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HomeMy WebLinkAbout1/17/2007 - STAFF REPORTS - 5.C. A�pALM Sp, r� V N W T ryroWO,eit> •� c�L/FORN�gW City Council Staff Report DATE: JANUARY 17, 2007 NEW BUSINESS SUBJECT: APPROVAL OF A LETTER OF EXCLUSIVE INTENT TO NEGOTIATE WITH EVENT MANAGEMENT GROUP (EMG) FOR THE PRODUCTION AND STAGING OF THE PALM SPRINGS GRAND PRIX IN SEPTEMBER, 2008, AN INDY RACING LEAGUE (IRL) EVENT FROM: David H. Ready, City Manager BY: Community & Economic Development Department SUMMARY: The City has received a proposal from Event Management Group (EMG) and Creosote Partners (collectively, the Organizers) on behalf of the Indy Racing League (owners of the Indianapolis 500 and the Indy Racing League) to produce an Indy car race in Palm Springs called the Palm Springs Grand Prix. The Organizers have presented a package of materials for an event that could be among the most heavily attended and watched auto racing, street entertainment events in the United States. The Palm Springs location, with all of the end-of-racing-season events and celebrations, would create 7-10 days of events and auto racing excitement. The purpose of presenting the program to Council is to secure the City's economic, logistical and promotional participation in this regional entertainment event as well as to provide information to the community in order to begin to develop the necessary support for an event of this magnitude. The Organizers have requested a Letter of Exclusive Intent from the City that will allow them to be the exclusive presenter of this entertainment concept. Since many issues need to be discussed and resolved to the mutual satisfaction of the parties, staff and the Organizer recommend that a 145 day period be the time in which to exclusively negotiate details for an agreement. If the negotiations are successful, an agreement would be presented for Council's approval. ITEM NO. 5 Palm Springs Grand Prix Letter of Intent January 17,2007 Page 2 CITY COUNCIL RECOMMENDATION' 1. Adopt Minute Order No. "APPROVING A LETTER OF EXCLUSIVE INTENT TO NEGOTIATE WITH EVENT MANAGEMENT GROUP FOR STAGING THE PALM SPRINGS GRAND PRIX IN SEPTEMBER 2008." STAFF ANALYSIS: The City received a proposal from Joseph F. Heitzler, Chairman/CEO of Event Management Group ("EMG") and Creosote Partners (collectively, the Organizers) on behalf of the Indy Racing League (owners of the Indianapolis 500) to produce an Indy race in Palm Springs called the Palm Springs Grand Prix, in September 2008. The Organizers presented a package of materials for an event that could be the most heavily attended and watched auto racing street entertainment event in the United States, with additional significant network television coverage. EMG has managerial expertise in specialty street entertainment auto racing event management. EMG management has conducted and produced over 22 street events over the last 6 years. EMG has partnered with local developers Creosote Partners to provide the local support and develop links with numerous Palm Springs community entities, which are critical to any successful street entertainment event promotion. Indy Racing League ("IRL") is the owner of the Indianapolis Motor Speedway and the world-renowned Indianapolis 500 race. IRL currently operates and conducts a 16 race schedule in the U.S., Japan and Canada. Economic Benefits Part of the promotional package proposed by the Organizers is that ABC and ESPN will provide worldwide coverage of the race live from Palm Springs, totaling approximately 6 hours of international TV coverage over three days. In addition, there would be worldwide media coverage created by the attendance of the international sports media. The athletes themselves will also promote the race and will help provide international coverage of this event. These professionals will make significant appearances months ahead of the actual event and the racing series cross-promotes its events. For example, IRL and EMG will use the Indy 500 as a special promotional opportunity for the Palm Springs event. The Palm Springs Grand Prix will also have more past winners of the Indy 500 in attendance then any other street race event in history. Another significant factor in IRL racing is the participation of Fortune 500 domestic and international corporations which sponsor the racing teams. These corporations schedule numerous corporate meetings and hospitality events prior to and during the actual racing event. Palm Springs Grand Prix Letter of Intent January 17,2007 Page 3 EMG will provide economic benefit surveys and research data from 12 other municipal entities demonstrating the significant economic spending that will be generated by this event. Long Beach is entering its 37th year of conducting the Grand Prix. Cleveland, Montreal, Mexico City, Denver and others have repeatedly experienced significant positive economic impacts for their respective cities' involvement. Palm Springs, as an internationally recognized final destination attraction in the large Southern California market, will enjoy significant attendance for this event and should rank in the upper 3 IRL cities in attendance in Year One of the event. EMG estimates that over 135,000 will attend the four days of race events. A major benefit, like many professional sports, is the charitable work of the Organizers and participants. In many cities the drivers visit hospital rooms and work on charity fund raising events, as well as school promotional events and programs. This activity is a foundation of the success and image of the event in the community. Event Schedule The actual Palm Springs Grand Prix will be conducted over a four-day period of time. However, there are numerous events that will be conducted as officially sanctioned events of the Grand Prix throughout the year. These events could include a Charity Ball, a Pro-Am golf tournament, a tennis tournament, a poker contest, several music concerts, Hispanic entertainment events, an ESPN boxing event, and a beauty contest. There could also be Casino-oriented entertainment events that would be conducted year-round in support of the race event. During the actual race week, in addition to the Indy car race the Palm Springs Grand Prix will also have a Celebrity Auto Racing event together as well as an International Vintage Car racing event. The average stay of those attending races is 5.6 days. The Organizers believe that they Can structure a marketing plan for this event that will create a 7-day package for those attending. This would be also the last race of the IRL series and the season-ending Annual Champions IRL Ball, seen live on ESPN, will be held on the Monday night after the Sunday race. This ball is to honor all the participants in the season's racing schedule. It is attended by all sponsors as well as all the promoters from events in all the other cities that stage these IRL races. A major attraction during this entertainment event is the incorporation of the Palm Springs Convention Center as the location for a major automobile show, which would feature new cars, vintage cars, race cars, and the major domestic and foreign car manufacturers. Palm Springs Grand Prix Letter of Intent January 17,2007 Page 4 City Participation The Organizers have requested that the City provide services to the event in the following areas: streets, sanitation, engineering, police and fire, administrative, emergency medical and others. At this time those costs are not known but will be refined during the 145 day due diligence period. From the community, this event will need several hundred volunteers to provide the guest relation services. Track Location, Construction and Design The race is a street race, similar to the Vintage Auto Racing Association races held in Palm Springs in the 1990's, though longer in distance. The City would work with the Organizers of this event as it relates to the actual racetrack design and its construction and maintenance requirements. The design of the racetrack and the associated cost would be negotiated. The race track itself needs to be approximately 2.1 to 2.4 miles in distance (the vintage track was about 1.2 miles). It will require a competitive design in order to challenge the drivers and excite the fans and the media. This will require creativity as well as economic assistance. The track itself must meet FIA racing and design configuration criteria. Staff and the Organizers have reviewed several race sites and believe this goal can be accomplished. The Organizers and City staff have located three potential race sites that meet the criteria described below. Some of the design needs are as follows: The race track should be 50-60 feet wide to maximize the amount of passing, as passing is what makes the race interesting; the "Pit Lane" should be two lanes, each 12.5 feet wide; each "Pit Box" should be 45 feet deep and 18 feet wide per team (24 cars); each 'Team Pit Box" should be 15 feet deep and 15 feet wide per team (24 teams); the "Paddock Area" should be 90 feet deep by 40 feet wide per team; and, the "Team Hospitality" area should be 55 feet deep by 25 feet wide. Summary The Organizers feel that no other city in the U.S. can offer the complete final race destination attributes that are inherent in Palm Springs: world famous golf resorts; popular casinos; unequalled weather; celebrity popularity via the Hollywood connection to Palm Springs; unique shopping opportunities; world-class hotel and resort accommodations; and, finally, the expertise and creative capabilities of the City. The Organizers' mission is to create an event entertainment zone/district that can challenge the drivers' skills, provide the spectacular vistas for international television, impress the Fortune 500 corporations, open the city to the international media and Palm Springs Grand Prix Letter of Intent January 17,2007 Page 5 provide an entertainment value-driven product that the community and all the visitors would endorse. EMG has the most experienced management team in open wheel racing; the IRL is the most important open wheel racing series with the most popular drivers; and, the IRL has the largest number of Fortune 500 corporations as sponsors. In addition, the Organizers have brought ABC Sports and LSPN as their TV partners. Palm Springs is one of the most recognizable destination and entertainment cities in the U.S. This event could expand the City's national and international expos a and add another event to its diverse annual events calendar. FISCAL IMPACT: The costs and benefits of the Ci y participating in the event are still being defined. Joh . *� mo d, Director of Tam Wilson Co tTyrky & omit Development Assistant City Manager David H. Ready, 5S City Manager Attachments: 1. Minute Order 2. Letter of Exclusive Intent ��F PA4M�Sp� City ®f -Palm Springs David H. Read City Manager Y Y er C 3200 E.Tahquaz Canyon Way - Palm Springs, California 92262 ��)pORN TEL. (760) 323-8201 ' FAX: (760) 323-8207 • Wcb: www.palmspring4-ci.gov January 18, 2007 Mr. Joseph Heitzler Chairman/Chief Executive Officer Events Management Group 405 Via Corta Palos Verdes Estates, California 90274 RE: LETTER OF EXCLUSIVE INTENT TO NEGOTIATE WITH EVENT MANAGEMENT GROUP FOR STAGING THE PALM SPRINGS GRAND PRIX IN SEPTEMBER 2008 Dear Mr. Heitzler: By action at its January 17, 2007 meeting, the City Council has approved this Exclusive Letter of Intent for Event Management Group (EMG) for the purpose of negotiating and exploring the feasibility of staging the Palm Springs Grand Prix with the Indy Racing League (IRL) in the City of Palm Springs in September, 2008. During the ensuing 145- day negotiation period, EMG and City staff will work to refine the total event costs and economic benefits, public participation, community support, and feasible courses for the race itself. While special events are certainly an important component to the tourism economy of the City, this letter does not bind nor obligate the City or the City Council to approve an agreement to host this event. However, after this 145-day period of negotiation and information gathering, Event Management Group will have an opportunity to present findings and recommendations to the City Council during a regularly scheduled Meeting or Study Session. City staff looks forward to discussing the possibility of such an event for Palm Springs. Thank you for your interest in our City. Sincerely, David H. Ready, J.D. Ph.D. City Manager Post Office Box 2743 9 Palm Spriggs, California 92263-2743 EVENT MANAGEMENT GROUP October 19,2006 Mr. David H. Ready Chief Executive Officer / City Manager Palm Springs Palm Springs City Hall 3200 E. Tahquitz Canyon Way Palm Springs, California Subject: Palm Springs Gran Prix Entertainment Event September 2008 Dear Mr. Ready, Thank you very much for the time and overview you and your associates have provided to date relative to conducting a Palm Springs Gran Prix Entertainment event for September of 2008 - September 2017. On behalf of the management entities that will produce and operate this entertainment event, EMG and the Indy Racing League and the Vintage Racing League. I would like to provide a general summary of this proposed event together with the goals and objectives of this letter of communication. Our mission is to secure the cities economic and logistical and promotional participation in this entertainment event as well as to provide information to the community that will allow those constituents to support the initiatives as necessary for an event of this magnitude. 405 Via Corta, Palos Verdes Estates, CA 90274 310-465-1978 310-465-1968 jheitzler@mac com f - I • EVENT MANAGEMENT GROUP The most important requirement that we as an organizing entity will need after your review of this presentation is a letter of intent from the city that will allow our organization to be the exclusive presenter of this entertainment concept. Realizing that we will have many issues to be discussed and resolved to the mutual satisfaction of all participating entities we would recommend and require that we identify a specific period of time in which to finalize all the details and to sign a binding letter of agreement. During that period of time we would exclusively negotiate with only these stated entities. We look forward to securing your letter of intent and will work extremely hard to resolve all the details and complete a binding letter of agreement within 145 days of receipt of a letter of exclusive intent. I hope that the following overview properly conveys our excitement that this event would be the most heavily attended and watched auto racing street entertainment event in the USA. Palm Springs would create an excitement unmatched in USA auto racing. Strnte2jc informatJ©n/ Fc0.m 5lpr6nas Grcr, Prcx Even j A.) Event Management Group - has managerial expertise in specialty street entertainment auto racing event management. EMG management has conducted and produced over 22 street events over the last 6 years. Its 405 Via Corte, Palos Verdes Estates, GA 90274 310-465-1978 310-465-1968 jheitzler@mac.com Jr EVENT MANAGEMENT GROUP most recent events were in Mexico and one race had in excess of 430,000 in attendance. B.) Creosote Partners - EMC approached Creosote Partners to provide the important initiatives from the numerous Palm Springs community entities, which are critical to any successful street entertainment event promotion. C.) IRL. Indy Racing League - The owners of the Indianapolis Motor Speedway and the Indianapolis 500 race which is world-renowned. Presently operates and conducts a 16 race schedule in the USA and Japan and Canada. D.) ABC/E5PN will provide worldwide coverage of this race live from Palm Springs. A total of approximately 6 hours of international TV coverage. E.) Worldwide media coverage will be created by the attendance of the international sports media. F.) World wide recognized professional athletes will promote the race and will provide international coverage of this event. These professionals will have significant in market appearances months ahead of the actual event. G.) Fortune 500 Domestic / International Corporations who sponsor the racing teams will schedule numerous corporate meetings and hospitality events prior to and during this event. H.) Palm Springs Community leaders as well as promotion winners will attend the INDY 500 as special VIP's and members of the official IRL racing promoter family. Additionally we will use the INDY 500 as a special promotional opportunity for the Palm Springs entertainment event. 405 Via Corta, Palos Verdes Estates, CA 90274 310-465-1978 310-465-1968 iheitzler@mac.com I i EVENT MANAGEMENT GROUP I.) EMG can provide economic benefit surveys and research data from 12 other municipal entities demonstrating the significant economic spending that will be generated by this event. Long Beach is entering its 37th year of conducting the Gran Prix. Cleveland, Montreal, Mexico City, Denver and several others have repeatedly provided excellent economic development trends that more than justify the respective cities involvement. J.) Palm Springs as an internationally recognized final destination attraction will enjoy a significant attendance record by virtue of conducting this event. It will rank in the upper 3 IRL cities in attendance in year one of the event. We estimate that over 135,000 will attend the race events Q The Palm Springs Gran Prix will be conducted over a four- day period of time. However we will have numerous events that will be conducted as officially sanctioned events of the Gran Prix through the entire year. L.) The following are a few of these events: Charity Fund Ball, Pro Am golf tournament, tennis tournament, poker contest, several music concerts, Hispanic entertainment events, ESPN boxing event, beauty contest. Also Casino oriented entertainment events will be conducted year round in support of the race event. M.) Palm Springs Grin Prix will also have a celebrity auto- racing event together with an international Vintage car- racing event. N.) This event will need volunteers to provide the guest relation services and numerous other critical community oriented details. 405 Via Corta, Palos Verdes Estates, CA 90274 310-465-1978 310-465-1968 iheitzler@mac.com i EVENT MANAGEMENT GROUP O.) The average stay of those attending races is 5.6 days. We believe that we can structure a marketing plan for this event that will create a 7-day package for those attending. This would be the last race of the series and the season ending Annual Champions IRL Ball, seen live on ESPN; will be held on the Monday night after the Sunday race. This ball is to honor all the participants in the seasons racing schedule. It is attended by all sponsors as well as all the promoters from events in all the other cities that stage these IRL races. P.) The entire success of this event is centered on the ability of the organizing entities to convey the emotional ownership of the event to the entire Palm Springs community. The drivers attending hospital rooms as well as our charity fund raising capabilities together with school promotional events and programs is essential. Q.) A major attraction during this entertainment event is the incorporation of the Palm Springs Convention Center as the location for a major automobile show. New cars, Vintage cars, race cars as well as the major domestic and international car manufacturers. R.) The city will have to provide services in the following areas; sanitation, engineering, police and fire, administrative, emergency medical and others. 5.) The city will need to work with the promoters of this event as it relates to the actual racetrack design and its construction and maintenance requirements. The design of the racetrack and the associated cost will have to be negotiated. The race track itself needs to be approximately 1.7 to 2.4 miles in distance. It will require 405 Via Corta, Palos Verdes Estates, CA 90274 310-465-1978 310-465-1968 jheitzler@mac.com l ' EVENT MANAGEMENT GROUP a competitive design in order to excite the drivers as well as the fans and the media. This may require creatitivity as well as economic assistance. T.) The track itself has to meet FIA racing and design configuration criteria. We have reviewed several race sites and believe we can accomplish this goal. U.) Some of the design needs are as follows: Race track should be 50-60 foot wide to allow for excessive passing; Pit Lane should be two lane each 12.5 foot wide; Pit Box should be 45 foot deep and 18 foot wide per team (24 cars); Team Pit Box should be 15 foot deep and 15 foot wide per team (24 teams); Paddock Area should be 90 foot deep by 40 foot wide per team; Team Hospitality should be 55 foot deep by 25 foot wide. V.) EMG together with Creosote Partners and several city departments have located three race sites that meet the above criteria. Please see attached aerials of those sites. W.) EMG would like to suggest that the city entertain discussions relative to a special event tax that can provide significant revenues for the cost of this event. EMG recently participated in preparation of a tax initiative for the state of Texas which provides a racing tax provision to support the infrastructure of auto racing throughout the state. I trust that you can now see why we believe that the City of Palm Springs will enjoy significant benefits from participation in this International event. No other city in the U5A can offer the complete final destination attributes that are inherent in Palm Springs. World popular golf resorts, world popular 405 Via Corta, Palos Verdes Estates, CA 90274 310-465-1978 310-465-1968 jheitzler@mac.com EVENT MANAGEMENT GROUP casinos, weather unequalled anywhere, celebrity popularity via Hollywood's love of Palm Springs, unique world class shopping opportunities, world-class hotel and resort accommodations and finally the expertise and creative capabilities of the city and its city management and city leaders. Our mission as a team is to create a event entertainment zone/district that can challenge the drivers skills, provide the spectacular vistas for International Television, impress the Fortune 500 corporations, open the city to the international media and provide an entertainment value driven product that the community and all the visitors would adopt as there creation. We would like to meet with the honorable Mayor Ron Oden as well as those city council members that you feel would be interested in going to the next step in the process of securing approval for conducting this event for at least the next nine years. We have the most experienced management team. We have the most popular open wheel racing series in the IRL. We have the most popular drivers. The IRL has the most number of Fortune 500 corporations as sponsors in open wheel racing in the USA. We have ABS Sport and E5PN as our TV partners. We have one of the most recognizable cities in the USA as the site for this event. We have a city that is creative and innovative in its thinking and has the expertise to assist in the production of this event. We have a community that supports its events as 405 Via Corta, Palos Verdes Estates, CA 90274 310-465-1978 310-465-1968 jheitzler@maacom EVENT MANAGEMENT GROUP well as contributes their time to worthy causes. We have a respected community citizen, Creosote Partners, as our partners. We want this to be a significant charity oriented event. I believe we have the critical ingredients to make this event as successful as our collective energies will allow. We will have more past winners of the INDY 500 in attendance then any other street race event in history. We have it all. We need to do this event together as a team. We need to move to the next step and we hope that you will provide the direction and guidance to accomplish the remaining tasks at hand. Thank you for this opportunity and I will await your response to this communication. Sincerely, I Joseph F. Heitz( r Chairman / Chief Executive Officer EMG Cc: Mr.Tony George, Chairman Indianapolis Motor Speedway Mr. Stephen Page, Chairman Vintage Racing League Mr. John Raymond, Director Economic Development City of Palm Springs Mr. Thomas Wilson, Assistant City Manager Development Services, City of Palm Springs 405 Via Corta, Palos Verdes Estates, CA 90274 310465-1978 310-465-1968 iheitzler@mac.com