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HomeMy WebLinkAboutFresno Sports and Events, LLC - First Amendment to 2018 Amended and Restated Sublease Agreement Z I— 01—/3 ✓ Wlldlu2v FIRST AMENDMENT TO 2018 AMENDED AND RESTATED STADIUM SUBLEASE AGREEMENT This FIRST AMENDMENT (Amendment), effective as of January 4,3-2'2021 (Amendment Effective Date), to the 2018 Amended and Restated Stadium Sublease Agreement effective December 14, 2018 (Agreement), is made by and between the City of Fresno, a California municipal corporation (City) and Fresno Sports and Events, LLC., a Delaware limited liability company (Tenant). Recitals A. Tenant is the owner of the professional baseball team known as the Fresno Grizzlies (Club). B. City leases Chukchansi Park, the Club's home Stadium, from the Fresno Joint Powers Financing Authority pursuant to that certain Facility Lease dated as of May 15, 2001. The City subleases Chukchansi Park to Tenant pursuant to the Agreement. C. Prior to December 11, 2020, the Grizzlies were designated as a Minor League Baseball Triple-A team in the Pacific Coast League affiliated with the Washington Nationals. Pursuant to a 2020 reorganization of Minor League Baseball by Major League Baseball (MLB), MLB has required, and Tenant has agreed to accept, a change in the Club's designation, affiliation, and league. The Club is now a Minor League Baseball Class A affiliate of the Colorado Rockies in the California League. As consideration for the Club's agreement to MLB-promulgated changes to the Team's franchise status, MLB has agreed to grant Tenant a ten-year Player Development License for the Club. D. Recognizing the economic impact to the City of Minor League Baseball's reorganization, MLB is providing the City with a separate commitment (Commitment Letter) that, among other things, commits MLB to keeping an MLB affiliate club in the City 1 through 2030, and to using its best efforts to sustain such an affiliation through at least 2036. In addition, MLB will encourage all Major League Clubs to consider the City as the future home of a Triple-A or Double-A affiliate to the extent such an opportunity arises. E. The parties desire to amend certain provisions of the Agreement to reflect revised terms consistent with the Club's changed status due to Minor League Baseball's reorganization. F. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Agreement. NOW THEREFORE, in consideration of the foregoing, and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree that as of the Amendment Effective Date the Agreement is hereby amended as follows: Amendment 1) Fixed Rental. Section 2.3 is hereby deleted in its entirety and replaced by the following: In consideration of the use and occupancy of the Stadium by Tenant, Tenant hereby agrees to pay to the City a fixed rental of: (i) $500;000 for 2020; and (ii) $100,000 per year from January 2021 through the remainder of the Term, to be paid in advance on the first day of each month of April, May, June, July, and August during the Term in equal monthly installments of $20,000 (the "Fixed Rental"). Notwithstanding the foregoing, the Fixed Rental due and payable in 2020 ("Deferred Rent") shall be deferred and paid in annual installments of $31,250, payable commencing March 1, 2021, 2 provided that if Tenant is not then in default under this Agreement as of the end of the 2025 Minor League Baseball season, then any Deferred Rent payments due and payable after the 2025 Minor League Baseball season shall be waived. 2) Additional Turnstile Fee. A new Section 2.7 is hereby added, to state in its entirety: In addition to the Fixed Rental, Tenant shall pay a fee of$1 for each turnstile attendee (including complimentary/trade/barter) for all Club home games above the cumulative total of 150,000 turnstile attendees in each Minor League Baseball season, including all regular season and pre- and post-season games and professional exhibition games (the "Additional Turnstile Fee"). The Additional Turnstile Fee shall be paid by Tenant to the City in arrears no later than thirty (30) days after the Club's last home game of each Minor League Baseball season; the City shall deposit remitted Additional Turnstile Fee payments in the City/Tenant Contributions Account of the Capital Reserve Fund as set forth in Section 4.4(a). 3) Profit-Sharing. Section 2.5(a) is hereby deleted and replaced in its entirety by the following: Tenant shall pay to the City an amount equal to (i) 12.5% percent of the first $1 to $500,000 of Tenant's Net Cash Flow (defined below), (ii) then 20% of the next $500,001 to $1,000,000 of Tenant's Net Cash Flow, (iii) then 25% of any Tenant's Net Cash Flow over $1,000,001 ("Profit Sharing Base Amount") for any given calendar 3 year during the Term("Annual City Share Amount"). "Net Cash Flow" shall mean EBITDA less Tenant's capital expenses, interest expenses from working capital and capital improvements debt (but not acquisition or recapitalization debt), and real estate or possessory interest taxes. 4) Audit. The first sentence of Section 2.6(a) is hereby deleted and replaced in its entirety by the following: "Tenant shall, on an annual basis, provide City Manager for his/her review, within thirty (30) days of completion, a copy of Tenant's financials reviewed by a third-party certified public accountant ("Accountant"), including any letter opinion or other correspondence completed by the accountant and, if requested, Tenant's internal financial statements (collectively "Financials"). Following review of such Financials, City Manager may require an annual audit by Tenant for any or all years during the Term if in City Manager's discretion an audit is advisable. The cost of the audit shall be paid from either the Capital Reserve Fund, or split equally by City and Tenant." 5) Confidentiality of Audit. A new Section 2.6(d) is hereby added, to state in its entirety: (d) Subject only to applicable laws governing public records, City agrees to use all commercially reasonable means to keep confidential any and all documents, reports or information provided by Tenant under this Section 2.6 and/or developed by the City as a result of any such information provided by Tenant under this Section 2.6. 6) Utilities. Section 4.1(a) is hereby deleted and replaced in its entirety by the following: 4 Except as otherwise provided in this Agreement, Tenant shall be responsible for all aspects of the operation of the Stadium and shall be responsible for any and all operating expenses, routine maintenance of and repairs to the Stadium. Except as otherwise provided in this Agreement, Tenant shall contract and pay for all utilities and services to the Stadium during the Term, provided the City shall reimburse Tenant for actual expenses incurred by Tenant for electricity, gas, water and sewer, and waste disposal, not to exceed $300,000 annually, with City making such reimbursement to Tenant within thirty (30) days of Tenant's submission to City of an invoice(s) therefor, with such backup documentation as reasonably required by City. 7) City Maintenance Repair and Replacement Obligations. The first sentence of Section 4.2(a) is hereby deleted and replaced in its entirety by the following: "The City shall be responsible for the timely maintenance, repair and replacement of all existing Structural Elements of the Stadium during the Term. If MLB requires Tenant to substitute or add any Structural Element (collectively "Structural Upgrade") as a condition to any agreement between Tenant and MLB, Tenant shall notify City of the requirement, and City and Tenant thereafter shall cooperate to determine the necessity of the Structural Upgrade and, if determined necessary, shall pay for the cost of the Structural Upgrade first from the Capital Reserve Fund, then, to the extent the Capital Reserve Fund contains insufficient funds to pay for the Structural Upgrade, the parties shall negotiate in good faith to identify additional funding sources to cover any shortfall." 8) Annual Contributions to Capital Reserve Fund. Section 4.4(a)(ii)(i) is 5 hereby deleted and replaced in its entirety by the following: "$50,000 annually, on or before October 1, by each of City and Tenant commencing in 2021 (collectively, the "Annual Contributions"). The Annual Contributions shall escalate at 2% annually. Notwithstanding the foregoing, neither Party shall be obligated to deposit Annual Contributions for 2020." 9) MLB Compensation. A new Section 4.4(e) is hereby added, to state in its entirety: (e) MLB Compensation. If, arising from or as a result of the 2020 reorganization by MLB of Minor League Baseball and its redesignation of the Grizzlies from Triple A to Class A, the City, Tenant or the Grizzlies (or an affiliate thereof) are awarded compensation by MLB related to such change in status, the entire amount of such compensation received by any such party shall be contributed to the Capital Reserve Fund. 10) Condemnation. Section 7.1(c)(iii) is hereby deleted and replaced in its entirety by the following: "the City shall, at its sole cost and expense, promptly make any repairs and restoration that Tenant deems reasonably necessary as a result of such condemnation, to a condition substantially similar to that prior to such damage or destruction." 11) Right to Terminate A reement. Pursuant to MLB's reorganization of and control over both MLB franchise and MiLB Player Development License determinations, and to MLB's Commitment Letter provided to the City, the heading of Section 10.4 is hereby revised to read "Right to Terminate" and Section 10.4 is hereby deleted in its entirety and replaced by the following: 6 10.4 Right to Terminate. (a) Tenant shall have no further obligations under this Agreement, including future Fixed Rental payments, upon the California League, or any other league in which Tenant is a member, ceases operations; provided Tenant shall make good faith efforts to continue to play professional baseball as an affiliate of a MLB team at the Stadium, in which case this Agreement shall remain in effect. (b) If Tenant's Player Development License expires and is not renewed by MLB, provided such non-renewal is not due to Tenant's negligence, willful misconduct or material violation of any Player Development License terms or rules of the Office of the Commissioner of Baseball or MLB, such non-renewal shall not be deemed a Tenant Default under this Agreement, but the City shall have the right to terminate this Agreement by giving written notice thereof to Tenant, in which event neither party shall have any further rights or obligations to the other, except (i) for those provisions expressly surviving termination of this Agreement, and (ii) to the extent of any obligations accruing prior to the date of termination, which accrued obligations shall survive such termination. 12) Assignment. Section 11.1 is hereby deleted and replaced in its entirety by the following: This Agreement may not be assigned by Tenant except as part of the sale of the assets of Tenant as provided in Section 10.2 and only with the prior written approval of the City, which approval shall not be 7 unreasonably withheld. Tenant shall have no further obligations under this Agreement if the obligations under this Agreement are assumed by another entity upon a transfer of the Player Development License as provided in Section 10.2 above. 13) Naming Rights. Section 12.1 is hereby deleted and replaced in its entirety by the following: Tenant has the exclusive right to name, or contract with a naming sponsor for, the Stadium from time to time during the Term ("Stadium Naming Rights"). Any such names shall be submitted to City for its prior review and approval, which shall not be unreasonably withheld. Tenant shall receive all Gross Revenues below$650,000 (escalated annually by 2%, commencing 2022) and 85% of all Gross Revenues above $650,000 (as escalated annually) from any Stadium Naming Rights agreements (including any related agreements with affiliates of either Tenant or the Grizzlies); the City shall receive 15% of all Gross Revenues above $650,000 (as escalated annually). 14) Tenant Covenants. Section 14.1(b) is hereby revised to read "Tenant shall assure the Grizzlies conduct its play as an MLB-affiliated professional baseball team;". Section 14.1(h) is hereby revised to read "Tenant shall use its best efforts to host an exhibition game at the Stadium with its Major League Baseball affiliate each year during the Term". 15) Soccer Sublease. The definition of"Soccer Sublease" is hereby deleted in its entirety; Section 3.2(a)(iii) is hereby deleted in its entirety; the last sentence of Section 3.2(c) is hereby revised to read "Likewise, Tenant shall distribute schedules for all sports 8 teams using the Stadium to City within five (6) business days after distribution by the league in which the team plays"; and the last sentence of Section 11.2 is hereby deleted in its entirety. 16) Changes to.References and Definitions. a. All references in the Agreement to "PCL" are hereby replaced with "California League". b. All references in the Agreement to "Triple A" are hereby replaced with "Class A". C. All references in the Agreement to "franchise" are hereby replaced with "Player Development License". d. The definition of"Rent" is hereby deleted and replaced in its entirety by the following: "Rent' means all Fixed Rental, APES Fees, Additional Turnstile Fees, payments required to be made by Tenant pursuant to Sections 2.3, 2.4, 2.7 and any and all other amounts payable by Tenant to the City hereunder." 17) Effect of Reinstatement. If during the Term MLB changes -the Club's designation to Triple-A, then for the remaining duration of the Term the original Agreement provisions shall be substituted for the amended terms of Sections.2.3, 2.5(a), 4.1, Section 4.4(a)(ii)(i) and Section 12.1 as set forth herein, as though this Amendment with respect only to those provisions were of no force or effect, and Section 2.7 shall be null and void. If during the Term MLB changes the Club's designation to Double-A, the parties shall discuss any changes to the Agreement necessitated or desired,�as a result of such changed designation. 9 18) Prior Agreement Confirmed. Except as otherwise expressly modified by the terms hereof, all of the remaining terms of the Agreement remain in effect. 19) Counter arts. This Amendment may be executed in counterparts, each of which when executed and delivered will be deemed an original, and all of which together will constitute one instrument. 20) Conditions Precedent. Tenant's receipt and execution of the Player Development License, which the City shall have the right to review, but shall have no right or authority of any kind to approve, and the execution by Tenant and the City of the Operations Agreement are conditions precedent to the effectiveness of this Amendment.IN WITNESS WHEREOF, the parties have executed this Amendment effective as of the date first above written. CITY OF FRESNO, Fresno Sports and Event C. a Califo is municip corporati By By: Thom que , City Manager Wichael Baker, Manager Date: a' Date: ! a 4 oZ 1 APPROVED AS TO FORM: DOUGLAS T. SLOAN By: City A rney f Name: Laurie Av isian- ad ni Date Title: Assistant City Attorney (If corporation or LLC, CFO, Treasurer, Secretary or Assistant ATTEST: Secretary) YVONNE SPENCE, CMC Date: City Clerk By: I D uty 2 G"79J4'� 10 ACTION BY UNANIMOUS CONSENT IN LIEU OF MEETING OF MEMBERS FRESNO SPORTS&EVENTS,LLC A CALIFORNIA LIMITED LIABILITY COMPANY The undersigned, being all of the Members of FRESNO SPORTS &EVENTS, LLC, a California limited liability company("Company"), acting by unanimous consent without a meeting pursuant to the Operating Agreement of the Company, consent to, and hereby authorize Michael Baker, as Manager, to take the following action with respect to the Company as herein resolved: RESOLVED, that Michael Baker, as Manager, on behalf of the Company and its Members, is authorized and directed to execute all documents and to take any other action necessary or advisable to effectuate the revised agreements by and between the Company and the CITY OF FRESNO ("City")related to the Company's lease of CHUKCHANSI PARK("Stadium")from the City and/or the Company's operation of the Fresno Grizzlies as a minor league baseball team at the Stadium.. This Action by Unanimous Written Consent of the Members of FRESNO SPORTS &EVENTS, LLC,is hereby taken by the undersigned, constituting all the Members of the Company, effective as of Janua ry Q 2021. JC SPORTS,LLC By: James Coufos, Manager FRESNO HOME FIELD, LLC By: Mi ael gaer, Manager 03758&400000 7368990.1 -1- ACTION BY UNANIMOUS C'ONSENT Eli LIEU OF MEETING OF MEMBERS FREESNO SPORTS & EVENTS, ILLS;' A CALIFORNIA LUMITIED LIABILITY COMPANY Y The undersigned. Fong all of the Mcrm bcrs of 1.RESKO S PORTS &. EVENTS, LLC, a C+0Mamia limited liahilidy wm ny (-Vbmpany"), 41:ag by unanimous coment wail a nxw•iaa� Pamuani tea tfhc Upera4ing Avrevii m urthc Company, conse-ni w. and hcmb)• aull onzc Michael R"Cr, as Nianaycrn 4o t4kv the futIb ing acti-on with respeco to the Company as hcrcin rev aJv d: RJ SOLVED.. 4Jat Mich gel Baker,as Manager.on behalf of The Company,and its Membc 's, is au-lharizcd and dilre-cled W execute atl docwncrtm wbd to take any other Esc 6 an next s.sary or advisable to erfettUAld the revised agreements by and betrA4,-cn the Company and the CITY Y OF F RESN related to the Company's lease of C'HLJKC'HANSJ PARK ("Stadium-') fromi the City an&cw the Company s opem ion of the F W CidZACS a stai r i Wtball team i t the Stud um.. 'his ,Ac4lan bv. Unan'JiMOUS W'ritten Canwm of the P4 embers of'FRF-.SNO SPORTS& EVENTS. LLC, is hereby en by the undemignod, constituting,all lbe Membem of the Company, effectiv as of Ianu ary- ;Yp 202 1. iC S T5, . .t' r�• F i - tana- JC SlO LC t FRESNO HOME. MELD, LLC By Michael Baker. Mampr r r�