DATE:
February 7, 2023
TO:
Paul Buddenhagen, City Manager
FROM:
Charles S. Bryant, Community Development Director
SUBJECT:
A Resolution Of The City Council Of The City Of Emeryville Authorizing The City Manager To Execute An Event Hosting Agreement With WES Management For The eSC eSkootr Championship Event To Be Held In Emeryville In 2023, 2024 And 2025
RECOMMENDATION
Staff recommends that the City Council adopt the above-entitled resolution authorizing the City Manager to execute an Event Hosting Agreement to hold the eSC eSkootr Championship Event in Emeryville in 2023, 2024 and 2025.
BACKGROUND
In September 2022, Mayor John Bauters contacted staff regarding communications he had had with principals of WES Management Limited (“eSC”), an organization that promotes micromobility solutions through the production of the eSkootr Championship. The eSkootr Championship is the world’s first electric scooter racing series. The series currently includes 30 professional teams that ride high-performance electric scooters that reach speeds in excess of 60 miles per hour on tracks sited in urban areas, with tracks typically one-third to one-half mile in length.
The eSkootr Championship has produced races in London, Switzerland and France and eSC is actively searching for a site for its inaugural United States event. The organization seeks partner cities that share its values of sustainability, equity, accessibility, and safety, with an aim toward advancing sustainable micromobility transportation solutions. eSC indicated strong interest in partnering with the City of Emeryville to produce its inaugural United States race in fall 2023, with additional races in 2024 and 2025.
According to eSC, eSkootr Championship Race events draw over 10,000 attendees with an average expenditure of $60 per person in food and beverage and 16,000 hotel room nights. Approximately half of attendees are expected to be from out-of-state or international locales, making the hosting of an eSC race a potential economic development opportunity for the City.
At the October 18, 2022 City Council meeting Mayor Bauters requested, and received majority support for, a future agenda item to discuss a potential eSkootr Championship Event in Emeryville. On November 1, 2022, the City Council adopted Resolution 22-147 appointing Mayor Bauters and former Vice Mayor Ally Medina to an ad-hoc subcommittee for planning the eSC eSkootr Championship: Emeryville Event and authorizing the City Manager to execute a non-binding letter of intent to negotiate an Event Hosting Agreement with eSC. Since then, the Event Hosting Agreement (“Agreement”) has been negotiated and is attached to this report as Exhibit A to the Draft Resolution.
DISCUSSION
The Agreement sets forth the roles and responsibilities of the City and eSC for the funding and production of the event, as well as providing rules for the collaborative use of logos and trademarks for promoting the event. The following overview summarizes the Agreement’s provisions relating to the event dates, locations and plan; the obligations and benefits for each party; the financial arrangement for producing the event, insurance requirements, default provisions, and other topics.
Event Dates, Locations and Plan
The Agreement provides the City with a license for the “eSkootr Championship: Emeryville, California” event in 2023, 2024 and 2025. For the 2023 season, the event will take place in September or October 2023 on specific dates mutually agreed to between the City and eSC within 60 days of the effective date of the Agreement. For the 2024 and 2025 seasons, eSC will propose dates no later than three months after the conclusion of the prior year’s event, which will be subject to the City’s approval within 30 days of receipt.
The location of the race course and ancillary areas within Emeryville will be proposed by eSC within 60 days of the effective date of the Agreement and subject to the City’s approval within 30 days of receipt of eSC’s proposal. The Agreement provides that the event location may be changed in the 2024 and 2025 seasons, also subject to City’s prior approval.
A high-level outline of the proposed elements of the Event, including the number and types of races and competitions, any preceding or subsequent ancillary events, other special events and entertainment, are to be determined within 60 days of the effective date of the Agreement.
The Agreement provides that eSC and the City will collaborate to develop an Event Plan that will include the details on how various aspects of the event, including logistics and marketing, are delivered by the City and eSC, and that the Event Plan will be completed and approved by eSC no later than four months prior to the start of the event.
In addition to the plans described above, the Agreement sets forth requirements for the preparation, submittal and approval of a detailed race course plan and a safety plan.
City Obligations
The Agreement delineates a set of obligations of the City, which the City must provide in exchange for the right to host the event, and the specific benefits outlined in the Agreement. The primary obligations of the City are to:
Provide venues and locations that the City owns or controls within the established event location, and provide eSC with access to the event location without imposition of fees.
Use commercially reasonable efforts to create and enforce a zone, which includes the event location and the area within 300 meters of the event location (i.e. approximately 984 feet), within which unauthorized merchandise vending and advertising will be prohibited during the “Event Period” (defined as the four days prior the event, the days of the event, and the three days after the event) Cooperate with eSC to prevent unauthorized use of eSC and event-associated trademarks and other intellectual property, including unauthorized merchandise, during the term of the Agreement.
Prevent other City-controlled major events from being scheduled on the same days as the event unless approved by eSC.
Cooperate with eSC in implementing the media and marketing plan for the event, and provide eSC with footage and imagery of various locations in Emeryville for eSC’s use. This includes the purchase of media advertising as defined by the Event Plan.
The City and its contractors are required to refer to the event by the exact name supplied by eSC, including any title or presenting sponsor identification.
Obtain eSC’s prior written approval for the type, location, size of any ancillary events as well as sponsors for ancillary events that the City may plan in association with the event.
Solicit and discuss sponsorship opportunities with businesses to support the costs of producing the event.
City Benefits
In exchange for the above obligations, the City receives the following benefits:
Recognition/acknowledgement of the City as the host of the event in media promoting the event, including a press conference announcing that the City has agreed to host the event. The City’s logo will be included in a logo designed for the event, which the City will have the right to use in connection with the event and which will be displayed in multiple locations that receive media visibility (e.g. track barriers, the start ramp, press conference backdrop, race podium).
Various special tickets/access rights to the event hospitality zone, race paddock tour, and riders meet and greet.
Rights to use video and photo archive content of the event for the City’s promotional use.
At the City’s option, the City may provide and receive revenues from parking and food and beverage concessions for spectators at the event, and revenues from ancillary events produced by the City and approved by eSC. The City is responsible for any costs related to providing paid parking, concessions and ancillary events.
The City is entitled to 50% of local event sponsor revenues received in excess of the event budget (see Financial Arrangement section, below).
In addition to the benefits stated in the Agreement, the City is expected to benefit from the local spending of event staff and attendees in hotels, restaurants and retailers, which may increase Transient Occupancy Tax and Sales Tax receipts over normal levels. eSC Obligations
The primary obligations of eSC are:
Provide all of the “Event Requirements” (included as Exhibit A to the Agreement) which include all of the various spaces, facilities, goods and services required to produce the event. The City may, in its sole discretion, deliver any of these Event Requirements if the costs to do so do not materially exceed the estimated cost as indicated in the event budget and eSC approves. This provision allows for the City to deliver Event Requirements where it is more cost effective to do so, to the mutual benefit of the parties.
Produce credentials for press, media, operations and other personnel, establish rules for media access to the event, and provide Volunteer Waiver and Release of Liability forms.
Stage, set up and operate the race course.
Costs of travel, food, lodging, and immigration paperwork for eSC’s personnel.
Costs of shipping eSC’s materials and equipment, and utilities required for the event.
Provide a display scooter to the City from the date of the announcement of the event until the day after the event, for promotional purposes.
Use reasonable commercial efforts to prioritize contracting with local service providers and vendors to deliver the Event Requirements. eSC Benefits
The Agreement provides eSC with the following benefits:
All revenues attributable to the event (except for the revenues described as City benefits).
Control of all rights to distribute, promote and market the event by all audio, visual and audiovisual media of all types. eSC may also benefit from the City’s introduction of sponsors, as described in further detail below.
Financial Arrangement
The total costs of producing the event are preliminarily estimated to be $1,500,000. This amount is subject to refinement in the form of an Event Budget within 30 days of selecting the event location, since the costs of the Event Requirements may vary depending on the selected location.
As noted above, the City has the obligation to secure Local Event Sponsorships which generate the revenues to cover the costs of the event. Local Event Sponsors will contract with eSC, and eSC will use revenues from the Local Event Sponsors to provide the Event Requirements. Local event sponsors will receive a package of benefits outlined in Exhibit E to the Agreement.
The Agreement provides that if less than $750,000 in sponsorship commitments have been secured within 60 days of the effective date of the Agreement, and if less than $1,500,000 in sponsorship commitments have been secured within 120 days of the effective date of the Agreement, the City shall either a) commit its own funds in an amount sufficient to ensure a total of $750,000 or $1,500,000 (as applicable) is available for the event, or b) the event will be cancelled at either the City or eSC’s option. eSC also has the option, in the event these sponsorship revenue thresholds are not met, to terminate the Agreement. This arrangement limits both parties’ financial exposure in the case that sponsor interest in the event is less than anticipated.
If Local Event Sponsorship revenues exceed the event budget, those excess revenues are split 50/50 between the City and eSC. If the City and eSC agree it is more cost effective for the City to deliver an Event Requirement, the City’s provision of that Event Requirement will reduce the Event Budget, which lowers the threshold at which the Local Event Sponsorship revenues are shared between the parties.
Furthermore, if a sponsor contracts with eSC for sponsorship rights for the eSkootr Championship Series as a whole, or another eSkootr Championship Event other than the Emeryville event, and such sponsor was introduced to eSC by the City, the Event Budget is reduced by 10% of the amount of the sponsorship, effectively serving as a “commission” to the City for the introduction of the sponsor, which is attributed to the costs of producing the event.
Insurance
The Agreement requires eSC to maintain general liability, commercial auto liability, workers compensation and excess liability insurance at specified coverage limits. Within ten days after the effective date of the Agreement, eSC must provide a written quote from eSC’s insurer for the additional costs to eSC to name the City as additional insured with the same coverage and limits. The additional costs are not to exceed $50,000, are subject to written approval by the City, and will be paid by the City as part of the Event Requirements. Certificates of Insurance and endorsements meeting the requirements of the Agreement are required to be provided by eSC within 120 days of the effective date of the Agreement.
Default
The Agreement defines three types of “Termination Events” which may cause either party to terminate the Agreement: Material Breach, insolvency, or failure to raise local event sponsor revenues/provide insurance.
A “Material Breach” is a breach of any obligation of the Agreement that has or is reasonably likely to cause a loss of at least $100,000 and that remains uncured after providing notice and the passage of a cure period as specified by the Agreement.
Insolvency includes a party admitting to its inability to pay its debts, bankruptcy, dissolution, receivership and similar circumstances.
Failure to raise local event sponsor revenues by the dates and at the amounts described in the Financial Arrangement section above, or the failure to provide insurance as described in the Insurance section above, are also both Termination Events.
If termination results from either a Material Breach or an insolvency-related Termination Event, the breaching party must repay any amounts actually expended by the other party in connection with the obligations of the Agreement. These amounts are capped at $100,000 if the termination occurs prior to three months in advance of the event, or $750,000 if termination occurs within three months of the event.
If termination results from a failure to raise local event sponsor revenues or provide insurance, each party is responsible for the costs they have incurred.
Other Provisions
The Agreement also outlines the rights the parties have to various trademarked insignia, event merchandise, media of the event, and the protection of intellectual property.
Policy Support
Hosting the event is a unique opportunity to raise the City’s profile with an international audience through a partnership with an organization that is aligned with City policy and values while also creating economic activity for local businesses. The promotion of micromobility and producing an annual event are both activities that are supported by existing City policies including:
General Plan:
Goal T-G-1 a comprehensive transportation system— A transportation system that is efficient, safe, removes barriers (e.g. accessibility near freeways and rail lines), and optimizes travel by all modes.
Goal T-G-2 Universally accessible— A transportation system that meets the needs of all segments of the population, including youth, seniors, persons with disabilities, and low-income households.
Goal T-G-3 Multi-modal— A transportation system that eliminates the necessity of owning and/or driving personal vehicles because of the availability of convenient and accessible alternative modes of transportation.
Economic Development Strategy
Overall Objective – Achieve economic development goals through the lens of Art and Innovation.
Marketing | Promotion Area, Experiential Topic, Action: Produce an annual signature event.
Draft Active Transportation Plan
The Draft Active Transportation Plan, while not yet adopted policy, includes micromobility as a multimodal focus area.
FISCAL IMPACT
The total costs of the Agreement cannot be precisely estimated at this time, since the Agreement anticipates the City and eSC working collaboratively to secure Local Event Sponsors that will contribute funds for producing the event.
At a maximum, (i.e. if no Local Event Sponsors are secured), the Event Hosting Agreement would represent an outlay of $1,500,000; however as noted above, the City may elect not to contribute those funds and instead cancel the event. The City will have the opportunity to evaluate its progress in raising local event sponsor revenues at 60 and 120 days from the effective date of the Agreement and decide whether to contribute the funds necessary to produce the event.
Conversely, if sponsor interest is strong and the event is well-attended, the Agreement could represent a positive fiscal impact to the City through the provisions relating to Local Event Sponsorship Revenues and as a result of increased Transient Occupancy Tax and Sales Tax receipts.
STAFF COMMUNICATION WITH THE PUBLIC
None.
CONFLICT OF INTEREST
None.
CONCLUSION
Staff recommends that the City Council adopt the attached resolution authorizing the execution of the Event Hosting Agreement for the eSC eSkootr Championship Event in Emeryville in 2023, 2024 and 2025.
PREPARED BY: Chadrick Smalley, Deputy Director of Community Development
APPROVED AND FORWARDED TO THE
CITY COUNCIL OF THE CITY OF EMERYVILLE:
Paul Buddenhagen, City Manager
ATTACHMENTS
Draft Resolution, Including Exhibit A – eSkootr Championship Event Hosting Agreement eSC eSkootr Championship Event – Event Hosting Agreement City Council Meeting | February 7, 2023
City of Emeryville
CALIFORNIA
MEMORANDUM