Management and Performance Review of County Government ...

Enterprise Operations of Jefferson County
Compensation for SMG’s services, as spelled out in the contract, required the
county to pay a monthly fixed fee of $7,000, with a total minimum fee of $36,000 and a
total maximum of $50,000, as well as reimbursements for travel expenses incurred by
SMG employees.
In May 2001, after paying SMG a total of $53,500 in fees, $3,500 more than the
maximum established in the contract, the county amended the contract to continue the
monthly payments, but to reduce the fixed monthly fee to $4,000. In addition to the
monthly fee, SMG was entitled to sales commissions based on aggregate gross sales
revenue generated by the sale of naming rights, product and service rights, advertising
rights and suite and premium seating rights, at the rates shown in Exhibit 8-4.
EXHIBIT 8-4
ADVERTISING CONSULTING SERVICES COMMISSIONS
PAID BY JEFFERSON COUNTY TO SMG
Type of Sale
Commission Rate
Advertising,
Sponsorship, Product
and Service Rights
Facility Naming Rights
Suite and Premium
Seating Rights
15% of net revenues resulting from sales
7% of net revenues collected in the first year
5% of net revenues collected for each year thereafter
5% of net revenues from sales
In April 2002, the county continued its relationship with SMG by engaging the
company to promote, operate and manage the facility. A management agreement
authorized SMG to:
‣ employ and supervise personnel;
‣ negotiate and execute licenses, occupancy agreements, rental
agreements, booking commitments, advertising agreements,
concession agreements, supplier agreements and service contracts;
‣ provide day-to-day administrative services to support management
such as preparing budgets and financial reports; and
‣ engage in advertising, solicitation and promotional activities.
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