Discussion:
The City of Shakopee has an agreement with Advantage Sports Group (September 6, 2022 – attached) with the terms allow for immediate termination without necessity of justification.
20. Termination. Notwithstanding any other provision in this Agreement, the City may terminate this Agreement by providing written notice of termination to Advantage Sports any time between March 1 and May 30th of any calendar year. Advantage Sports may terminate this Agreement for the fourth and fifth years (commencing on September 1, 2025, and September 1, 2026, respectively) by providing written notification to the city no later than May 30, 2024. Upon such termination by either party, this Agreement becomes null, void, and of no effect and neither the City nor Advantage Sports shall have any further rights or liability under this Agreement.
While the issues listed below are sufficient cause to justify immediate termination of the agreement, staff recommend a termination date of August 31, 2023. Immediate termination would be disruptive and detrimental to Shakopee community participants engaged with Advantage Sports Group’s (ASG) current 2023 AAA hockey season which goes from March through August.
The most egregious issue is the recent discovery of ASG’s violation of the terms of the agreement with unauthorized sale of ice times to a third party without written consent from the city.
16. Assignment. Neither party may assign this Agreement or any of the rights, duties or payments arising under this Agreement to any third party without the written consent of the other.
ASG staff (Matthew Underwood) shared with city staff that ASG was in danger of losing ice profits because of some changes to the ice schedule for an upcoming tournament. ASG pays $158.20 per hour (after taxes) for 1,000 hours annually of ice time. Staff discovered that ASG re-sold some of that ice time without city consent to Snipers Edge Hockey. (for $200 per hour as confirmed by Snipers Edge owner, Zach Sikich, on 5/3/23). ASG claims that this transaction falls under the guise of their “partnership” effort to run tournaments with Snipers Edge. However, all third-party partnerships require city consent per the “assignment” terms above, which the city has not consented to.
Original Intent = Activate Unused Space:
The existing “partnership” between the city and ASG has moved far away from the original intent that got it started. City staff strive to find opportunities and partners to activate spaces. On November 6, 2019, the council agenda listed an agreement to partner with Southwest Christian High School. Southwest’s boys’ hockey team for the hockey season where they would pay $40,000 to : rent ice 6:30am-8:30am daily on weekdays, play 8 games, and rent spaces for a locker room and a storage/coaches room. However, the Shakopee boy’s high school coach (Calvin Simon) protested that the proposed contract would be a severe threat to his team.
He took these concerns to the Shakopee Youth Hockey Association board, who added their displeasure during an immediate meeting that was requested with Jay Tobin and Troy Ciernia on November 6, 2023, just prior to the council meeting. Mr. Reynolds was contacted, and he came to join the meeting in progress, where it was agreed that the proposed contract with Southwest would be removed from the council meeting agenda and there would be further discussion.
In the follow-on discussions, Calvin Simon came forward with a proposed contract for ASG to offer a “morning developmental hockey program” consisting of 200 hours of ice from 6:00am-8:00am weekdays from September to February for $34,000 which was approved by Shakopee City Council on December 3, 2019.
As time has passed, ASG grew, and they’ve responded by requesting to amend agreements. On September 1, 2020, Shakopee City Council approved an agreement to increase ice hours from 200 to 800 (at discount rate of $165 per hour minus taxes) and give them a priority in ice time reservations, along with adding an office/space classroom and a coach’s room rental spaces all for $140,000 a year. Because the agreement no longer specified those previously inactivate morning hours, there was an unintended consequence with ASG now demanding their priority ice selection per the agreement and ultimately claiming 494 hours that were previously filled by great partners paying $170 per hour (plus taxes). Those partners included: Top Dog – 250hrs; Northland – 72hrs; Minnesota Hockey Clinics – 31hrs; Minnesota Wave AAA – 63hrs; and Avi Friedman – 36hrs. Another agreement amendment was approved by Shakopee City Council September 5, 2022, increasing ice times from 800 to 1,000 hours, and increasing price to $170 per hour. The intent continues to be activating spaces and increasing revenues, and while the amendments were focused on those goals the city has since realized how many partners it has lost and how much revenue it has lost because of the agreement with ASG. City staff has confirmed that many of those partners who felt forced out by ASG are excited to return with the termination of this contract, and ice revenues impacted by the agreement (1,000 hours) will increase from the current $158,320 (after taxes) to $180,000 for the same hours at current rate BEFORE taxes (customers pay $193.28 per hour with taxes) because of this termination.
ASG co-owner Calvin Simon has used his role as the boys’ high school coach to inappropriately use the boys’ locker room and coaches’ room to conduct his for-profit ASG business, which violates the existing agreement with the school district. When ASG was notified that they could no longer do that, they requested to be able to rent those rooms. Per that request, staff worked with the city attorney’s office to quickly draft a rental agreement (contingent on school district approval – per their agreement) which was sent to ASG on March 20, 2023, and added to the agenda for the April 4, 2023, City Council meeting. Mr. Simon sent an email stating that he would not be going forward with the agreement, while Mr. Simon and Mr. Underwood have continued to argue and harass staff demanding that ASG should be entitled to the spaces for free because 20 other coaches they’ve spoken to in Minnesota have free access. This demanding and demeaning behavior has made it difficult for staff and partners.
On January 25, 2023, Mr. Reynolds, Mr. Tobin, and Mr. Ciernia met with Mr. Simon and Mr. Underwood of ASG to resolve complaints of ASG “bullying” made by Shakopee Skate School staff. The complaint is that Mr. Underwood was “bullying” Skate School staff being verbally aggressive and threatening, as well as intentionally physically intimidating. The issue revolved around Mr. Underwood demanding ice times that are part of the city program run by the Shakopee Skate School. This was not the first complaint of ASG’s Mr. Underwood “bullying” partners or staff. That meeting resolved with ASG being instructed to talk to Mr. Tobin about any future concerns. And to that end, and at the request of ASG, Mr. Tobin scheduled a recurring monthly meeting with ASG staff which was accepted by Mr. Simon and Mr. Boeltl. Because no ASG rep has ever shown up for the meetings nor called or emailed to cancel or reschedule the meeting, and because all follow-up emails and phone calls have been ignored - all future meetings were finally cancelled last week.
Staff made every effort to make the partnership with ASG work. When ASG moved into their office/classroom space in 2020 they asked staff if they could use some of our excess furniture until they could acquire their own. Almost 3 years later, space modifications and activations in the community center now demand use of the tables ASG has been using. Staff notified ASG and have learned that ASG staff are making disparaging comments as to why we need our furniture back.
Mr. Simon filed complaints about dryland training partner E-Train and demanded better services. Staff was able to partner with best-in-class trainers at Twin City Orthopedics and bring “Training Haus” to Shakopee. Training Haus has expressed his frustrations that in efforts to partner with ASG, hundreds of thousands of dollars were invested building out the space to the specifics requested by Mr. Simon with the understanding that the ASG AAA hockey program (MPH -Minnesota Performance Hockey) would use it…and MPH is not using it. Training Haus has communicated his need to bring in other AAA teams or the Shakopee Training Haus is in danger of going under. Training Haus is another valued city partner that will be better off from the termination of the ASG agreement.
The ASG agreement and amendments have been brought forward with the intention of increasing value through activated spaces, increased partnerships, and growing revenues. Instead, ASG has resulted in loss of partnerships and revenue and no real increase in the activation of spaces. Staff recommends that it is in the best interest of the city to terminate the ASG agreement per the terms in paragraph 20, with termination date effective at midnight on August 31, 2023.