Sedgwick County, owner of the Intrust Bank Arena (the downtown Wichita arena), has a five-year contract with SMG that outsources the management of the arena.
Yesterday, SMG announced a 10.5 year lease with the Wichita Thunder hockey team. Terms of the deal weren’t disclosed, and SMG is resisting their release, as explained in Wichita Eagle reporting referred to in my post Wichita downtown arena open records failure.
But this much is clear: SMG has committed to a contract that lasts longer than their contract with the county.
Sedgwick County could choose to renew SMG’s contract, of course. The contract also contains a provision where if the county receives at least $1,700,000 from the profit sharing agreement with SMG, the contract automatically renews.
But it seems like SMG is getting a little ahead of itself.
It also appears that the lease contract SMG made with the Thunder requires approval by Sedgwick County.
The management agreement between Sedgwick County and SMG grants authority to SMG to negotiate contracts without county approval, but there is an exception: “… if any such license, agreement, commitment or contract other than those involving the license, lease or rental of the Facility in the ordinary course has a term that extends beyond the remaining Management Term or, if this Agreement has been renewed, the Renewal Term, such license, agreement, commitment or contract must prior thereto be approved in writing by the County (which approval shall be at the County’s sole discretion, not to be unreasonably withheld) …”
(The management term referred to is five years.)
So it seems that this contract, extending beyond the management term as it does, is subject to Sedgwick County approval.
There’s more from the SMG-Sedgwick County agreement: “SMG and the County will have joint approval rights (which approval right shall be at each party’s sole discretion, not to be unreasonably withheld) for all major revenue streams that can impact the profitability of any Facility, including ticketing, sponsorships, food and beverage, and tenant leases with terms of one year or greater.”
The Thunder is certainly a major revenue stream for the arena. In fact, they’re the anchor tenant. The lease, at 10.5 years, is much longer than the one year mentioned.
So there’s another clause of the contract that seems to indicate that Sedgwick County has approval rights for this lease agreement.
Here’s a question: can Sedgwick County give its approval to a contract that SMG will not let the county see?
If you think this contract has problems take a look at the WaterWalk contract. There was a clause in it that stated that former City Manager Cherches was the only person from the City to approve anything having to do with the project. In addition, the City had very little recourse against the developers in case of default at any time during the 99 yr. contract. Ethically-challenged local government managers usually run-circles around the elected officials.
[…] Intrust Bank Arena management contract unusual, but not necessarily bad (Bill Wilson in the Wichita Eagle) Explores the nature of the arrangement between Sedgwick County and SMG as compared to other arenas. “The bottom line for these officials: Sedgwick County has a good deal with SMG, but has a responsibility to closely monitor the arena’s performance for taxpayers who paid for the building with a sales tax increase.” More coverage of related issues is Wichita downtown arena contract seems to require Sedgwick County approval. […]
[…] So I believe we need to know the details of this lease made to the arena’s signature tenant. I made my case, based on my reading of the contract, in my post Wichita downtown arena contract seems to require Sedgwick County approval. […]