Sioux Falls, SD
The city council will be voting Tuesday night to give a marketing firm $45,000 for the final three months of the year to sell sponsorships inside the new Denny Sanford PREMIER Center.
But that's just a fraction of what the city plans to pay in the two years leading up to the grand opening. That's because the city plans to pay Legends Sports and Marketing $15,000 a month until the events center opens for the next two years to sell everything from premium seating to sponsorships in the hallways. That adds up to $360,000. The company will also get a 12.5 percent commission.
It may sound like a lot of money, but the city is hoping the group makes the city a lot of money too.
"They will easily sell 20 times what we will pay them," Sioux Falls Community Development Director Darrin Smith said.
Legends helped nail down the final details of the $20 million title sponsorship deal with Sanford Health, First PREMIER Bank and PREMIER Bankcard and got paid more than $20,000 to do it, without a commission.
For the next two years, the city plans to pay the firm $15,000 a month plus commission for all of the naming rights in the hallways, the premium seating areas and digital video boards.
"That $15,000 a month is a lot; is a lot. But that's a temporary fee for awhile until we get all the stuff sold out," city council member Greg Jamison said.
But officials say unlike most expenses, this money will actually go toward making the city more money in the long run.
"These guys are going to be selling several million dollars of inventory and we'll end up paying them a few hundred thousand dollars in the form of a monthly retainer. So it's a very, very good deal, great return on investment and they're very good at what they do," Smith said.
Jamison hopes the pay out to Legends will pay off in the long run.
"I think the people who are working on commissions in order to sell those will get paid accordingly and so if it doesn't sell out, well they don't make as much," Jamison said.
Legends did not get a commission for the title sponsorship because the city did most of the work lining it up.
The city is also asking Legends to look at selling sponsorships inside the Arena and Convention Center.