
Work Plan / Project Understanding |
25% |
|
Cost / Fee Proposal |
25% |
|
Total |
100% |
Both firms participated in oral presentations for the purpose of introducing key members of the project team and allowing the City to fully understand the Proposer’s ability to meet the evaluation criteria. Oral presentations were considered in the final scoring.
Evaluation Team: Proposals were evaluated and scored independently by City staff including an Assistant City Manager and Assistant to the City Manager. The scores were discussed within a team setting facilitated by a City Contracts Manager from the Finance Department, and the team consensus was that OVGGP received the higher overall score and therefore recommended for final award of contract.
Award Recommendation: Staff recommends award of the agreement to Oak View Group Global Partnerships, LLC as the most advantageous and best value proposal per the evaluation criteria set forth in the RFP. While both Proposers are industry leaders with extensive client lists, the following are key differentiators that were noted by the evaluation team which resulted in a higher score for OVG Global Partnerships:
• OVGGP presented an extensive ecosystem of partnerships locally, nationally, and globally.
• OVGGP presented currently existing partnerships that could be incorporated with the SCCC.
• OVGGP presented an extensive track record of successful naming rights deals in both the public and private industries.
• OVGGP presented internal resources including an extensive executive team of industry experts with comprehensive management experience and relationships.
• OVGGP presented a regular cadence of internal networking and coordination meetings among regional directors to avoid duplication of prospects and leads.
Term of Agreement: The initial term of the proposed agreement is three years. The City may exercise up to two one-year options to extend the agreement at the end of the initial term, at the sole discretion of the City and subject to the appropriation of funds. The City has the ability to terminate the agreement without cause upon 90 days written notice.
Summary of Agreement: The proposed agreement would provide OVGGP with the rights to market and sell naming rights and sponsorship opportunities at the Santa Clara Convention Center. Services will be provided in two phases with the goal of completing work and executing agreements prior to December 31, 2025.
Phase 1 - Asset Inventory and Valuation: Phase 1 is expected to be completed within the first 90 days of contract execution (July 2024 - October 2024). OVGGP will conduct an asset inventory and valuation to identify the essential assets that are available for revenue generation. This includes a full audit of existing assets, ideation of new assets, valuation of assets, and the provision of a detailed report to the City on all values for each asset, along with potential partnership tiers, comparable naming rights deals, and recommendations for the sales team.
Phase 2 - Sales and Marketing of Naming Rights and Sponsorships: Phase 2 is expected to be completed within 14 months of the completion of Phase 1 (October 2024 - December 2025). For Phase 2, OVGGP will hire a dedicated staff person responsible for generating revenue from local, regional, and national companies through the sale of integrated sponsorships and naming rights partnerships throughout the Santa Clara Convention Center. This position will serve as the Department Head for local operations, be responsible for the sales and service for all corporate partnerships and be responsible for achieving measurable financial results (Please refer to Attachment B - Director of Partnerships for detailed duties and responsibilities). Activities during Phase 2 includes the development of sales and marketing strategies, creation of a list of target entities, creation of sales and marketing materials and implementation of a sales campaign, provision of monthly reports to keep City team apprised of prospects, leading negotiations with prospective entities, and assisting with coordinating efforts to ensure timely delivery of naming rights and sponsorship agreements. Additionally, OVGGP will provide ongoing marketing and sales/support services as required by the City.
Cost Summary: OVGGP will receive fixed compensation plus commissions for services provided under the Agreement.
Fixed Compensation: The total fixed compensation for the initial three-year term of the agreement is a not-to exceed amount of $496,859. This includes costs to complete Phase 1: Asset Inventory and Valuation (up to $46,859), and costs to support OVGGP’s dedicated sales and marketing person (up to $150,000 annually, up to $140,000 in salary and benefits and up to $10,000 reimbursement for travel and entertainment expenses).
Commissioned Services: As consideration for the performance of OVGGP to network, prospect, and sell SCCC naming rights and sponsorships in Phase 2, OVGGP will be entitled to receive additional compensation in the form of commissions:
Facility Naming Rights: Commission of 13% on income from SCCC naming rights agreement procured by OVGGP for the initial term of the naming rights agreement.
Sponsorships: Commission of 18% on income from other sponsorship agreements procured by OVGGP for the initial term of the sponsorship agreements.
Revenue generated from naming rights and sponsorships will offset the cost of services provided in Phase 1 and 2.
OVG Global Partnerships
The proposed agreement with OVGGP is a separate agreement from the OVG360 Management Agreement as activities related to naming rights and sponsorships fall under a different business unit within Oak View Group. OVGGP will work collaboratively with OVG360, Levy, and the City in the coordination and implementation of naming rights and sponsorship agreements to ensure little to no disruption to day-to-day operations.
City Council Policy
City Council Policy 035 - Naming of Facilities outlines criteria and procedures for the naming of City of Santa Clara building and facilities. The policy’s overarching objectives are to establish and maintain a system to ensure that decisions on naming opportunities are made in an equitable and consistent manner and that the naming actions maintain current and future alignment with the City’s Mission Statement and Code of Ethics and Values.
While City Council Policy 035 includes naming rights and sponsorships, the SCCC is unique from other City facilities and the approval process as outlined in City Council Policy 035 would not apply. The SCCC is one of the City’s lines of business, its uses are commercial in nature, and it serves to generate revenue by attracting and hosting local, state, national and international events. Additionally, with the need to execute SCCC naming rights and sponsorships agreements prior to 2026, timing is of the essence and a naming rights agreement will be brought forth to City Council directly.
Naming Rights and Sponsorship Agreements Approval Authority
Naming rights are the highest level of sponsorship and as noted previously, a SCCC naming rights agreement will be subject to City Council approval. As sponsorships come in many forms, at varying levels, and may change frequently for different purposes, staff is recommending that City Council delegate authority to the City Manager to negotiate and execute sponsorship agreements related to the naming of SCCC assets and for sponsorship agreements valued up to $1,000,000, not including the principal naming rights partner for the Convention Center and the Mission City Ballroom. Delegated authority to the City Manager will allow for a high volume of agreements to be reviewed and processed expeditiously in a shorter amount of time. Example areas in the facility and service categories that may be sponsored under $1,000,000 include, but are not limited to:
• Lobby spaces
• Entry ways
• Outdoor patio
• Conference/meeting rooms
• Exhibit hall
• Pouring rights (beverage sponsorship)
Table 2 below demonstrates the proposed approval authority levels for sponsorship agreements.
Table 2
|
Organization |
Role |
|
OVGGP |
Responsible for valuation, sales and marketing, prospecting, proposing sponsors to City, negotiating agreement terms in coordination with the City Manager’s Office. |
|
OVG360 |
Approval of sponsorship agreements obtained by OVG360 through its normal course of business (i.e., related to events that take place at the SCCC; sponsorship agreements related to advertising within the SCCC). These types of sponsorships fall under OVG30’s purview, as an agent of the City, under the current Management Agreement. |
|
City Manager |
Approval of sponsorship agreements valued up to $1,000,000, including the naming of SCCC assets, with the exception of the principal naming rights partner for the Convention Center and the Mission City Ballroom. |
|
City Council |
Approval of sponsorship agreements valued at more than $1,000,000 and the SCCC naming rights agreement. |
Proposed SCCC Naming Rights and Sponsorships Guidelines
As SCCC naming rights and sponsorships is a new undertaking for the City, standard guidelines do not currently exist. Staff are working to establish criteria by which the City may accept sponsors for the SCCC. Initially proposed guidelines and restrictions are as follows:
Proposed Guidelines
• The City shall retain ownership and control of the venue, property, programs, or services.
• Sponsorships must not impair the City’s ability to manage the facility, property programs, or services.
• Sponsorships will be negotiated and decided upon on an individual basis and the agreement will not detract from the character, integrity, aesthetic quality, or safety of the property or unreasonably interfere with its use, function, and purpose.
• Revenue generated by naming rights and sponsorships will be used to support enhancements and capital improvement projects for the SCCC.
• The City will not endorse the products, services, or ideas of any awarded Sponsor.
• Sponsorship agreements must be for a fixed term. Every sponsorship agreement will have a sunset clause.
• At its sole discretion, the City will reserve the right to terminate sponsorship agreements prior to the scheduled termination date, without refund or consideration, should it feel it is necessary to do so.
• Sponsorship agreements may only be transferred or assigned by a sponsorship holder with the consent of the City. Where a company changes its name, the naming rights may, with the consent of the City and at the expense of the naming rights holder, be modified to reflect the new name.
• There shall be no actual or implied obligation for the City to purchase the product or services of a sponsorship holder.
Prohibited Content
• Obscenity;
• Pornography;
• Incitement to imminent lawless action;
• Speech presenting a grave and imminent threat;
• Fighting words;
• Fraudulent material;
• True threats;
• Defamatory, libelous, or slanderous material;
• Solicitations to commit, or speech integral to, criminal conduct;
• Promotion of drugs, alcohol, tobacco, gambling, or adult entertainment;
• Promotion of oil and gas products;
• Political campaign speech, or speech that supports or opposes or appears to support or a ballot measure or initiative, or refers to any person in or campaigning for public office; or
• Religious speech that advocates or opposes a religion or religious belief.
Prohibited Advertising
Sponsorship materials that advocate, contain price information or are indication of associated savings or value, request a response, or contain comparative or qualitative descriptions of products, services, or organizations.
Staff will continue to refine the guidelines and will work with the City Attorney’s Office to incorporate applicable language into future sponsorship agreements for use by both OVG360 and the City.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of a California Environmental Quality Act (“CEQA”) pursuant to the CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
FISCAL IMPACT
The budget amendment appropriates funding for this agreement to the Materials, Services, and Supplies budget from available fund balance in the Convention Center Enterprise Fund.
Budget Amendment
FY 2024/25
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Convention Center Enterprise Fund |
|
Expenditures Materials, Services, and Supplies |
$ 202,655 |
$ 496,859 |
$ 699,514 |
|
|
|
|
|
|
Fund Balance Unrestricted Ending Fund Balance |
$ 2,435,993 |
($496,859) |
$ 1,939,134 |
COORDINATION
This report has been coordinated with the Finance Department and the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Approve and authorize the City Manager to negotiate and execute an agreement with Oak View Group Global Partnerships, LLC for Naming Rights and Sponsorships for the Santa Clara Convention Center consistent with the terms and form of agreement in the staff report for an initial term starting on or around July 22, 2024 and ending on or around July 21, 2027, in the amount not to exceed $496,859 plus commissions;
2. Approve and authorize the City Manager to execute up to two one-year extension options to extend the term and increase the compensation amount of the agreement to $796,859 plus commissions, subject to budget appropriations;
3. Authorize the City Manager to make minor modifications to the agreement, if needed.
4. Approve and authorize the City Manager to negotiate and execute sponsorship agreements valued up to $1,000,000, including the naming of SCCC assets with the exception of the principal naming rights partner for the Convention Center and the Mission City Ballroom.
5. Approve the FY 2024/25 budget amendment in the Convention Center Enterprise Fund to increase the Materials, Services, and Supplies budget in the amount of $496,859 and decrease in the unrestricted ending fund balance in the amount of $496,859 (five affirmative Council votes required for the use of unused balances).
6. All agreements to be subject to review and approval as to form by the City Attorney.
Staff
Reviewed by: Chuck Baker, Assistant City Manager
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. Agreement for Services Between the City of Santa Clara, California, and OVG Global Partnerships, LLC.
2. Director of Partnerships Job Description