Item Coversheet

Resolutions - C7  K




COMMISSION MEMORANDUM

TO:Honorable Mayor and Members of the City Commission 
FROM:Alina T. Hudak, City Manager 
DATE:March  27, 2023
 



SUBJECT:A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AMENDING RESOLUTIONS NO 2021-31965 AND NO. 2022-32221, WHICH AUTHORIZED THE CITY MANAGER TO NEGOTIATE AND EXECUTE AN AGREEMENT WITH RED BULL NORTH AMERICA, INC (RED BULL) FOR THE EXCLUSIVE ENERGY DRINK POURING RIGHTS BASED UPON APPROVED ESSENTIAL BUSINESS TERMS; SAID AMENDMENT AUTHORIZING THE SEGREGATION OF THE SPONSORSHIP, SALE AND DISTRIBUTION OF PRODUCTS, AND VENDING EQUIPMENT AND SERVICES COMPONENTS OF THE AGREEMENT; AND FURTHER APPROVING AND AUTHORIZING THE CITY MANAGER TO EXECUTE: (1) THE SPONSORSHIP AGREEMENT WITH RED BULL; (2) THE RED BULL PRODUCT DISTRIBUTION AGREEMENT WITH RED BULL DISTRIBUTION COMPANY, INC.; AND (3) THE RED BULL VENDING AGREEMENT WITH BETTOLI TRADING CORP. D/B/A BETTOLI VENDING FOR A TERM OF FIVE (5) YEARS, COMMENCING RETROACTIVELY AS OF JULY 1, 2022.

RECOMMENDATION

The Administration recommends that the Mayor and Commission adopt the resolution, authorizing and approving the City Manager to execute three separate agreements in order to fulfill the original proposal and business terms put forth by Red Bull North America, for exclusive pouring rights in the energy drink category.

BACKGROUND/HISTORY

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.

ANALYSIS

The Administration and Red Bull North America have worked together to source and negotiate with two third party vendors who have agreed to the business and financial terms set forth in the original Red Bull North American exclusive pouring rights proposal, and who have also agreed to the legal terms and requirements necessary to enter into a legally binding agreement with the City.  As such, the Administration is recommending that the Mayor and Commission approve and authorize the City Manager to negotiate the following agreements:

 

1) Execute an agreement with Red Bull North America for the sponsorship and marketing components of the proposal - draft contract attached as "Red Bull Pouring Rights Sponsorship Agreement".

 

2) Execute an agreement with Red Bull Distribution Company for the purchase and distribution of product, as per the financial terms set forth in the original proposal - draft contract attached as "Red Bull Pouring Rights Distribution Agreement".

 

3) Execute an agreement with Bettoli Trading Corp., for the vending machine services portion of Resolution No 2022-32221 - draft contract attached as "Red Bull Pouring Rights Vending Agreement".

 

SUPPORTING SURVEY DATA

N/A

FINANCIAL INFORMATION

 

The business and financial terms of the original Red Bull North American proposal would not change with this resolution.  All three parties have agreed to the original terms set forth below, and are included within their respective agreements:

 

Term:

 5 years

 

Sponsorship fee:

 

 $75,000 per year paid within 30 days of contract execution.

 

Commissions / Pricing / Rebates:

 Rebate Bonus: $5 per case purchased, paid quarterly.

 Volume Bonus: $25,000 paid at 10,000 cases, additional $25,000 for each additional 5,000 cases.

 Pricing - $36/case for 24 x 8.4 oz cans

 Sample Product – 15,000 cans at $3/can for CMB employees, and 30,000 cans at $3/can at mutually agreed upon occasions.

 

 

Applicable Area

Citywide
Is this a "Residents Right to Know" item, pursuant to City Code Section 2-14? Does this item utilize G.O. Bond Funds?
No No 

Strategic Connection

Non-Applicable
Legislative Tracking
Marketing and Communications
Sponsor
Commissioner Alex Fernandez

ATTACHMENTS:
Description
Resolution 2021-31965
Resolution 2022-32221
Red Bull Pouring Rights Sponsorship Agreement
Red Bull Pouring Rights Distribution Agreement
Red Bull Pouring Rights Vending Agreement
Resolution