On December 8, 2021 the Mayor and Commission approved Resolution 2021-31965 (attached), waiving, by 5/7th vote, the formal competitive bidding requirement, finding such waiver to be in the best interest of the city, and authorizing the City Manager to negotiate an agreement with Red Bull North America, for an exclusive municipal marketing pouring rights agreement in the energy drink category for vending and dispensing on certain city-owned properties, based upon the essential terms set forth in the city commission memorandum accompanying the item resolution, for a term of five (5) years; and further, authorizing the City Manager to finalize and execute the agreements, subject to form approval by the City Attorney.
The Administration and Red Bull North America began contract negotiations and in addition to the agreed upon terms set forth in the December 8, 2021 agenda item, the Administration wanted to include additional benefits to Red Bull North America, as it was deemed to be favorable to both entities in terms of financial impact and brand awareness.
In addition to the business terms outlined in the December 8, 2021 Commission agenda, the Administration requested to add the following items to the final agreement, which having a financial component, required approval from the Mayor and Commission:
Advertising & Sponsorship Rights
1. Special Event Permit Fee Waiver - waiver of any Special Event Permit and/or Permit Application Fees for Red Bull North America’s use for two (2) mutually agreed upon event(s) per Year, based on availability and meeting all approvals as set forth in the City’s Special Event Permit approval process. For purposes of the Special Event Permit and / or Permit Application Fee waiver, these Facilities shall include public beachfront areas, and Parks and Recreation facilities where Special Events are permitted. The City shall only waive fees up to a maximum of $25,000 per event, and solely for permit or square footage fees for which the city has no hard cost. All other costs and ancillary fees including but not limited to production, taxes, security, audio/visual, decoration, parking or food and beverage shall be the responsibility of Red Bull North America. Rights may not be transferred or assigned and do not carry over into future Years.
The Administration is in support of this benefit as Red Bull North America is globally recognized as producing some of the top events and brand activations, and this will incentivize them to bring those events to Miami Beach.
2. Product Sampling - Up to two (2) royalty free Product Sampling permits per month (up to $2,500 per permit per month, and up to $60,000 per Agreement Year), to a maximum of twenty-four (24) permits per Year. Permit waiver shall only cover permit fee costs for which the City has no hard cost. If Red Bull North America does not use all twenty-four (24) permits by the end of the Year, any remaining permits will not roll-over to the following Year and will be forfeited. All other fees and costs of production, including but not limited to taxes, security, audio/visual, decoration or food and beverage shall be the responsibility of Red Bull North America. Rights may not be transferred or assigned and do not carry over into future Years.
The Administration is in support of this benefit as Red Bull North America sampling activations are highly engaging and recognizable and will not only bring awareness to our new partnership, but will bring brand awareness to the Red Bull North America brand with the intent of driving sales at City owned venues, resulting in higher consumption and financial rebates back to the City.
3. Vending Sales Rebates – Red Bull North America will contract with a third-party vendor to execute city wide vending services. The City will receive a vending rebate of $5 /per case for each case sold in vending machines placed on City property or within City venues.
The Administration is in support of this benefit as it was not included as part of the initial agreement and will further increase revenues to the City by allocating $5 from every case of Red Bull sold in vending machines, back to the City in the form of a rebate.
4. Advertising Benefits. Red Bull North America shall have the following advertising benefits, which do not have an actual out-of-pocket expense to the City: (1) one (1) royalty free advertisement in any City-produced event collateral as the “Official Energy Drink of Miami Beach”; (2) one (1) royalty free Red Bull North America PSA or message per year to be aired on MBTV; and (3) one (1) royalty free Red Bull North America PSA or message per year to be aired on the Miami Beach trolley video screens, with above advertising benefits having no additional costs to the City; and
The Administration was in support of all of the above-mentioned advertising benefits as they would draw attention to our new partnership, while elevating the Miami Beach brand and driving consumption and sales, resulting in higher revenues for the City.
On July 20, 2022, the Mayor and Commission adopted Resolution No 2022-32221 (attached) authorizing the City Manager to include the additional business terms in the agreement with Red Bull North America.
As negotiations continued, the Administration was made aware by Red Bull North America in November 2022, that due to a change in their corporate structure, the City would be required to enter into three separate agreements in order to fulfill the original pouring rights proposal put forth, as Red Bull North America was no longer the distributor of their products, nor did they have an internal vending arm of their corporate entity. As such, the Administration worked with Red Bull North America to source two suitable, Red Bull authorized vendors who would be able to fulfill the Distribution (product purchase) and Vending portions of the original proposal.