What’s The Next Step with Harry Grove Stadium Lease?

George Wenschhof

Originally published 8-21-2011

The handling of the lease of Harry Grove Stadium by the City of Frederick has raised more questions than was intended since Mayor Randy McClement issued a Request for Proposals (RFP) back in the spring of this year.

Rather than dwell on the less than satisfactory manner the award process has been to date, it would behoove the mayor and aldermen to examine the options available to them to ensure the city ends up with the best terms available for the use of the stadium – city residents deserve no less.

Public scrutiny of the terms of the lease agreement being negotiated by the city with The Keys has highlighted significant income differences to the city in various areas compared with the terms proposed by Frederick Atlantic LLC. Some of these areas were discussed in my column published on August 17, 2011.

In that column, I also pointed out the mayor and board of aldermen had never really discussed the pluses and minuses of charging for parking, stadium naming rights, and various billboard advertising options which have been identified as potential revenue streams for the city.

The lack of effort by the city to limit excessive pricing of concessions at the stadium was another disappointment discovered as the award process/lease negotiations have played out.

Rather than conduct a do-over of the issuance of the RFP, the possibility exists for the mayor and/or board of aldermen to require a few additional steps be taken prior to the ratification of the stadium lease.

While, the city RFP review committee has recommended The Keys and lease negotiations are taking place with them, no formal action has been taken by the mayor and board to affirm/confirm the recommendation by the review committee.

In addition, no lease agreement has been presented to the mayor and board for an official vote.

The intent of these proposed additional steps prior to ratifying a lease agreement would be to ensure the city receives the best lease possible from the two respondents to the RFP.

Prior to continuing lease negotiations with The Keys, discussion should take place in the next city mayor and board workshop with an agreement to implement the following steps:

First, review the Harry Grove Stadium financial pro forma (AL v. Keys and Proposed Keys Lease) prepared by Aldermen Karen Young – confirm the projected city expenses portion with city financial staff – instruct RFP review committee to use the projected city expenses when they evaluate clarified lease offers received in step three.

Second, decide on what additional revenue streams are acceptable to the city. This would include naming rights and a determination on “what” is available to be named, parking revenue, billboard advertising, and the price of concessions.

Third, instruct the RFP review committee to request private and separate oral presentations from both bidders (allowable under the RFP issued) to clarify their proposed terms based on the agreed upon additional revenue streams from the decisions made in the mayor and board workshop in step two.

This is important as City administrator Josh Russin in an article written by Katherine Heerbrandt in the Frederick Gazette was quoted as saying "The changed items — the split in revenues for signs and parking — were not part of the selection committee's purview, and only came up in the negotiations process."

In addition to clarifying proposed revenue splits on the agreed upon additional revenue streams, if any other areas of the submitted proposals need to be discussed to ensure “apples are being compared to apples”, the review committee would have the opportunity to do so at this time.

Fourth, have the RFP review committee (or a designee, if privacy is preferred) present in a mayor and board workshop, their ranking of the two proposals and their subsequent recommendation.

Unless, objection to the recommendation is heard from a majority of the aldermen at the workshop, the finalization of the lease agreement would then take place to be formally ratified at a following mayor and board meeting.

These steps should have been taken in the first place to ensure transparency and to preserve the integrity of the Request for Proposal process.

It is not too late for them to still happen – city residents deserve it.

Stay tuned…

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Questions Remain with Harry Grove Stadium Lease

George Wenschhof

Today, The City of Frederick will hold another workshop on the proposed lease. Aldermen Shelly Aloi (R) and Karen Young (D) questioned various aspects of the proposed lease from The Keys during a city workshop held two weeks ago.

As a result, several minor tweaks to the lease were done, but still no attempt has been made to compare the lease offer from The Keys to the proposal offered by Frederick Atlantic LLC.

John Lavoie; managing member of Frederick Atlantic LLC, emailed me a side by side comparison of the two bids submitted to the City of Frederick.

After looking at this comparison, one can see why questions have been raised by the Aldermen.

For instance, in the capital expense section of the scoring, The Keys won by 3.0 points when their obligation was up to $100,000, but only obligated if the city matched.

The Frederick Atlantic LLC bid was for $100,000 through years 1-3 with no obligation by the city, with the money placed in a local bank account.

The overall average scoring by the city RFP review committee was 89.80 for The Keys and 80.35 for Frederick Atantic LLC.

Interestingly, the utility fees (estimated $150,000 annually) which are presently being negotiated between the city and The Keys were an obligation agreed to by Frederick Atlantic LLC.

Now, The Keys are requesting in their lease proposal, to receive the first $150,000 (now $125,000) in parking revenue to offset utility fees, whereas Frederick Atlantic offered to pay 100% of utilities.

Another question brought up in the previous city workshop was concern to the lack of "green initiatives" in the lease offered by The Keys.

This was an area in the RFP which was won by Frederick Atlantic LLC.

As to potential parking and signage revenues contained in the proposed Keys lease, it would be wise for the city to reconsider this as a revenue source.

First, the added cost of parking to attend a minor league baseball game will have an adverse affect on working families who want to take their families to see a game. As a result, this added cost would also most likely drive attendance figures down.

Second, in regard to additional stadium signage; what type of appearance will billboard advertising on the outer wall of Harry Grove Stadium present as one enters The City of Frederick?

When I emailed these concerns to Alderman Karen Young, she responded with the following:

"I agree that we should be very cautious about charging for parking. If this is about "affordable family entertainment", parking charges will defy that goal. The Keys used some very misleading assumptions in their parking revenue projection. My calculation shows $25,653 for the city. Is the juice worth the squeeze?

Furthermore, the Keys estimate over $250,000 in total income to the city. My calculation (taking out naming rights and using a more realistic parking projection) is $156,103. That's BEFORE our bond payments on the scoreboard. I am obtaining that number to get a better net income projection.

I agree with your signage observation. Do we really want to over-ride the LMC to make this deal work?"

In another email, Young indicated the projected cost for the city in 2012 to operate Harry Grove Stadium is $287,756. This figure includes operating expenses, maintenance and debt service.

She added "Unless we charge for parking and make money from signage, this contract doesn't work. I am very uncomfortable signing a ten-year contract that depends on parking and signage revenues to break even!"

In addition to the above concerns, concession sales have never been discussed, but remains an irritation to many who attend a game.

While, the cost of admission has remained low, the cost of a hot dog, peanuts and even bottled water mirrors the price one pays at Camden Yards, the home stadium for the Baltimore Orioles.

It would have been nice to see an attempt made by the city to review who manages the concessions and have been given a suggestion price range.

Jack Boehmer, in a letter to the editor which appeared in the Frederick News Post on August 11, wrote how minor league baseball is big business, adding how when he was in charge of concessions at Harry Grove Stadium 15 years ago, he took in one million in six months.

With all the questions raised, slowing down to fully understand the ramifications of the proposed lease would be prudent. Careful review and consideration by the city aldermen should take place prior to ratifying a long term lease for the use of Harry Grove Stadium.

Stay Tuned...

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City Holds Pre-Bid Conference For Harry Grove Stadium

George Wenschhof

Yesterday, The City of Frederick held a pre-bid conference for the Request For Proposals (RFP) on the use of the city owned stadium.

As anticipated, two potential bidders attended; the current lease holder; The Frederick Keys and Frederick Atlantic, LLC.

The RFP was issued by Mayor Randy McClement when negotiations on the extension of the current lease with The Frederick Keys, broke down.

The Frederick Keys, who are the single-a farm team of the Baltimore Orioles have been paying a small annual lease of thirty thousand, which some have said is not enough, even though the added economic benefits to the community is considerably larger.

Frederick Atlantic, LLC is a baseball team associated with the independent Atlantic League and interestingly, is owned by a partnership which includes the original owner of the Frederick Keys; Peter Kirk.

The Atlantic League was formed in 1998 and has many former major league players as managers and coaches, including Any Etchebarren who was the catcher on the 1966 World Champion Baltimore Orioles.

One issue which has been raised by city aldermen and the mayor is how can additional revenue be raised by the city from use of the stadium. Suggestions have ranged from allowing the stadium to be used for multi-use purposes such as concerts and theater.

In addition, alderwoman Carol Krimm would like to see the stadium be made available for use by local Babe Ruth teams on off days.

Jack Lavoie, managing member of Frederick Atlantic, LLC. sent me some information on the Atlantic League and some of the activities which take place in other stadiums, which can be read here.

Some have clamored the Frederick Keys are up for sale and have been extending their lease on yearly basis and therefore should not be continued.

While, others say replacing a major league farm team with a Independent League team would result in a lesser economic benefit to the greater local community.

RFPs are due to The City of Frederick by April 15.

If two bids are received, as expected, the vote by the board of aldermen is likely to be close when the award is made. Alderwoman Karen Young has publicly expressed support for the Atlantic League, while alderwomen Kelly Russell and Carol Krimm, along with alderman Michael O'Connor have not been as quick to jump on the bandwagon for change.

Stay Tuned.......

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