PAPER F
ECONOMIC DEVELOPMENT, PLANNING, TOURISM AND LEISURE SERVICES SELECT
COMMITTEE - 27 MAY 2003
THE ISLE OF WIGHT ROCK FESTIVAL
REPORT OF THE HEAD OF COMMUNITY DEVELOPMENT AND TOURISM
REASON FOR SELECT COMMITTEE CONSIDERATION
At its meeting of 21st May 2003 the Executive is to consider
a report in relation to the legal agreements for the series of music concerts
to be held at Seaclose Park under the banner of “the Isle of Wight Music
Festival”.
The Chairman has taken a view that this report should also be
considered by this Select Committee and has therefore included it on the agenda
for this meeting.
ACTION REQUIRED BY THE SELECT COMMITTEE
To consider any actions it feels appropriate arising from the
Executive’s decision of 21 May 2003.
BACKGROUND
The report to be
considered by the Executive is attached at Appendix 1.
The outcome of the
Executive meeting will be reported verbally to the Committee.
RELEVANT PLANS,
POLICIES, STRATEGIES AND PERFORMANCE
INDICATORS
As set out in the report to the Executive.
CONSULTATION PROCESS
As set out in the report to the Executive.
FINANCIAL, LEGAL,
CRIME AND DISORDER IMPLICATIONS
As set out in the report to the Executive.
APPENDICES
ATTACHED
1. “The
Isle of Wight Rock Festival”, Report of the Portfolio Holder for Leisure and
Tourism to the Executive dated 221st May 2003.
Contact Point :
John Metcalfe, F 3825 e-mail [email protected]
JOHN
METCALFE
Head
of Community Development and Tourism
PAPER
A
Purpose : for Decision
REPORT TO THE EXECUTIVE
Date : 21 MAY 2003
Title: THE ISLE OF WIGHT ROCK
FESTIVAL
REPORT OF THE PORTFOLIO HOLDER FOR LEISURE AND TOURISM
IMPLEMENTATION DATE : 27 May 2003
SUMMARY/PURPOSE
1.
Members are asked to
consider varying the terms of the Council’s agreement with Solo to make use of
Seaclose Park as a venue for an Isle of Wight Music Concert.
REASONS FOR URGENCY
2.
This report did not appear
on the forward plan as agreement with Solo was thought to be finalised and the
need to report to the Executive has only been determined since the publication
of the May Council plan. The decision
cannot wait until the publication of the June forward plan, given the date of
the 2003 event on 14/15 June.
CONFIDENTIAL/EXEMPT
ITEMS
3.
The detailed breakdown
of the financial basis of the proposed agreement is set out in annex 1.
BACKGROUND
4.
At its meeting of 5 November
2002 the Executive reviewed the outcomes of the two week Isle of Wight Festival
held to celebrate the Queen’s Golden Jubilee and to consider the Council’s
options in staging further festivals.
5.
Much of the debate at the
time focussed on the “high profile” concert for that festival and this report
also has future such events at the heart of its considerations. For clarity, Members agreed to enter into an
agreement with Solo whereby:-
·
The Council would provide
the Seaclose site, local liaison with statutory and voluntary bodies and cross
marketing with the Community Festival to Solo in support of an annual major
concert event.
·
In return Solo would provide the
Council with 4,000 tickets for each event which the Council was to sell under certain
restrictions and retain all proceeds for its own use.
6.
The Executive agreed to
utilise these proceeds to offset the costs of the Council’s investment in the
2002 festival and also to fund some of the activities associated with future
community festivals. At the same time
it recognised that Solo required a five year contract with an option to renew
in order for it to proceed with the agreement and that whether the concert
event would ever take place in any one year would ultimately be at Solo’s total
discretion.
7.
At best the Council’s
receipts from the sale of its tickets were estimated to be £500,000 over the 5
years of the agreement. At worst the
Council could receive nothing, either because the event did not take place or
because of failure to sell tickets allocated to the Council.
8.
Following the 5 November
decision it has been somewhat difficult to complete the Council’s agreement
with Solo. This is largely because
Solo’s focus was on securing the acts to perform at the 2003 event. Nevertheless, Solo did announce a line up
for the concert and also agreed to the Council beginning the sale of its 4,000
tickets on 5 March 2003. From 1 April 2003 the Council has also been
selling tickets on behalf of Solo. At
the date of this report the Council had completed 4,900 ticket sales and is
holding £141,000 on trust for the ticket holders. These receipts must be returned if the event fails to take
place.
9.
The Council’s legal
department prepared a contract and forwarded it to Solo for completion in March. The response from Solo was that its original
offer of so many tickets to the Council had been an over generous offer and it
was not able to complete it. More
especially, in light of the fact that it was taking all of the financial and
operational risks in staging the annual concert.
10.
On the basis that the
event(s) would make a contribution to both the social and economic well being
of the Island and that cancellation would lead to great disappointment in the
community, officers entered into a dialogue with Solo to seek an alternative
agreement for Members’ consideration. A
key driver in these discussions was also to ensure that the Council could still
derive an income from the event to offset the 2002 investment costs whilst
still bearing no financial risk for its delivery.
11.
Following a number of protracted
discussions which culminated in a final ultimatum being given to Solo, a
revised proposal has now been received.
The details of the proposal are shown in annex1 but the key elements are
summarised below:-
12.
The Council…..
·
Will provide the
Seaclose site, local liaison and cross marketing with the community festival
for the concert event(s).
·
Will not bear any
financial or operational risk in the staging of the event(s).
·
Will transfer no monies
to Solo prior to the successful completion of the 2003 event.
·
To be given a 10 year
agreement for the Council’s input.
13.
Solo…..
·
To make the Council a
fixed payment for the ten years of the agreement (subject to the event taking
place). The payment is to be made in 10
instalments, paid annually and the amount of each instalment shall be higher
than the previous year in accordance with an agreed payment schedule.
·
To pay the Council a
minimum percentage of each event’s income from ticket sales (net of VAT and PRS). This percentage to increase once the
admissions for any one event exceed an agreed amount.
·
If it fails to deliver
an event in any one year of the agreement, then the Council shall have the
right to terminate the agreement.
·
The new agreement to replace
all existing agreements between Solo and the Council.
·
Shall not hold a similar
event at another location on the Island for 3 months either side of any
concert.
·
Will not be under a
positive obligation to promote the community festival in future years.
14.
Solo have agreed to sign
a copy of the revised agreement proposals in advance of the meeting. Confirmation that this has in fact been done
will be reported verbally.
15.
Solo has declared a
strong desire and commitment to work with the Council to deliver not only the
2003 event, which has already been heavily advertised and promoted, but also
events in future years for the economic and social well being of the
Island. Nevertheless it reports that
its financial position is such that if the Council were not able to agree to
the variations in terms as it has proposed then Solo would have to either: -
·
Staging the 2003 concert
at an alternative location (including on the mainland).
·
Cancelling the 2003
concert altogether.
STRATEGIC CONTEXT
16.
One of the seven themes in
the Island’s Community Strategy, ‘Island Futures’, is to develop tourism. Two of the aspirations within this theme
are: -
·
To take positive action to
promote the Island as a year round destination by emphasising its range of
attractions.
·
To enhance the quality and
range of leisure attractions and recreation and increase the attractiveness of
the Island as a visitor destination.
Action 6.1 of the theme relates to the
development of a Tourism Development Plan (TDP) which seeks to broaden the market
base and length of the season.
17.
The Council’s Corporate Plan
has a priority to, ”further develop our programme of events, leisure, and
cultural opportunities to meet the needs of both visitors and resident”, within
the key objective of improving health, housing and the quality of life for
all. Also, within the objective of
encouraging job creation and economic prosperity the Council has a priority to,
“work with the tourism industry to promote the Island as an all year round
holiday destination”.
18.
Solo’s business plan
projections are to sell a minimum of 273,000 tickets for the concerts arranged
over the lifetime of the proposed agreement.
The concerts will therefore make a real contribution to the Community
Strategy and Corporate Plan objectives outlined earlier.
BEST VALUE AND CONTRACT STANDING ORDERS
19.
The agreement proposed
with Solo is not a contract for services, but is a commercial partnership. On 5 November 2002, applying the principles
of contract standing orders, Members determined not to require a tendering
exercise to be undertaken. In doing so,
Members were invited to continue to rely on a model test undertaken by Wight
Leisure in 2001 which revealed that Solo were the only potential partner.
20.
It should be noted that
the proposed payment includes consideration for the provision of the Seaclose
site. The value of the site for the
purposes of promoting a festival is, to an extent, untested. However, taking the soft market test, the
performance of the 2002 event and the business analysis presented by Solo,
Members face a choice between taking steps to secure the medium term future of
the concerts whilst recovering some of the investment in the 2002 event or
halting support for events in the short-term, to allow a further market test,
during which time the pump priming effect of the investment in the 2002 event
would diminish
CONSULTATION
21.
Discussions have been held with other local Councils as to the terms
they conclude
with music promoters for use of Council land as a venue for music concerts.
FINANCIAL/BUDGET IMPLICATIONS
22. The
Council made an investment of £380,000 in the 2002 Isle of Wight Music Festival
for which it organised the high profile launch event. It bore all of the financial risk for that festival and it is
essential that it should not seek to be the sole bearer of such a risk in
similar ventures again.
23 Under the
terms of the original agreement with Solo it was estimated that the Council
would receive in the order of £500,000 over 5 years from the sale of its annual
allocation of 4,000 tickets. This sum
was however not guaranteed, as it was dependent on all of the tickets being
sold and the event actually taking place which was not a decision in the
control of the Council.
24. Under the
terms now proposed the Council will receive a payment of £425,000 from Solo over the ten years of the
agreement. This payment is ‘guaranteed’
to the extent that Solo are able
to deliver concerts which complete the term of the agreement. The
percentage of Solo’s ticket sales which is offered in addition to the minimum payment is felt to be
worth between £120,000 to £150,000 to the Council assuming that an annual concert is arranged and
that Solo are able to sell a
minimum 273,000 tickets for them. A 10%
variation in Solo’s ticket sales is
estimated to be worth about £12,500 to the Council.
25. A material fact
for Members to consider is that the Council has sold 3,660 of its allocation of 4,000 tickets as per
the original agreement. These ticket
sales have generated net receipts
to the Council of £92,000 at a cost of £6,000 for marketing and promotion (ie net surplus
£86,000). Based on the income projections from Solo the Council will only have
recovered this level of income at
the end of year 3 of the proposed new agreement. These actual figures would a also tend to suggest that the original
agreement has the potential to generate a net £430,000 to the Council.
26.Solo, however, has given a clear indication that it
can not deliver the 2003 concert
under the terms of the existing agreement. Hence the reason for this report. The Council will
not therefore receive the full benefit of the £92,000 this year.
LEGAL
IMPLICATIONS
27.The Council has the powers (enhanced by the Local
Government Act 2000 and S111
Local Government Act 1972) to arrange for the closing of or contribute to the expenses of, anything necessary or expedient for the
provision of
entertainment of any nature.
28. The report to 5 November 2002 Executive
contained detailed advice about the
current contractual position between the Council and Solo. That report also advised Members on the licensing and Isle of Wight
Act regulations.
CALL IN
29. Rule 15 of
the Select Committee Procedure Rules provide for the usual rules on call in to be disapplied where the
decision of the Executive needs to be implemented before the expiry of the
call-in period.
30.It is proposed that, provided the Chairman of the
Council consents, the call-in
rules are abridged rather than disapplied entirely.
31.A call-in period limited to midnight on Monday 26
May 2003 will allow for the
decision to be referred to the
meeting of the Economic Development, Planning, Tourism and Leisure Services Select Committee on
Tuesday 27 May 2003 Rule
15(a) shall be disapplied to the extent that it provides for referral
back to the Executive
for reconsideration, as time will not
allow for that step to be taken and for a contract to be completed in good time
for the festival on 14/15 June.
OPTIONS
(i)
To agree to vary the terms
of the agreement with Solo (as reported to the Executive on 5 November 2002) to
those set out in this report.
(ii)
Not to agree the terms of
the agreement with Solo (as reported to the Executive on 5 November 2002).
(iii)
To limit the call-in period
to midnight on Monday 26 May 2003 to allow the decision to be referred to the
meeting of the Economic Development and Planning, Tourism and Leisure Services
Select Committee on Tuesday 27 May 2003.
EVALUATION/RISK
MANAGEMENT
32. The
2002 concert was the first time that an event of its type had been staged for
many years making it extremely difficult to predict likely attendance
figures. This notwithstanding the
attendance and revenue projections that Solo provided for the 2002 launch
concert proved to be considerably overstated.
In the light of this and also the volatility of the festival market
(success being a function of weather, line up, rival events), the projections
produced by Solo and contained within this report are likely to have a high
degree of tolerance.
Option
(i)
33. This
option would secure the potential for a major concert to be staged on the
Island for each of the next ten years which should bring with it consequent
benefits to the Island’s economy through its impact on the tourism
industry. The Council will bear none of
the financial and operating risks of the concert(s), these risks are Solo’s alone.
34. If the
agreement runs to term then the Council will receive a minimum payment of
£425,000 from Solo. It will also
receive a percentage of ticket sales which may generate in the order of a
further £125,000 to the Council. These
sums will be sufficient to recover the costs of the Council’s investment in the
2002 event although it must be recognised that the original agreement set out
to achieve this in 5 as opposed to the 10 years now being considered. It must however be borne in mind that the original
agreement was reliant on the Council selling an allocation of tickets whereas
in the current proposal now before Members the money (excluding the overage on
Solo’s ticket sales) received by the Council will be an annual up front payment
from Solo. There is therefore an
increased likelihood of the 2002 investment being recovered.
35. In both
the original agreement and in the current proposed revisions the option as to
whether a concert will proceed in any given year will be completely at the
discretion of Solo. In the revised
proposals the Council would have the option to terminate the agreement if a
concert did not take place in a year or to accept an increased payment from
Solo in subsequent years to ensure that the minimum payment is still received.
36. Perhaps
the principal risk in accepting this option is that if the concerts exceed the
expectations of Solo then the Council’s income from the agreement might, in
time, be viewed as being insufficient.
Nevertheless it must be borne in mind that the financial risk of
organising and growing the concert programme is with Solo only and it will
expect to receive an appropriate return for its investment and risk. It must
also be recognised that if a concert is delivered for each of the ten years of
the agreement then the Council will recover its investment in the 2002 event
and will have enabled an attraction that makes a significant contribution to
the Community Strategy and the Corporate Plan.
Option (ii):
37.If this option were adopted then it would seem
likely that Solo would either seek
to relocate the 2003 concert to a non Council venue or to cancel it
altogether. It is thought most unlikely that
Solo would revert to the terms of the agreement as set out in the report of 5 November 2002 and deliver
the 2003 and subsequent
concerts under these terms.
38. If the concert were to be relocated on the Island
then the economic benefits for
the Island and especially for the tourist sector would still be
delivered but only for 2003. There is no long term view as to whether
Solo would deliver a series of
concerts at an alternative venue on the Island. If the 2003 event were moved to the mainland then the Island would
receive no economic benefits from it.
If a non Council owned
venue for the concert(s) were used by Solo then the Council would not be able to recover any of its
investment in the 2002 event.
39.If the 2003 concert were cancelled altogether then
its potential economic benefits would be lost, as
would the Council’s ability to recover any of its investment in the 2002 event. It is thought most unlikely that any
further concerts
could be arranged in the medium term if this was to be the chosen response of Solo.
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RECOMMENDATIONS
40. On the
basis of the information contained in this report, options(i) and (iii)
be adopted.
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BACKGROUND PAPERS
41. “The Queen’s Golden Jubilee Celebrations – Isle of
Wight”, Report of the
Portfolio Holder for Tourism and Leisure Services, to Executive on 5
November 2002.
Contact Point : John
Metcalfe, Head of Community Development and Tourism,
( 823825 e-mail: [email protected]
John
Lawson, Head of Legal and Democratic Services,
( 823207
e-mail: [email protected]
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David Pettitt, Strategic Director of Education and
Community Development
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John Fleming,
Portfolio Holder for Tourism and Leisure Services
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