1. sports

Exhibit 2
Page 1 of 17
SECOND AMENDMENT
TO THE AGREEMENT
Between
BROWARD COUNTY
and
STIFEL, NICOLAUS & COMPANY, INC.
for
ARENA FINANCIAL ADVISORY SERVICES
Agreement No. N1273107A1
Exhibit 2
Page 2 of 17
SECOND AMENDMENT
TO THE AGREEMENT
Between
BROWARD COUNTY
and
STIFEL, NICOLAUS & COMPANY, INC.
for
ARENA FINANCIAL ADVISORY SERVICES
Agreement No. N1273107A1
This is a Second Amendment to the Agreement, made and entered into by and
between: BROWARD COUNTY, a political subdivision of the State of Florida, hereinafter
referred to as "COUNTY,"
AND
STIFEL, NICOLAUS & COMPANY, INC., a Missouri corporation authorized to do
business in the State of Florida, hereinafter referred to as "SECOND PARTY,"
(collectively referred to as the "Parties").
WITNESSETH:
WHEREAS, COUNTY and SECOND PARTY entered into an agreement for Arena
Financial Advisory Services with an effective date of August 5, 2014, (the "Agreement")
and First Amendment to the Agreement with an effective date of October 1, 2014, (“First
Amendment”; and
WHEREAS, the Parties desire to increase the compensation for the services in
Exhibit “A”, Task 1 and 2 due to unforeseen circumstances that requires an increased
level of effort and increase in Reimbursables.
NOW, THEREFORE, in consideration of the mutual terms, conditions, promises,
covenants, and payments hereinafter set forth, COUNTY and SECOND PARTY agree as
follows:
1. The foregoing recitals are true and correct and are incorporated herein by this
reference.
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Exhibit 2
Page 3 of 17
2. Article 3, Section 3.1 is deleted in its entirety and replaced with the following:
3.1
The term of this Agreement shall begin on the Effective Date and shall end on
September 30, 2015, unless terminated earlier or extended in writing by the
Contract Administrator. The Scope of Services as described in Exhibit "“A" is for
three (3) tasks, i.e., Task 1, Task 2 (including Task 2A), and Task 3. Task 1 is for
services that will be rendered on an as needed basis as identified and authorized
in writing by the Contract Administrator. Task 2 has a Time for Performance of
ninety (90) calendar days provided however, for Task 2 services performed on a
maximum not-to-exceed basis, the Time for Performance shall be set forth in a
separate notice to proceed as set forth in Section 4.1.1; Task 3 has a Time for
Performance of seven (7) calendar days. The Time for Performance for each task
shall commence upon the issuance of a written Notice to Proceed by the Contract
Administrator to SECOND PARTY. The Notice to Proceed for Task 3 shall include
COUNTY’s comments to the draft report provided under Task 2.
3. Article 4, Sections 4.1 and 4.1.1, are deleted in their entirety and replaced with
following:
4.1
COUNTY agrees to pay SECOND PARTY as compensation for performance of all
services required by this Agreement as follows:
4.1.1 Maximum Amount Not-To-Exceed and Lump Sum Compensation
Compensation to SECOND PARTY for the performance of the Scope of
Services for Task 1 shall be on the basis of a maximum amount not-toexceed (“MNTE”) pursuant to the Hourly Rates established in Section
4.1.2and Exhibit “B”; the Scope of Services for Task 2 shall be on the basis
of lump sum subject to the provisions of Section 7.4 and maximum amount
not-to-exceed pursuant to the Hourly Rates established on Exhibit “B.” The
services in Task 2 subject to the maximum amount not-to-exceed shall be
authorized and detailed in a separate notice to proceed; and the Scope of
Services for Task 3 shall be on the basis of lump sum subject to the
provisions of Section 7.4. Total compensation is as follows:
Task 1: Fifty Thousand Dollars ($50,000);
Task 2: One Hundred Thousand Dollars ($100,000-Lump Sum);
Task 2A-Phase 1: Twenty-five Thousand Dollars ($25,000 – MNTE);
Task 2A-Phase 2: Twenty-five Thousand Dollars ($25,000-Lump
Sum);
Task 2A-Phase 3: Fifteen Thousand Dollars ($15,000-Lump Sum)
Task 3: Ten Thousand Dollars ($10,000).
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Exhibit 2
Page 4 of 17
4. Article 4, Section 4.2.1, the maximum sum for Reimbursables shall be increased from
Twelve Thousand Five Hundred Dollars ($12,500) to Thirty Thousand Dollars
($30,000).
5. Article 4, Section 4.2.1(b), is amended to add the following allowable Reimbursables:
“specialized reports, maps, and econometric models.”
6. The effective date of this Second Amendment shall be February 27, 2015.
7. Exhibits “A” and "B" are deleted in their entirety and replaced by Exhibits “A”
and "B" attached hereto and incorporated herein.
8. Except as otherwise set forth herein, the terms and conditions of the Agreement
and First Amendment to the Agreement shall remain unchanged and in full
force and effect.
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Exhibit 2
Page 5 of 17
IN WITNESS WHEREOF, the parties hereto have made and executed this Second
Amendment to the Agreement: BROWARD COUNTY through its Board of County
Commissioners, signing through its Mayor or Vice-Mayor, authorized to execute same by
Board action on the ______ day of ______________, 2015, and SECOND PARTY,
signing by and through its _________________________, duly authorized to execute
same.
COUNTY
ATTEST:
BROWARD COUNTY, by and through
its Board of County Commissioners
_____________________________
Broward County Administrator, as
Ex-officio Clerk of the Broward County
Board of County Commissioners
By____________________________
Mayor
___ day of _______________, 20___.
Approved as to form by
Joni Armstrong Coffey
Broward County Attorney
Governmental Center, Suite 423
115 South Andrews Avenue
Fort Lauderdale, Florida 33301
Telephone: (954) 357-7600
Telecopier: (954) 357-7641
Insurance requirements
approved by Broward County
Risk Management Division
By___________________________
Signature
(Date)
By____________________________
Michael J. Kerr
(Date)
Deputy County Attorney
___________________________
Print Name and Title above
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Exhibit 2
Page 6 of 17
SECOND AMENDMENT TO THE AGREEMENT BETWEEN BROWARD COUNTY AND STIFEL,
NICOLAUS & COMPANY, INC. FOR ARENA FINANCIAL ADVISORY SERVICES.
SECOND PARTY
STIFEL, NICOLAUS & COMPANY, INC.
ATTEST:
By ___________________________________
Printed Name:__________________________
__________________________
Secretary
Title:__________________________________
______ day of __________________, 20____.
(SEAL)
OR
WITNESSES:
___________________________
Witness 1 Signature
___________________________
Witness 1 Print/Type Name
___________________________
Witness 2 Signature
___________________________
Witness 2 Print/Type Name
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Exhibit 2
Page 7 of 17
EXHIBIT A
SCOPE OF SERVICES
Task 1 - Contract Negotiation Support
The primary purpose of this phase is for Stifel (including Stifel subconsultant) to assist the
County with various contract negotiation support related to the anchor sports tenant and
the ongoing management and operations of the BB&T Center. The portions of Task 1
would be completed upon the written direction of the County only, pursuant to 4.1.3.
1.1
Stifel Document Review
Stifel will review documentation developed directly by the County Contract
Negotiating Team, or by others pursuant to discussions with the Negotiating Team,
and comment on that documentation, providing such commentary to the
member(s) of the Negotiating Team as directed by the County.
1.2
Member of County Contract Negotiation Team
Stifel will serve as a member of County's contract negotiation team and provide
advice and recommendations relating to professional hockey, sports, and
entertainment issues and on the management and operation of the BB&T Center
as directed by the County.
1.3
Arena Operating Term Negotiations
Stifel will assist in the development and negotiation of new terms for arena
operations, license agreement, and other related agreements. Stifel will draw on
their extensive experience with similar projects to assist the County with a variety
of potential negotiations, paying particular attention to a variety of market-specific
factors, industry best practices, trends and potential risks and/or rewards of any
proposed business terms and conditions.
Stifel's negotiation assistance will address a variety of factors and scenarios
including, but not limited to:
a. Potential tenant relocation;
b. Tenant retention provisions;
c. Owner guarantees;
d. Potential tenant acquisition;
e. Potential public arena operational subsidies;
f. Public profit sharing options;
g. Approach to capital repairs and improvements;
h. Potential public participation in facility capital repairs and improvements; and,
i. Other potential considerations.
1.4
Financial Analyses of Business Terms
In this phase, Stifel will conduct financial analyses of potential revised business
terms and conditions to determine short and long-term financial impacts to the
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Exhibit 2
Page 8 of 17
County. As part of this analysis, Stifel will identify incremental benefits, if any,
associated with renegotiating the existing arena operating and arena license
agreements and retaining the Florida Panthers NHL team as an anchor tenant.
Potential incremental benefits from a renegotiation of operating and arena license
terms could include, but are not limited to, the following:
a. Annual rental payments
b. Revenue sharing opportunities from the following sources:
i.
Ticket sales
ii. Premium seating
iii.
Concessions
iv. Catering
v.
Merchandise
vi. Advertising and sponsorships
vii. Naming rights
viii.
Others
c. Re-negotiation of expense responsibility:
i.
Facility operations
ii. Event day expenses
iii.
Maintenance
iv. Capital repairs
v.
Others
d. Public Sector Revenue from fees and/or taxes:
Task 2 - Market and Financial Analysis of the Arena without the Panthers
Task 2 shall be performed through this Agreement between the County and Stifel
by Barrett Sports Group, LLC ("BSG") an approved subconsultant to Stifel. Stifel
shall be responsible for the management and supervision of the services
performed by BSG.
2.1
Market Analysis
The primary purpose of this phase is to determine the strength of the market to
support the BB&T Center without the presence of the Panthers. The results of this
task will provide a comprehensive assessment of the market potential for the arena
broken down by specific user groups and types. From this data, operating
scenarios will be developed which will quantify the number and type of events,
attendance levels, per capita spending, ticket prices and other quantifiable
measures.
a. Demographic and Socioeconomic Characteristics
In this analysis, the demographic and socioeconomic characteristics of the local
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Exhibit 2
Page 9 of 17
and regional market will be assembled. The purpose of this exercise is to
evaluate the local and regional area's demographic and socioeconomic
conditions, and its ability to support the operations of the BB&T Center without
the presence of the Panthers. Based on a comparison of several different
market variables, this analysis will identify historic, current, and projected
trends relative to the areas including:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
Population;
Number of households;
Age stratification;
Household income;
Retail sales;
Unemployment rate;
Cost of living;
Corporate base; and,
Other appropriate data, as identified.
The evaluation of these characteristics will serve as an important component for
our analysis since these indicators serve as a gauge for existing and anticipated
demand in the marketplace.
b. Competitive Market Analysis
The market potential to support the operations of the BB&T Center without the
Panthers will be affected by the number and types of existing and planned sports
and entertainment venues in the regional area. In this task, BSG will analyze
both existing and planned local and regional competitive facilities to assess the
relation, interaction and impact they may have on the BB&T Center, if any. Such
facilities include but are not limited to American Airlines Arena, Marlins Park, Sun
Life Stadium, the proposed Miami MLS Stadium, and other such facilities.
Through this analysis, BSG will assess the relevant market area (both local and
regional) for the BB&T Center, and identify and consider factors, both positive and
negative, that differentiate the BB&T Center from its competition. This analysis will
also explore reasons for financial success and difficulties at competitive facilities.
c. Potential Market Opportunities
Based on the findings of the previous tasks, BSG will interview or survey potential
users to evaluate and identify new market opportunities for the venue, including
niche markets. BSG will conduct interviews or surveys of potential users to
estimate the market demand for events likely to be hosted at the arena. This
analysis will be critical in assessing the market potential for events as well as the
impact on the overall facility utilization and operational success. The interviews or
surveys will be conducted with the appropriate individuals for organizing the
following events and facility uses i-viii. In addition, the Contract Administrator,
Stifel and BSG shall determine whether interviews or surveys should be conducted
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Exhibit 2
Page 10 of 17
with potential users ix-xiii.
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
Major league sports;
Minor league sports;
Collegiate sports;
Concerts;
Family shows;
Ice shows;
Motorsports;
Other sporting events;
Public/consumer shows;
Conventions and tradeshows;
Civic events;
High school sports/graduations; and,
Other events, as identified.
Interview and/or survey respondents will be asked a variety of questions regarding
their interest in utilizing the arena. Information gathered will include venues
currently used in the area, advantages and disadvantages of existing facilities,
estimated utilization of the arena, and desired building amenities/programming.
This type of analysis provides quantified estimates by market segment of the
number and characteristics of events that could utilize the arena.
2.2
Demand Analysis
The primary purpose of this phase is to assess the potential continued sports and
entertainment market demand for the BB&T Center based on the type of event,
projected attendance, forecasted ticket sales, among others. Based on the results
of the previous phases, the knowledge BSG has gained in performing similar
studies, and information contained in BSG’s database of events, BSG will assess
which event markets represent the strongest potential sources of facility utilization,
and how successfully the arena could compete in these markets. Specifically, from
this data BSG will provide information on the following:
a. Description of events that could utilize the facility;
b. Estimated attendance at each type of event;
c. Evaluate the probability of attracting other sports teams, including collegiate,
minor league and major league teams, to the facility as tenants, as well as
providing estimates of efforts needed to attract these other tenants;
d. Estimates of patron spending on tickets, concessions and merchandise;
e. Specific seating, space and facility requirements;
f. Rental terms anticipated; and,
g. Discussion of trends and issues likely to impact the future demand of the
facility.
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Exhibit 2
Page 11 of 17
By combining interview and survey results with the analysis results generated in
previous tasks, BSG will be able to identify the event markets that represent the
primary sources of demand for the facility. This information will assist in assessing
the overall event and attendance levels that could be achieved at the facility.
2.3
Financial Analysis / Economic and Fiscal Impact Analysis
The objectives of this phase are to: (1) identify key operating assumptions and
issues inhibiting or enhancing the BB&T Center's future operations without the
Panthers; (2) estimate the annual operating revenues and expenses over a 15year period; and, (3) estimate the economic and fiscal impacts associated with the
continued operation of the facility and consider the impact upon the County's
tourism and hospitality industries.
a. Financial Analysis
Based on the potential event mix, facility usage levels and attendance derived
from the market analysis, BSG's knowledge of the industry, the results of BSG's
analysis in the previous phases, and the financial performance of comparable
arenas, BSG will prepare estimates of operating revenues and expenses
associated with the arena. Revenue and expense estimates will be detailed by
type of event and by source of revenue and expense. As part of this analysis,
BSG will assess the ability of the BB&T Center to "break-even" or generate an
operating profit without a professional sports team as an anchor tenant. BSG
will develop a series of operational pro-formas and operating scenarios,
including the following:
i.
ii.
iii.
iv.
v.
15-year financial operating pro-forma to determine facility financial
viability;
Profit and Loss Statements;
Cash Flow Statements;
Sensitivity Analysis; and,
Break-Even Analysis.
In addition, BSG will identify financial risks, if any, associated with the continued
operation of the venue with and without a professional sports team as an
anchor tenant.
b. Economic and Fiscal Impact Analysis
BSG will estimate the direct and indirect economic and fiscal impacts generated
by the continued operation of the arena. In evaluating these impacts, the first
important step involves defining and quantifying the existing sources of direct
spending. This direct spending is generated annually throughout the operation
of the facility.
The primary sources of spending during operation occur when attendees
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Exhibit 2
Page 12 of 17
make purchases or payments in connection with attendance at arena events.
When analyzing the direct spending generated by facility operations, three
major areas of spending should be measured as described below.
i.
ii.
iii.
In-facility - This type of spending takes place within or as part of the
facility, and includes purchases made by attendees, including purchases
for admission, concessions, novelties, and parking, as applicable.
Out-of-facility - This type of spending takes place by event attendees in
other local businesses in conjunction with facility activity. This type of
spending generally includes transactions at area restaurants, hotels,
and other service businesses.
Facility tenant operations - This reflects expenditures made by the
facility tenants, primarily sports teams, for such items as travel, salaries,
marketing, and administrative costs.
The level of direct spending estimated in this phase will be based on estimates
for attendance and spending patterns and estimates of various tenant-related
expenditures, if applicable. To help ensure the appropriateness of direct
spending estimates, BSG will rely on a variety of industry resources, including
its in-house data base which tracks facility operations from around the
country.
To estimate the overall economic impacts, it is necessary to utilize an economic
impact model to measure the effects of the direct, indirect and induced
expenditures throughout the economy. BSG will use its extensive experience
working with a variety of economic impact models including the IMPLAN
system and other models developed by major universities. Further, BSG will
use this experience to accurately apply the direct spending estimates to the
selected model, and interpret the economic data generated.
In addition to estimating the economic impact that could be generated by the
arena, BSG and Stifel will develop estimates of the potential fiscal impacts the
operations of the arena creates (refer to Section 2.5). As part of this analysis,
we will prepare estimates of local and state tax revenues that are generated by
the operations of the arena. Consideration of the arena's impact upon the
County's tourism and hospitality industries will also be assessed as part of this
analysis.
2.4
Management Options
In this analysis, BSG will identify potential arena management options for
the continued operations of the venue. BSG will highlight the advantages and
disadvantages of private and public management alternatives and the key
parameters of such partnerships including lease terms and operational
responsibilities/liabilities. In addition, BSG will identify and evaluate other options
for consideration, including potential closure, re-purposing, or sale of the facility in
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Exhibit 2
Page 13 of 17
the event the facility loses its anchor tenant.
2.5 Identification of Potential Public Funding Support: Stifel and BSG will identify and assess
the level and type of public funding support necessary to ensure the financial viability of
the BB&T Center and the Florida Panthers. As part of this analysis, Stifel and BSG will
assess the level of public support received at comparable NHL and NBA arenas, our
extensive experience on similar projects, as well as our knowledge of the local political
landscape in order to evaluate potential public participation and any opportunities or
barriers that could exist in the local market. In addition, Stifel and BSG will recommend
alternative funding sources to support on-going operations and future capital
improvements.
2.6 In addition, Stifel and BSG will identify intangible benefits provided by the facility with and
without a professional sports anchor tenant to the community.
Task 2A – Phases I, II and III – Additional Services (Subject to the budget limitations
set forth in the Section 3 of the Second Amendment)
I.
Due Diligence Support
The goal of this phase is to support the County.
A. Participate in Meetings, as requested by County (Subject to Budget
Limitations) – Attend New York meetings with the NHL and Florida
Panthers;
B. Participate in Conference Calls, as requested by County (Subject to Budget
Limitations); and
C. Meet with Key Stakeholders, as requested by County (Subject to Budget
Limitations)
II.
NHL Deal Structure/Lease Comparison
BSG will prepare a comprehensive review and evaluation of relevant NHL arena
deal structures and leases and will provide case studies for each transaction that
will include arena sources/uses of funds, lease summaries, etc. The analysis will
attempt to isolate the relevant arena deal points and lease terms to allow for
accurate and meaningful comparison. BSG will attempt to identify of the lease
components and account for other significant costs of occupancy (e.g. direct and
indirect equity/debt contributions). Our analysis is based on identifying the
respective team’s total arena occupancy costs as a percentage of estimated
team revenues, arena revenues, gross gate receipts and net gate receipts (as
available).
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Exhibit 2
Page 14 of 17
Arena Occupancy Costs
In order to accurately compare arena deal structures and lease terms, it is
important to quantify the impact of the terms on the team. The first step in this
analysis is to apply the key deal points and lease terms to the operating
performance of the team to compute the arena occupancy costs for the team. In
this type of analysis, it is important to identify all of the occupancy costs for the
team, not just the rent component. Too often, teams and/or public sector entities
will not consider certain lease components. Items that often do not get
considered include the team’s direct equity/debt contribution toward the
construction/renovation of facilities, the team’s indirect contribution (e.g.
vendor/concessionaire equity), ticket surcharges, sales taxes, entertainment
taxes, etc. Examples of arena occupancy costs include:

Rental Payments & Taxes
o Base Rent/Additional Rent/Percentage Rents
o Ticket Sales Tax/Ticket Surcharges/Usage Fees/Admissions Taxes

Revenue Sharing
o Luxury Suites/Loge Boxes/Club Level Seats/ Private Club (Ticket and
Premium)
o Concessions/Novelties
o Naming Rights/Advertising/Sponsorships
o Parking (and Parking Surcharges)
o Television/Radio
o Other

Expenses
o Game Day Operating Expenses
o Arena Annual Operating Expenses
o Arena Capital Repair/Replacement Expenses
o Other

Up-Front Team Equity/Debt Investment

Vendor/Concessionaire Investment

Miscellaneous/Other
o Rent Rebate
The total arena occupancy cost for a team reflects only one measure of the
impact of the lease terms. Notwithstanding revenue sharing arrangements,
teams can generate significantly different amounts of revenue based on the
design of the arena (e.g., number of seats, number of luxury suites, number of
club seats, number of parking spaces, etc.), market characteristics and other
factors both internal and external to the facility. The lease terms should reflect
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Exhibit 2
Page 15 of 17
the ability of the team to generate revenue in the arena, specifically, and in the
market, generally.
Equivalent Performance Analysis
The equivalent performance analysis approach attempts to isolate the arena deal
points and lease terms to better understand their impact on the team. In this
analysis, performance measures such as attendance, average ticket price,
advertising revenue, etc. are held constant while facility attributes such as
capacity, number of luxury suites, number of club seats, number of parking stalls,
etc. reflect actual characteristics. Utilizing this method allows the analyst to
estimate the arena occupancy costs for the team. The costs are then compared
to the other teams and divided by the potential estimated team revenues, arena
revenues, gross gate receipts and net gate receipts (as available) for further
comparison. The analysis allows the reader to better understand the impact of
the lease terms on the team.
Summary of Findings
The goal of this portion of the engagement is to prepare a presentation style
report to communicate findings and conclusions. Specifically, BSG will comment
on how the proposed deal structure compares to other relevant NHL deal
structures.
III.
Document Review Support
BSG will provide assistance in the review of key presentations/documents prepared in
connection with a potential revised deal structure.
A. Collect and Review Previous Relevant Work Related to Marketing,
Planning, Economic, and Financial Data (if any)
B. Review Pro Forma Operating and Financial Data for the BB&T Center
C. Conduct Interviews with Key Interested and Related Parties to Obtain
Background Information Relevant to Conducting Analysis – Interview List
Adjusted Based Upon Confidentiality Requirements
D. Review Key Presentations/Documents Prepared in Connection with a
Potential Deal Structure
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Exhibit 2
Page 16 of 17
Task 3 - Final Report and Recommendations
3.1
Based on the data obtained in the preceding analyses, Stifel and BSG will provide
a final report outlining the following recommendations:
a.
b.
c.
d.
e.
f.
g.
Facility modifications;
Operations;
Financial forecasts;
Opinions on economic viability;
Marketing;
Deal structure/Lease Comparison; and
Others.
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Exhibit 2
Page 17 of 17
EXHIBIT B
SCHEDULE OF SUBCONSULTANT PARTICIPATION AND HOURLY RATES
No.
Firm Name
Discipline
Barrett Sports Group, LLC Financial/market analysis
Hourly Rates
1.
2.
3.
4.
Daniel S. Barrett
Joshua C. Cohen
Brett D. Rasmussen
Administrative
$450
$250
$150
$50
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