DAUNTING TO THE UNINITIATED, terms of a convention centerare critical to the financial health of your event. Here experts lay out five ways to negotiate more advantageous contractual terms and more equitable liability.
- Divide and Conquer.
Certain operational information about a meeting ormust make it into the contract: access dates (move-in and move-out); event dates and times; space designations and rates; and deposit and payment schedule. Sometimes included are special services (electrical, room setup); use of ancillary space (public or common areas to which the licensee has access); and rental waived for food and beverage.
Because these are the items most likely to be amended, centers such as the San Diego Convention Center Corp. summarize them within the first two pages of a contract. The SMG-Greater Columbus Convention Center also outlines ancillary charges, such as parking, rigging, electrical, telephone, and Internet, that are not included.
For a meeting with exhibits,can be vague about items such as electricity, garbage collection, and cleaning. However, “the contract shouldn't be cluttered with details that change hour-to-hour,” says Beatrice Kemp, vice president/general counsel, San Diego CCC.
- Use Counsel Wisely.
Experienced planners who work hand-in-hand with lawyers often address the operational issues — most likely to be open for— in preliminary drafts, deferring the “boilerplate” legal issues to counsel, who generally consult behind the scenes.
Lawyers often take a first pass at a contract draft, reconfirming space, dates, and rates, and items related to logistics. They look for anything that seems out of the ordinary with regard to liability, indemnity, or insurance. They also analyze cancellation clauses,, and overall indemnity.
Contract analysts produce drafts at the San Diego CCC, which circulates them to staff professionals for review. When the issues elevate to indemnification, insurance, or breach, the contract hits Kemp's desk. Likewise, when the stakes rise to negotiation of terms, “I'm the contact person in the building,” explains general manager Dittie Guise of SMG-Greater Columbus Convention Center.
- Propose Specific Language.
Boilerplate, covering such items as liability, indemnification, and insurance, is nearly impossible to change, particularly for convention centers under municipal authority. You can sidestep this by getting in writing that convention centers will be responsible for acts and omissions of their employees and for defects in the premises and equipment they provide, says John Foster, a lawyer with Foster, Jensen & Gulley LLC, Atlanta.
For example, what if a major rainstorm results in a leaking roof and ruins your exhibit booths or meeting materials? The convention center should pick up the costs.
Orange County Convention Center has incorporated more user-friendly language into its contract, along with a simple indemnification clause. “Each party is responsible for its own negligence or activities,” explains Elizabeth Forsythe, lease administration supervisor. The events of 9/11 prompted the center to revise force majeure to include interruptions caused by national emergencies and government directives.
Kemp at San Diego CCC admits to “very little wiggle room” on “untouchable” areas: the amount and type of insurance and indemnification. “Most licensees would like to have mutual indemnification, and that's why our language accommodates the building being responsible for its own actions,” she says. “Everything else can be discussed and possibly changed.” Even boilerplate will change if new safety, licensing, or government requirements are put into effect.
It may be impossible for centers to explain every single item in the contract, Guise noted, because certain boilerplate is regulated and thus varies from facility to facility. Still, SMG-Greater Columbus CC approaches a number of contract terms — such as mutual liability — on a case-by-case basis, she says, with lawyers coming together to figure out language that works for both parties.
Another thorny item is cancellation damages. Orange County CC requires 100 percent of the rental to be paid if an event cancels within 24 months. “If we resell, credit is given to the canceled group. But it's tough to resell within a two-year period,” notes Kathie Canning, deputy general manager, Orange County CC. “Think about all the revenue, beyond rental, that's lost.”
- Pick Your Battles.
Planners tend to focus first on the specific and flexible “dates, space, rates” items in the contract draft, and then take on the boilerplate. Instead, they should determine what terms within the entire draft are most important to the event's viability and make those central to the contract negotiation process. “Figure out the value on your ‘got to have’ scale,” advises Foster.
A real frustration is when additional charges are buried in a 50-page addendum of services. Garbage removal, for example, may be part of the licensing agreement, but you might have to dig to find those extra charges.
Planners who want no surprises routinely request during the bidding process to have the shell of a convention center's standard contract. Is it in legalese or layman's terms? San Diego CCC, for example, rarely is asked, “What does this mean?” Kemp says. “We get, ‘Why do you include that?’”
- Challenge Open-Ended Statements.
Ripe for controversy are clauses in which planners agree to pay for additional services ordered on-site. Too often, no one remembers authorizing such services when the invoices arrive weeks after the event.
Some groups revise these clauses to state that the planner must receive an estimate of the additional charge in a work order on-site, and that work order must be signed by an authorized representative in order for the company to be responsible for it.
There's one simple reason to be this exact with rights, limitations, responsibilities and liabilities, as well as operational policies and use of exclusives: “The people signing the contract may not be with the organization when the event takes place,” says Orange County CC's Forsythe.